Paper

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National Synergy on Information Systems Initiative, Information
Gaps, and Financial Stability in Indonesia: An Institutional
Arrangements Perspective1
Agung Darono2
agungdarono@depkeu.go.id
Finance Education and Training Agency - Unit of Malang
Ministry of Finance Republic of Indonesia
Jalan Ahmad Yani Utara Nomor 200, Malang, East Java, Indonesia, 65126
Sugianto
sugianto.hirokerto@bpk.go.id
Bureau of Information and Communication Technology,
Supreme Audit Board of Republic of Indonesia
Jalan Gatot Subroto Kav. 31, Jakarta, 10210
Abstract
Recently, there has been an increasing interest in financial information gaps. For instance,
The International Monetary Funds (IMF) joined with the Financial Stability Board (FSB) have
published a series of documents and initiatives on how global financial stability stakeholders
should address these issues in 2009. Recent discussion in this area have heightened the
needs to set out an appropriate mechanism in managing adequate flows of information to
facilitate financial stability authorities to promote global financial stability. Each financial
stability authority needs to consider a wider context in terms of providing suitable information
gathering mechanism/infrastructure for current economic, social, political and technological
aspects. In Indonesian context, according to the Law 11/2011 concerning Financial Service
Authority (“Otoritas Jasa Keuangan”/”OJK”), stability of the financial system should be
maintained through a coordination forum (called as “Forum Koordinasi Stabilitas Sistem
Keuangan”/”FKSSK”) whose members consist of the Minister of Finance as coordinator and
member, Governor of Bank Indonesia, Chairman of the Board of the Deposit Insurance
Corporation, and the Chairman of the Board of Commissioners of the OJK the members.
Central to this transitional situation is in determining type of technological support as well as
appropriate institutional arrangements required to establish well-designed exchange of
information mechanism in the FKSSK's coordination tasks in order to maintain the financial
stability. On the other side, Supreme Audit Board (“Badan Pemeriksa Keuangan”/”BPK”) as
state’s auditor has recently launched its initiative, called as National Synergey on Information
Systems. The main feature of this initiative is “e-Audit”, an ICT-based mechanism to capture
data from BPK-auditees’ information system into BPK’s data-center. This study deploys a
qualitative-interpretive method and adopts institutional arrangements and socio-technicalsystem perspectives as working tools to analyse the various relevant policies/regulation that
have been enacted by the financial stability stakeholders to reduce the financial information
gaps in Indonesia. The study proposes how BPK’s information systems synergy initiative (eAudit) could be considered as an information exchange infrastructure that can be utilized to
support Indonesian financial stability stakeholders in reducing potential information gaps.
Keywords: information gaps, financial stability, institutional arrangements
1
This article represents the personal views of the authors and does not represent any views or policies of the
institutions where the authors affiliated
2
Corresponding author
1
1. Context of the Case
Indonesia made a crucial step in its financial management system when the Financial
Services Authority ("Otoritas Jasa Keuangan"/"OJK”) was fully operated in December 31,
2013. This authority, established based on Law No. 21/2011, is responsible for regulating
and monitoring financial services activities in the banking sector, capital market, insurance,
pension funds, and other financial institutions. The establishment of this entity was preceded
by quite a lot of public debate regarding the choice of institutional supervision and regulation
towards financial services, which was suitable in Indonesia context. The final decision is as
set out in the OJK Law (Hasan, 2012; Sunarsip, 2012).
According to Indaryanto (2012), Nasution (2003), and elucidations in the OJK Law, the main
objectives of this authority is to serve a financial system stability, which in turn able to
support sustainble national economics growth. The main tasks of OJK are to ensure fair,
transparent, accountable and sustained financial services. To achieve those goals, OJK has
a role as part of the Coordination Forum for Financial Stability (“Forum Komunikasi Stabilitas
Sistem Keuangan”/”FKSSK”). Beside the Chairman of the OJK, this forum also includes the
Minister of Finance (MoF), the Governor of Bank Indonesia (“BI”), and Chairman of the
Board of Commissioners of the Deposit Insurance Agency (“LPS”) . Article 43 OJK Law, in
order to achieve financial stability, explicity reign to develop and maintain an integrated
information exhanges infrastructure among this forum members. Therefore, existence of
financial information (and its consequences, information gaps) and how this information
exchanged has been focal concern both of financial system stability authorities and scholars
(Cushman, 2012; Oosterloo and Haan, 2004; Nasution, 2003; Jappelli and Pagano, 2002).
