Indonesia Auditadmin2023-08-21T18:19:25+08:00
Key Note
- Why Company Audits in Indonesia are Important
- Indonesia Auditing Services We Provide
- Audited Companies vs Unaudited Companies
- Audit Exemption in Indonesia: Are There Any?
- How to Respond to an Audit in Indonesia?
- Your Questions, Answered
- Audit In Indonesia Articles
- Why You Should Conduct a Company Audit with Us
Company Law in Indonesia requires audit of financial statements by among others, limited liability companies, companies with assets more than 50 billion rupiah, and public companies. Our skilled auditors at Paul Hype Page offer dependable and expert audit services that foster shareholder trust and offer investors the certainty required for well-informed choices. Following rigorous international auditing standards, we conduct comprehensive and autonomous audits, pinpointing possible inaccuracies to present an authentic view of your company’s financial well-being, heighten stakeholder assurance and ensure regulatory conformity.
Why Company Audits in Indonesia are Important
Company audits in Indonesia hold significant importance due to their role in ensuring the accuracy, reliability, and transparency of financial information. An audit is an independent and systematic assessment of an organisation’s statutory records, financial documents, and book of accounts. In Indonesia, audits are conducted in accordance with the Indonesian Financial Accounting Standards (SAK) established by the Financial Accounting Standards Board (DSAK IAI) and the Indonesian Sharia Accounting Standards Board (DSAS IAI) for sharia-based companies.
The primary objective of a company audit is to determine the extent to which the financial statements, along with their non-financial disclosures, present a true and fair representation of the company’s financial status. By conducting thorough examinations and assessments, auditors provide credibility to the financial statements, ensuring that they are reliable and accurate.
Furthermore, company audits contribute to the improvement of a company’s internal controls and systems. Through the auditing process, weaknesses and deficiencies in internal controls can be identified, allowing the company to implement corrective measures and strengthen its governance framework. This helps mitigate risks, prevent fraudulent activities, and enhance the overall efficiency and effectiveness of the company’s operations. Other than analysing the credibility of the financial statements, audits also analyse the material misstatement risks that are present within them.
Indonesia Auditing Services We Provide
Our various audit services in Indonesia will be able to cater to the specific needs of your company. Among others, these are the services that we provide:
Annual Financial Audit
According to Indonesian regulations, companies that have a substantial asset value are required to have their financial statements audited. This ensures that the financial information presented is accurate, reliable, and in compliance with accounting standards.
Special Purpose Audit
We offer specialised audit services tailored to meet specific requirements, such as internal control audits, forensic audits, compliance audits, and due diligence audits. Our skilled auditors apply their expertise to address your unique needs, providing a thorough evaluation of specific areas or processes within your organisation.
Certification for Subsidy Claim Audit
For businesses that receive subsidies or grants, our audit services include verifying the eligibility and accuracy of subsidy claims. We assess whether the claimed expenses align with the subsidy program’s guidelines and regulations, ensuring compliance and maximizing the potential benefits for your organization.
Fixed Assets Certification
Our auditors perform a detailed examination of your fixed assets, including property, plant, and equipment. We verify the existence, valuation, and proper accounting treatment of these assets, helping you maintain accurate records and make informed decisions regarding their management and utilization.
Claim Certification
Our audit services cover the certification of various claims, such as tax refund claims or insurance claims. We meticulously review the supporting documentation, assess the validity of the claim, and provide an independent certification that enhances the credibility and reliability of your claim.
Shares Certification
Whether it’s for an initial public offering (IPO) or transfer of shares, our audit services include verifying the ownership, value, and compliance aspects of shares. We ensure the accuracy and integrity of the share-related information, providing certification that adds credibility and transparency to share transactions
Personal Income Certification
Individuals seeking certification of their personal income can rely on our audit services. We review and verify the income sources, documentation, and compliance with tax regulations, issuing a certification that validates the accuracy and legitimacy of their reported income.
