The Components Make the Financial Statements That Ends Up as a Group Audit
Auditing, a single company is complicated and very detailed. What more if it comes to auditing large corporations with several subsidiaries within its purview. Audit for such companies is called group audit. But group audit for holding company in Indonesia comes with its own set of rules and regulations. Would you know if your company needs a group audit? The following pointers should give you an idea.
The definition of a group audit refers to an audit of a group of financial statements. Each financial statement should contain specific components that could differ from geographical, products, services, functions, investments and many other aspects. Some financial statement would only have financial information for one component. In contrast, there is a financial statement that could contain more than one component. How do you tell which one is a component? Well, experienced auditors or a group engagement team should know this better. Consider this, if the financial statements contain information of consolidated subsidiaries, a combined entity under common control, incorporated affiliates, investment in a joint venture, or even various entities providing separate financial reporting to the headquarters. There is no particular need to hire several auditors for components auditing. The same auditor carrying out the group audit for holding company in Indonesia can also audit the components.
Foreign-owned companies should adhere to the Company Law in Indonesia for the audit requirements and financial statements preparations. Besides referring to Company Law, foreign-owned companies should have a good understanding of all the related laws for conducting business in Indonesia. Foreign-owned companies are naturally made up of foreign investors. Thus, they are subject to the Investment Coordination Board. Hence, such companies should regularly refer to the Investment Law as well. Among the requirements in Investment Law is that foreign investors must submit quarterly investment activities to the Investment Coordinating Board, undertake corporate social responsibilities, and comply with the labour law. Experienced and registered auditors in Indonesia are well versed in these matters apart from financial statements. They will advise the necessary if specific issues are lacking to reduce future risks.
Moreover, foreign investors must engage a public accountant to conduct the audit. Recently, financial reporting standards in Indonesia is more comparable to international financial reporting standards. This move is essential to attract foreign investors to do business in the country.
The Due Dates
Companies in Indonesia could have a different financial year than stipulated by the government. Indonesian law states that the due date for the corporate financial reporting and paying tax is 30th April. This date applies only if the company’s financial year is between 1st January to 31st December. Otherwise, the due date is four months after the end of their financial year. Thus, companies should take note of their respective due dates for financial reporting. They may need to engage with a group engagement team if there is a group audit.