Oosterloo and Haan (2004) revealed that the main point to maintain the financial stability are
co-operation dan information exchange between the whole financial stability stakeholders. It
means that those stakeholders have to keep their information current and update. The
urgency of this issue has also been made of the finance ministers and central bank
governors of the G20-countries to invite the IMF and FSB identify any information gaps int
the field of economy and financial stability, and asked to immediately close the various
loopholes should be closed (IMF and FSB, 2009).
In relation either with the information gaps or information exchange, in the term of financial
stability objectives, the situation in Indonesia has shown that these issues also have become
crutial attention among of the financial system stability stakeholders. In this sense, Table 1
elucidate excerpts based on report by IMF (2010) and FSB (FSB, 2013), concerning the
results of the assessment towards Indonesia’s financial system stability as well as its
responses from the related authority. This table describes the specifics information related to
information exchange mechanism that had been arranged among the authorities.
Table 1. Assessment Results towards Information Gaps in Financial Stability
Reports
Facts/Criteria
Authority’s Responses
Financial System
Stability Assessment
(IMF Country Report
No 10/288), 2010
“ ... the lack of formal and
informal information
sharing arrangements with
other financial sector
supervisory authorities ...”
IMN Survey of National
Progress in the
Implementation of
G20/FSB
Recommendations,
2013
To quicken supervisory
responsiveness to
developments that have a
common effect across a
number of institutions,
supervisory exchange of
information and
coordination in the
“ ... It should be noted, however, that the
lack of formal information sharing
arrangements did not materially impede our
practice of consolidated supervision, as
noted in the overall assessment of
consolidated supervision ...”
“ ... At national level, BI has signed bilateral
MoUs with other relevant financial sector
authorities such as with OJK and Indonesian
Deposit Insurance Corporation (LPS).
Furthermore, a Financial System Stability
Coordination Forum (FKSSK) that was
mandated by OJK Law has also been
established in 2012. The FKSSK
2
Reports
Facts/Criteria
development of best
practice benchmarks
should be improved at
both national and
international levels
Authority’s Responses
establishment was formalized through a
FKSSK MoU that was signed by Minister of
Finance, Governor of Bank Indonesia,
Chairman of OJK’s Board of
Commissioners, and Chairman of LPS’s
Board of Commissioners. The MoU
facilitates the sharing of information and
data among authorities that are required to
maintain and promote financial system
stability. At international level, in the banking
sector, as a response to BCP FSAP
recommendations, BI has entered into
formal arrangements with several foreign
authorities since 2010, such as with foreign
authorities such as China (CBRC), Malaysia
(BNM), Singapore (MAS), Australia (APRA),
and Korea ...”
Source: data gathered by authors
According to authorities’ responses, it seem that everything goes fine. However, in the
authors' view, the real situation is more complicated than its looks like, especially with how
the MoU between these members of FKSSK are followed up. Why? Because, in some cases
coordination measures toward exchange of information initiatives are not always an easy
one in Indonesia. Back to 2007, for instance, the stock exchange operator (then Jakarta
Stocks Exchange/JSX), had deciced to introduce a new reporting mechanism based on
eXtensible Business Report Language (XBRL) data format which at that time was
considered as the best practice for financial information reporting, but this initiative did not
not run smoothly. It was fail not due to technical issues, but referring to Williamson’s term
(2000), rather on institutional arrangements issues. In fact, the constraints arose from active
stocks exchange members who considered this initiative as a violation to sound business
practices. That parties argued that the designated provider for development and
implementation of e-reporting was appointed without going through the fair mechanism. As a
result, this JSX regulation was then reported by such parties to the Commission for the
Supervision of Business Competition ( “Komisi Pengawas Persaingan Usaha"/”KPPU" ), and
such commission decided to cancel the JSX regulation 3.
