Some of the Most Important Accounting Rules in Indonesia Companies Should Know About
In this article, we look at some of the most important accounting rules in Indonesia. Read on.
The accounting standards in Indonesia is the Indonesia Financial Accounting Standards (PSAK). The Indonesia Financial Accounting Standard Board and the Indonesia Sharia Accounting Standards Board that are under the Indonesian Institute of Chartered Accountants (Ikatan Akuntan Indonesia IAI) have issued it.
Public and private Indonesian companies should act based on accounting standards.
Companies must present the balance sheet into account with liabilities with constant capital and debts. The loss account and profit prioritize the global production repository and allow the choice of cost classification by nature or function.
For the purpose of taxes, permanent establishments, foreign investment (PMA) companies, some entities with their foreign affiliations and companies that have financial statements preparation using US dollars as the functional currency which maintain the English language and US dollar bookkeeping, must obtain approval from the Ministry of Finance.
Financial statements should have a variation sheet with the constant capital that excludes reserve account and balance that is carried forward, annexes, and the cash flow sheet. The activity statements in the financial year include a balance sheet, assets and liabilities statement, the intermediate balance, statement of application and source of funds, and another information sheet. Companies can’t separate one from another and publish both of them annually.
Five kinds of limited liability companies should publish their audited financial statements that have received shareholders approval. Companies must prepare yearly reports as per Indonesia’s accounting principles.
The Professional accountancy bodies are IAI (Indonesia Institute of Accountants), The Indonesia accounting society.
Certification and Auditing
The IAI represents the accountant’s profession. The Department of Finance is the authorized body to give recommendations and establish accounting obligations.
Which Companies Need to be Audited?
Companies should be audited by the public accountant that is registered in Indonesia in case they meet these requirements:
- Companies with total assets exceeding IDR 25 billion.
- Firms that have an annual gross turnover that exceeds IDR 50 billion per year.
Companies that give debt knowledge instruments.
- State-owned enterprise companies.
- Companies in public fund mobilization.
- Publicly traded companies.
Indonesian company audits follow the Indonesian Financial Accounting Standards (Standar Akuntansi Keuangan – SAK). This can be determined by the DSAK – IAI and DSAS – IAI for sharia-based companies.
Who Can Audit?
The auditor should be a registered and independent public accountant recognized by the Ministry of Finance. The Ministry of Finance gives no permission to a company to use auditing firm services for 6 straight years until the partners changed.
Companies need to follow the accounting rules in Indonesia strictly. If you want assistance in handling the accounting, you can contact us at 3E Accounting.