Audited Companies vs Unaudited Companies
| Audited Companies | Unaudited Companies |
|---|---|
Ability to Create Reliable Financial Reports Company audits play a crucial role in generating reliable financial reports for both internal and external stakeholders. By conducting comprehensive assessments of financial records, transactions, and statements, audits verify the accuracy and integrity of financial information. This enhances the credibility and trustworthiness of the company’s financial reports, enabling stakeholders to make informed decisions based on reliable data. | Inability to Create Reliable Financial Reports Unaudited companies face challenges in producing reliable financial reports for both internal and external purposes. Without the independent scrutiny and validation provided by audits, there is a higher risk of errors, misstatements, or inconsistencies in financial records. This lack of reliability undermines the credibility of financial information, making it difficult for stakeholders to make informed decisions based on accurate data. |
| Resource Allocation and Productivity Assessment Through audits, companies can gain insights into the proper allocation of resources and assess the productivity levels of different products or business segments. Audits help identify areas of inefficiency, wastage, or underutilisation of resources, allowing companies to make informed decisions on resource allocation, cost reduction, and process improvements. This promotes effective resource management and enhances overall operational efficiency. | Difficulty in Resource Allocation and Productivity Assessment Without audits, unaudited companies struggle to determine the proper allocation of resources and assess the productivity levels of their products or business segments. The absence of systematic evaluations and analysis can lead to inefficiencies, suboptimal resource utilisation, and an inability to identify underperforming areas. This hampers effective decision-making and Audited Companies Unaudited Companies resource management and enhances overall operational efficiency. |
| Effective Financial Management Companies rely on audits to gain a comprehensive understanding of their financial affairs. Audits provide a detailed analysis of assets, liabilities, revenue streams, and expenses, enabling companies to evaluate their financial health and performance. This information is essential for effective financial management, strategic planning, and decision-making. Without audits, companies would lack the necessary insights to monitor their financial status, identify potential risks, and take appropriate measures for financial stability and growth. | Limited Financial Affairs Management Unaudited companies face challenges in effectively managing their financial affairs. The lack of in-depth analysis and evaluation of assets, liabilities, revenue streams, and expenses makes it difficult to gain a comprehensive understanding of their financial position and performance. This limits their ability to identify financial strengths, weaknesses, and potential risks, hampering their ability to make informed financial decisions and strategic plans. |
| Marketplace Reliability Company audits contribute to establishing credibility and reliability in the marketplace. By consistently producing reliable financial reports and adhering to auditing standards, companies enhance their reputation for transparency and financial accountability. This, in turn, builds trust among customers, suppliers, investors, and other stakeholders. Reliable financial reporting demonstrates a company’s commitment to quality and professionalism, increasing its competitive advantage and market standing. | Unreliability in the Marketplace The absence of audits can lead to an unreliable reputation in the marketplace for unaudited companies. Without independent verification of financial statements and adherence to auditing standards, stakeholders may question the accuracy and transparency of financial information. This can erode trust and confidence among customers, suppliers, investors, and other stakeholders, potentially impacting business relationships, partnerships, and market competitiveness. |
Audit Exemption in Indonesia: Are There Any?
While there are no specific auditing and compliance regulation in Indonesia which explains about audit exemptions, it is mandatory for every limited liability company in Indonesia to have their financial statements audited if they fulfil one of the following criteria.
Companies that are mandatory to be audited:
Companies with a total asset value exceeding 50 billion rupiah (estimated $3.4 million USD)
According to Indonesian regulations, companies that have a substantial asset value are required to have their financial statements audited. This ensures that the financial information presented is accurate, reliable, and in compliance with accounting standards.
Public companies
Publicly listed companies in Indonesia are obligated to undergo auditing to enhance transparency and provide assurance to shareholders and investors. The audit process helps validate the accuracy of the company’s financial statements and promotes confidence in the company’s operations.
Companies that issue debt instruments
Companies that raise funds through issuing debt instruments such as bonds or debentures are subject to auditing requirements. This ensures that the financial information provided to debt holders accurately represents the company’s financial position, enabling investors to make informed decisions.
State-owned enterprises
State-owned enterprises play a significant role in Indonesia’s economy. To maintain accountability and transparency, these enterprises are required to undergo audits. Auditing helps identify any financial irregularities, strengthens internal controls, and ensures compliance with regulations.
Companies that collect or manage public funds (e.g., banks, insurance companies)
Entities involved in the collection or management of public funds, such as banks and insurance companies, have a higher level of responsibility in safeguarding public interests. Auditing ensures the accuracy and integrity of financial information and helps prevent fraudulent activities or mismanagement of funds.
How to Respond to an Audit in Indonesia?
After engaging audit services in Indonesia, an audit report will be given. Here are some of the ways you can respond to it:
Address Concerns
When responding to an audit report in Indonesia, it is important for companies to carefully review and address any concerns raised by the auditing team. While not all recommendations may be mandatory, business should consider the implications of non-compliance and ensure that they remain legally compliant. The information provided in the audit report can serve as a valuable resource for identifying areas of improvement and implementing necessary changes to enhance financial processes and controls.
Appeal to the Authorities
In situations where a company may lack the resources or capabilities to immediately fulfill the recommendations provided in the audit report, it is possible to appeal to the relevant authorities. This can involve requesting an extension to a company with certain requirements or providing justifications for alternative approaches that still ensure compliance. It is crucial to communicate openly and transparently with the auditing authorities and seek guidance on the appropriate steps to take to address the audit findings.
Open Audits
In cases where a company is subject to open audits, meaning the audit report and its findings are accessible to the general public, it becomes even more important to comply with the recommendations outlined in the report. Open audits increase the level of scrutiny and accountability for the company, as stakeholders and the public have access to detailed information about its operations and financial status. Non-compliance with audit recommendations in such cases can lead to reputational damage and potential legal consequences.
Your Questions, Answered
Auditing a company can be daunting – here are the top questions regarding Auditing Services in Indonesia compiled to clear your doubts!
Can small and medium-sized enterprises (SMEs) benefit from audits in Indonesia?Paul Hype Page2023-08-16T09:50:02+08:00
Can small and medium-sized enterprises (SMEs) benefit from audits in Indonesia?