In this context of information exchanges that require some of parties to involve, and in a
broader scale (not merely related to financial system stability objectives), there is a different
approach that can be used to deal with this information exchanges mechanism, one which
emerged from the Supreme Audit Board (“Badan Pemeriksan Keuangan”/”BPK”), namely
National Synergy on Information System (“Sinergi Nasional Sistem Informasi”/”SNSI”), with
“e-Audit” system-application as its core feature. According to BPK’s press release (BPK,
2012), SNSI/e-Audit initiative basically aims to facilitate electronic-information gathering by
BPK’s auditors through a data communication network (i.e. internet) from the auditee
computing environment. From auditing dicipline, according to (Darono, 2010), this measure
known as continous auditing or embedded audit modules technique. Accordingly, this
initiative is basically not directly engaged with financial system stability objectives. But, in
contrary referring to Hadi Poernomo, the Head of BPK, this initiative should be expanded to
a broader scope, namely to establish an information exchange infrastructure and build the
national data center. As he said:
3
Source: http://bit.ly/1ctLic0
3
"... The national data center consists of two major parts, namely the public financial
and private financial data. If national data center exists, monitoring could be
strengthened ... "4
As of December 2013, e-Audit has covered 749 auditees consisting of 524 local
governments (provincial/district) and 90 ministries/agencies, and also 177 office of state
treasury (Directorate General of Treasury as part of MoF). Thus, e-Audit system-application
with its configuration and specific mechanisms will retrieve data from its client either at the
Database Management System (DBMS)-level or file-system level. The captured-data then
transferred to the BPK’s data-center through a data communication channel (i.e. internet).
Later, this data will be analysed by auditors as entry points to generate audit reports.
Technically speaking, the transfer of captured-data from auditees’ network to the BPK’s data
center could simply be done by installed specific software (referred to as "consolidationagents", a common terminology used in the ICT dicipline for this is daemons or services) in
the auditees’ hardware (computer network). Figure 1 illustrates an e-Audit technical
configuration as well as how the stream of data from the auditees’ computer network to the
BPK’s computing platform and then accessed and used by the auditors.
Further, are there any links between the information gaps reduction or information exchange
in the term of financial stability, on one side, and SNSI/e-Audit initiated by BPK on the other
side? From authors’ point of view ─ yes, there are. How JSX cancel the impmentation of
XBRL-based e-reporting mechanism. Likewise, debate on how information management in
the term of banking supervision should be conducted by OJK given that this new authority
has not had adequate resources (i.e. human resource, hardware, software, operating
procedures). Not to mention other problems OJK faced: how to supervise the capital markets
or other financial service providers5. Those are potential discrepancies between the
technical-technological and the institutional arrangements aspects. Meanwhile, BPK’s
SNSI/e-Audit is relatively smooth to hold more than 800 entities to join their information
exchange infrastructure. Hence, BPK’s approaches in this context have a enormous
potential to be adopted by the financial system stability stakeholders to establish their(own)
information exchange infrastructure. That is to say, all situation described above indicate the
need of proper institutional arrangement in connection with how FKSSK’s managed to
establish an integrated information exchange mechanism.
Based on above description, the research question of this paper is to investigate how to
make a proper institutional arrangements of information exchange for financial stability
purposes by comparing it that of BPK’s SNSI/e-Audit initative. Furthermore, this study seeks
to elaborate whether SNSI information exchange mechanism could be used as merely a
benchmark model or even has its potential become part of FKSSK's information mechanism
exchange.
This study adpots qualitative-interpretive approach and will combine both institutional theory
and socio-technical-system theory as its conceptual framework. This combination was
chosen to comprehend how an implementation of the system-standard-technology (in this
context is SNSI as an ICT-based information exchange mechanism) as a social artifact.
