Indonesia Accounting Standards and Rules – a Vital Tool for Success
Ensuring Best Practices and Financial Transparency for Your Business with Indonesia Accounting Standards and Rules.
Indonesia Accounting Standards and Rules (Standar Akuntansi Keuangan or SAK) has made tremendous inroads in facilitating consistency in accounting and financial management. In the Indonesian arena of commerce, SAK is quite crucial as a business is booming. Companies now operate on a global scale and having some form of standardized regulation is needed to enable investor confidence.
De-mystifying Accounting Standards
How a business maintains and collates its finances is what accounting and financial principles really are. When aligned or converged with international guidelines and structure, a standardization of accounting rules and management then occurs. This helps to provide clarity and uniformity in business processes, making it easier for financial assessments to occur.
Convergence occurs when International Financial Reporting Standards (IFRS) are adopted and integrated but adjusted to a country’s specific commercial context. By doing so, a business’ will:
- Gain international recognition and acceptance
- Be able to increase funding via capital markets
- Be efficient and transparent in the submission of financial statements
- Increase both local and foreign investors’ trust
Well curated accounting standards enable stakeholders to make informed decisions about the financial aspects of any business. Thus, accounting standards, both locally and internationally, are needed as they regulate the whole accounting process. They also maintain procedural guidelines for financial documentation which is of tremendous help to:
- Key stakeholders
- Potential and existing investors
- Foreign investors
- Accountants and auditors
Applying SAK to Your Business
With the largest economy in Southeast Asia, Indonesia has a robust market that built around agriculture, mining and manufacturing. Business and commerce here are steady as the country is rich in natural resources. It is also the fourth most populous country in the world, making it a formidable presence in Asia’s emerging market economy.
In Indonesia, SAK is regulated and governed by the Financial Services Authority (Otoritas Jasa Keuangan or OJK) and Bank Indonesia. They are advised by the Indonesian Institute of Accountants and the Department of Finance, which also has the power to create accounting obligations.
The accounting standards themselves are established by the Indonesian Financial Accounting Standards Board (Dewan Standar Akuntansi Keuangan or DSAK). As of 1st January 2018, SAK is substantially but not fully converged with the IFRS. As such, Indonesia still maintains its national Generally Accepted Accounting Principles (GAAP).
GAAP Tier 1 lists SAK for listed companies and entities with public accountability. Tier 2 governs entities with no significant public accountability. Due to the ongoing transitional phase, companies that have local and foreign listings need to prepare two sets of financial statements in accordance with IFRS and SAK. All public and private companies are required to comply with DSAK issued accounting standards.
Getting your business’ accounting standards right can be quite a minefield, but you don’t have to face this nightmare alone. 3E Accounting has the relevant experience and exposure to ensure your business meets all the requirements of Indonesia Accounting Standards and Rules.
Contact 3E Accounting today for reliable and accurate accounting and financial services.