Yes, audits can be beneficial for SMEs in Indonesia as they provide an independent assessment of financial statements, enhance transparency, and improve the company’s credibility among stakeholders, including lenders, investors, and business partners.
Can companies switch auditors in Indonesia?Paul Hype Page2023-08-16T09:47:57+08:00
Can companies switch auditors in Indonesia?
Yes, companies have the right to change auditors in Indonesia. However, it is important to follow the procedures and requirements set by the Financial Services Authority (OJK) and the Indonesian Institute of Certified Public Accountants (IAPI) when transitioning to a new auditor.
What happens after an audit is completed?Paul Hype Page2023-08-16T09:47:39+08:00
What happens after an audit is completed?
After the completion of an audit, the auditor prepares an audit report, which includes their findings, opinions, and recommendations. The company’s management reviews the report, addresses any identified issues, and takes necessary corrective actions to improve financial reporting and internal controls.
How can companies prepare for an audit in Indonesia?Paul Hype Page2023-08-16T09:47:22+08:00
How can companies prepare for an audit in Indonesia?
Companies can prepare for an audit by organising their financial records, ensuring compliance with accounting standards and regulations, conducting internal reviews, and addressing any identified issues or weaknesses in internal controls. Seeking guidance from professional auditors can also help in the preparation process.
Can companies choose to have voluntary audits in Indonesia?Paul Hype Page2023-08-16T09:47:03+08:00
Can companies choose to have voluntary audits in Indonesia?
Yes, companies have the option to undergo voluntary audits even if they are not legally required to do so. Voluntary audits can provide additional credibility and assurance to stakeholders and demonstrate a commitment to transparent financial reporting.
What are the consequences of non-compliance with audit requirements in Indonesia?Paul Hype Page2023-08-16T09:46:46+08:00
What are the consequences of non-compliance with audit requirements in Indonesia?
Non-compliance with audit requirements can lead to penalties, fines, reputation damage, and regulatory actions by authorities such as the Financial Services Authority (OJK). It is essential for companies to adhere to audit regulations to maintain compliance and avoid potential negative consequences.
Who is responsible for conducting audits in Indonesia?Paul Hype Page2023-08-16T09:46:21+08:00
Who is responsible for conducting audits in Indonesia?
Audits in Indonesia are conducted by qualified auditors who are registered with the Financial Services Authority (OJK) or the Indonesian Institute of Certified Public Accountants (IAPI).
What are auditing services?Timothy2022-07-15T12:10:32+08:00
What are auditing services?
Auditing services are professional services that provide compliant financial statements and ensure that the finances are in order before communicating to key stakeholders.
When do I need to submit the audited financial statements in Indonesia?Timothy2022-07-15T12:10:17+08:00
When do I need to submit the audited financial statements in Indonesia?
The audited financial statements must be submitted within 6 months from the end of the financial year.
How long does an audit usually take in Indonesia?Timothy2022-07-15T12:10:00+08:00
How long does an audit usually take in Indonesia?
Depending on volume and complexity of transactions, an audit can take a few weeks or up to months.
How often do companies need to be audited?Timothy2022-07-15T12:09:42+08:00
How often do companies need to be audited?
Every company must have its financial statements and accounting records audited at least once a year. Only companies which fulfil the criteria for audit exemptions do not have to be audited.
What are 3 types of audits?Paul Hype Page2021-11-09T12:24:44+08:00
What are 3 types of audits?
There are three main types of audits: external audits, internal audits, and Internal Revenue Service (IRS) audits. External audits are commonly performed by Certified Public Accounting (CPA) firms and result in an auditor’s opinion which is included in the audit report.
Which is the first largest accounting body in the world?Paul Hype Page2021-11-09T12:24:30+08:00
Which is the first largest accounting body in the world?
The Chartered Institute of Management Accountants (CIMA) is the world’s largest and leading professional body of management accountants.
Does Indonesia adopt IFRS?Paul Hype Page2023-08-16T09:38:22+08:00
Does Indonesia adopt IFRS?
Yes. From 2015 onwards, the Indonesia Financial Accounting Standard (SAK) converged with the International Financial Reporting Standard (IFRS) entirely.
Who is obligated to be audited?Paul Hype Page2021-11-09T12:22:52+08:00
Who is obligated to be audited?
The Company Law mandates that financial statements of a limited liability company must be audited by a public accountant registered in Indonesia if they meet at least one of the following criteria:
- Companies with assets exceeding 50 billion rupiah (US$3.6 million);
- Public companies;
- Companies that issue debt instruments;
- The company is a state-owned enterprise; or
- The company collects or manages public funds (such as banks and insurance companies).
Audit In Indonesia Articles
Supplement your existing knowledge with additional insightful readings that we’ve crafted based on our years of experience.
Why You Should Conduct a Company Audit with Us
Here are the benefits of auditing your business with us:
We assess your internal controls – proper procedures, verification and segregation of duties
We will review your company’s security and recommend mitigation measures for issues
We efficiently identify gaps in your business operations
We verify the accuracy and integrity of your financial statements
We check the laws, regulations, and industry standards and your company’s compliance