Consequently, this study focuses on its institutional context. This context mainly relates with
how process of designing an appropriate institutional arrangements to support systemstandards-technology in imlementing information exchange infrastructure for financial
stability purposes. The reason of using the institutisonal arrangements perspective in this
case is motivated by how any institutional layers can be easily identified and intertwined in a
4
Source: http://www.bpk.go.id/news/bpk-gagas-pusat-data-nasional . Translated by authors.
See for example: http://www.infobanknews.com/2013/07/soal-laporan-bank-dpr-berang-bi-tawar-undangundang/
5
4
e- AUDIT INFRASTRUCTURE
Core Database
Consolidator-Agent
INTRANET
BPK Representative Offices
Database & Filesystems
MAK
CAMPUS LAN
E-Audit
Portal
Secure Access
INTERNET
Auditors
Auditors
Ministries
Entity’s Users
AK
ConsolidatorAgent
ConsolidatorAgent
Filesystems
Database
Local Governments
State-Owned Enterprises
Data Sources
Data Sources
Figure 1. BPK’s e-Audit Infrastructure (source: BPK)
5
social structure. Having said that, this research will therefore discuss what kind of
institutional arrangements should be developed in this context (Ropohl, 1999; Williamson,
2000; Orlikowski and Barley, 2001; Avgerou, 2003; Eason, 2008; Eaton et al., 2008;
Hassan and Gil-Garcia, 2008; Briggs and Brooks, 2011; Bunel and Lescop, 2013).
This study utilised interpretive policy analysis (IPA) described by Glynos et al (2009) as data
analysis method. Authors argue this method will help to delve into detail such related policy
and involved-social-structure in establishment of information exchange mechanism for
financial stability purposes. IPA method allows researchers to articulate well-founded
interpretations of policymaking that presume the judgements and values of the researcher
are involved, and not to produce objective facts or causal explanations (Walsham, 2006;
Glynos et al., 2009).
The remainder of the paper is structured as follows. The second section presents
relationship between information gaps and financial stability. Third section discusses
institutional arrangements in the context of information exchange practices. Then, all
discussions concluded in the fourth section.
2. Information Gaps and Financial Stability
Schinasi (2007) describes the financial stability as a mechanism to prevent financial problem
into a systemic thing that threatens the economic system but also must keep the economy's
ability to grow and carry out its main functions. Meanwhile, FSI (2007) suggests that financial
stability is a situation in which the financial system operates efficiently and is able to
withstand relatively large shocks in economics and finance. According to Duisenberg, as
cited by Oosterloo and Haan (2004), although there is no single definition towards financial
stability term, at least there is a consensus that a stable financial system is a situation that
allows all the major elements of the system to work well.
Regarding this, Gunadi (2011) emphasised that public have their rights to know the condition
of financial system stability and the whole economics environment. This is also a part of the
the financial system authorities accountability. Communication and information is also
important to increase public confidence towards stability of the existing financial system.
Gunadi (2011) further said that in some cases, the prevailing condition of information
exchange to support communication and information purposes still face some obstacles:
“... There are also information sharing and data exchange problems among financial
authorities. These conditions create additional challenges for macroprudential
surveillance. Furthermore, the high possibility of undetectable potential risks and
imbalances in the financial system makes the tasks even more challenging and difficult
...”
Burgi-Schmelz et al (2010) reveal that one of the important learned lessons of the global
financial crisis, back in 2008, was there are needs for all elements of the financial system to
have sufficient information and available on timely basis, as a tool to evaluate sorts of
potential instability. Furthermore Oosterloo and Haan (2004) also outlines that one of the
preconditions for financial stability is to provide sufficient information as a decision making
tool on each element of the financial system. This is in line with what has been emphasised
by Nasution (2003) and Houben et al (2004) that one of the causes of financial instability is
information asymmetry. This information asymmetry condition has an inclination to
encourage the actors of such financial system (or economy in general) to take moral hazards
or adverse selection action which are to some extents will trigger instability in the financial
system (Crockett, 1997; Nasution, 2003; Deliarnov, 2006; Schinasi, 2007)
6
Satria et al. (2012) explicates that the global financial crisis in 2008 then led to underline the
term of macroprudential and microprudensial analysis. Both of these terms actually are not
two separate concepts in a discrete manner, but better be viewed as a continuum so the
analysis would be intertwined between two of these things. According to Gunadi (2011) and
also Deriantino (2011), information needs in macro- and micro- prudensial prudential, are
slightly different. Refer to Brio in Satria et al. (2012) macropudensial analysis needs of topdown information, while micropudensial analysis is bottom-up information. Gunadi (2011)
employed two diffrent terms to distinguish this analysis: macroprudential-surveillance and
microprudential-supervision. Both of these terms are categorical in nature, to distinguish the
level and purpose of each type of analysis. The consequence of this difference is the
different data resources to be used for analysis. For macroprudential surveillance purposes,
required data are more related to the detection and identification of potential vulnerabilities
and risks associated with the financial markets, financial institutions, or the structure of the
overall economy. Meanwhile, int the microprudensial analytical side are more likely to use
the data obtained from systems such as Real Time Gross Settlement (RTGS), Debtor
Information System (“Sistem Informasi Debitor”), or government liquidity monitoring system
(“BIG-eB” system) (BI, 2008; Gunadi, 2011; Deriantino, 2011).
Up to this point, the authors concluded that the information is necessary in achieving
financial stability, but at the same time there are also information gaps. How to reduce or
eliminate the gaps? Research by Murphy and Westwood (2010) suggest that the British
government should invite various stakeholders (including the Bank of England) to reorganize
how institutional arrangements should be appropriately established in the process of
collecting a variety of information management in the context of financial stability.
Information gaps can occur even on information that is essential to make the party that
should be enough information users need to find yourself a such information. Sulistiowaty
and Nopianti (2010), for example, illustrate that BI should do:
“... more progressive statistics data and information than that issued by official
institutions. Since the official economics data are not available to be used as supporting
data immediately, BI conducts some surveys on a regular or ad hoc basis as a source of
supplementary information on macro or micro economic conditions to obtain early
indicators respecting national economic movements earlier than official data ...”
This constellation seems to push IMF and FSB (2010) to state that:
“ ... Closing all the gaps will take time and resources, and will require coordination at
the international level and across disciplines, as well as strong high-level support. The
legal framework for data collection might need to be strengthened in some economies ...”
To cope with these information gaps issues, IMF and FSB (2013) explore the possibilities of
an increased connectedness between various financial organizations, including among
supervisory agencies. This measure obviously must consider the legal issues and data
confidentiality as well as institutional arrangements between involved institutions, including
the supervisory agencies.
The question then arises is how to develop an information exchange mechanism in
accordance with the various conditions (technology, organisation structure, legal aspetcs) in
each component of the financial system? Based on above described facts as well as
previous research results, the answer to this question can be seen from two sides, the
practical-operational technology and institutional arrangements. The practical aspect of
information exchange would involve various stakeholders, either as the senders or receivers
of exchanged information. At this time, mostly all of the information exchange mechanism
takes place with the use of information and communication technology (ICT) supports.
Hence, the information exchange in this case is not merely seen as a matter of technology
alone, but must also be seen from the institutional-organizational perspectives (Ropohl,
1999; Kling, 1999; Orlikowski and Barley, 2001; Avgerou, 2003; Briggs and Brooks, 2011).
7
3. Institutional Arrangements in Information Exchange Practices
In economics the concept of institutions, Williamson (2000) as also cited by Bunel and
Lescop (2013) revealed the presence of four levels of institutions, namely: (1) an informal
institution, such as moral values, local customs; (2) institutional environment, such as: legal,
formal political organizations; (3) institutional arrangements, such as: the relationship
between institutional governance; (4) resource allocation, price, insetives-disincentives, are
dynamic and change over time, such as: the behavior of the agents, margin and pricing,
allocation of resources. Somewhat different, Fountain (2001) defines institutional
arrangements as laws, regulations, and other cultural cognitive, or socio-structural
constraints found in governance contexts. Meanwhile, Yustika (2010), identified the term
institutional environment and institutional arrangements. Macro-approach (institutional
environment) is an enabling environment, concentrating on the preparation of the legal
framework, economic, and political policies that produced that can answer your targeted
goals. At the micro level (institutional arrangements), this approach will design specific rules
of games to allow all economic actors to compete or collaborate in a fair way. Based on
some notions regarding the institutional arrangements, this paper will elaborate the
possibility of institutional arrangements that may be exist in the context of the relationship
between the information exchange for financial stability purposes and SNSI initiative as an
alternative-infrastructure information exchange. Hassan and Gil-Garcia (2008) suggest that
institutional arrangements are important elements for understanding how information
technologies (including information exchange) are selected, designed, implemented, and
used in public organizations.
Some researchers have used the concept of institutional arrangements as an analytical tool
for examining the application of the technology (i.e. ICT) as part of the particular public
policy (administration). Bunel and Lescop (2013), use institutional arrangements analysis
framework to describe how specifics ICT-application policy is designed and implemented.
Whereas Brigss and Brooks (2011) describe how the institutional arrangements play an
important role in the implementation of electronic (internet based) payment systems. Nejman
et al., (Nejman et al., 2010) in the context of the situation in Czech Republic, reveal the
importance of appropriate institutional arrangements to each different environment so that
the collection of data and statistics from the financial markets. Adequate institutional
arrangements needed to ensure data qualitaty, to reduce the workload on the each unit
which have an exchange information obligation, and to streamline the whole needed
resources.
In the Indonesian context, from sectoral perspective, various authorities/organizations in the
field of private or public financial management had their experiences in term of how to set up
an appropriate institutional arrangements which involved an ICT-based application systems.
A recent study by Darono (2013) outlined how institutional arrangements affect the
implementation aspects of data exchange in the field of tax administration application,
electronic tax payments, and electronic tax filing. Also, an official report published by BI
(2012), explained how the institutional arrangement capable of pushing interconnection
(which is basically an information exchange mechanism) between BCA and Bank Mandiri as
the two largest payment provider in Indonesia became available. Consequently, this
measure in turn have made national payment network become wider. Table 2 displays some
institutional arrangements related to financial information exchange initiatives
(electronically/ICT-based) among different entities as information providers.
8
Table 2. Information Exchange Applications for Financial Information
Information Exchange
Involved Entities
Purposes
Applications as
Institutions
State Revenues Module
(“Modul Penerimaan Negara”/
“MPN”)
Bank Indonesia-Real Time
Gross Settlements (BI-RTGS)
Indonesia National Single
Window (INSW)
BIG-eB
State Revenue Authority, State
Treasurer, Banking Insitutions
Jakarta Auto mated Trading
Systems (JATS)
Stock Exchange Authority,
Broker, Investor, Clearings &
Settlements Authority
Initiated by Bank Indonesia,
especially “to force” integration
between BCA and Bank Mandiri
as two major payment providers
National Payment Gateway
Bank Indonesia, Banking
Insitutions
Customs Authority, Ports
Authority, Banking Insitutions
Ministry of Finance, Bank
Indonesia, Banking Insitutions
Information exchange for tax
state revenues (taxes, import’s
duties, excises, etc.)
Information exchange for
interbanks transation
Information exchange for
import/export transaction
Information exchange for
government fund transfer and
liquidity
Information exchange for all
financial-products traded at
Indonesia Stocks Exchange
Information exchange for
payment or other financial
transaction,
Source: data gathered by authors
Referring to the cancellation of the implementation of XBRL-based e-reporting for listed
companies, this indicated problems need to be addressed in relation to the institutional
arrangement for the financial information exchange. If listed-companies along with capital
market operators are still reluctant to apply information exchange mechanism with
international data standards, therefore the implementation process among financial services
companies, given that they have lower qualification or scale , is questionable. To overcome
this condition, in authors view, it is neccesary for financial stability stakeholders try to take
different perspectives. In the context of either existing technical-technological or institutional
arrangements, it is better for financial stability to pay more attentions on what has been
achieved by the BPK with its SNSI/e-Audit. This initiative can be viewed as an alternative
mechanism for the stakeholders of financial stability. In our deeper analyses, this e-Audit
system-application has developed its information gathering structure (not yet for information
exchange, because in its nature this application only captured information from auditee in a
one-way direction) with various parties (auditee and some other informasi sources, such as
airline company) in a simple data communication setting, involving a huge amount of data,
and using reliable data transfer performance.
There are some arguments to consider both technical aspects and institutional arrangement
of e-Audit mechanism an alternative information exchange infrastructure in terms of financial
stability purposes, namely: (1) data source in remote sites can be either a database/DBMS
(as long as featured with Java Database Connectivity/JDBC) or file systems (e.g. Microsoft
Excel file); (2) internet-based communications network, without specifics/dedicated data
communication network (such as leased-line); (3) RSA-standard’s encrypted data; (4)
maintenance-free application, particularly for remote sites, since all patches/softwareupdates/configuration are performed by BPK’s technical staffs. Having said that, this
configuration actually accords with the requirements of the desired information exchange
mechanism as explicitly stated in OJK Law which affirmed in Explanation of Article 43:
“... principally OJK shall build, maintain and develop the integrated information system in
accordance with the duties and authorities. What is meant by "integrated" is that a
system built by the OJK, Bank Indonesia, and the Deposit Insurance Corporation are
connected to each other, so that each institution can exchange information and to
access banking information required at any time (timely basis). This information covers
general and specific information about the bank, the bank's financial statements, bank
9
examination report conducted by Bank Indonesia, the Deposit Insurance Corporation or
by OJK, and other information while maintaining confidentiality and consider the
information in accordance with the provisions of the legislation .. . “6
Daeng M. Nazier, Deputy of the Head of BPK in Planning and Development, explained that
the e-audit as a service application is still being developed and is expected to fully operated
in 2014 (BPK, 2011). BPK’s Warta BPK (2011) revealed that:
“ ... The foundation built by incorporating the implementation of e - audit in BPK Strategic
Plan 2011-201. Furthermore, an important part of the BPK Strategic Plan Implementation
Plan. And, are automatically included in the plan BPK Bureaucracy Reform. To that end,
in order to become stronger foundation, BPK perform some steps into the corridor
bureaucratic reforms to strengthen the implementation of e-audit. The steps are
performed that includes the arrangement of legislation, governance, organizational
management, human resource management. After the stage of development of this
foundation has an early form, performed the test phase application through pilot project.
In consideration of the readiness of the parties or the examined BPK’s auditee, CPC
participation in the labor force, and the readiness of the CPC inspectors in carrying out
this e-audit. Readiness associated with the auditee, the CPC took them through the
signing of a memorandum of understanding on the development of information systems
for data access . BPK still going to do it again until all the auditee to sign MoU ... "
Some critics raise towards the implementation of e-Audit, both againts its performance, data
privacy and institutional arrangments over the e-Audit itself. Praseno (2012) emphasised that
from the perspective of the auditors and auditing dicipline, e-Audit: (1) just another way to
digitize documents; (2) tend to focus data collection without further elaborating the internal
audit capacity of each auditee. Over this situation, this study not only see the effectiveness
of e-Audit through the whole (government’s financial statement) audit process, but more on
function of this effort as a mechanism for collecting (financial) information. This point of view
is needed to improve (financial) information collection infrastructure in Indonesia.
So, what kind of institutional arrangements are appropriate to support the information
exchange for financial stability purposes in Indonesia? This paper does not attempt to give a
final answer, but more on thrusting an alternative institutional arrangements which, if
desired, can be discussed further at the operational levels, among the members of FKSSK.
As mentioned earlier, the information exchange in the current era should be read as ICTbased information exchange. Therefore, further discussion on the choice of the proposed
institutional arrangements are influenced by a variety of concepts , experiences or practices
which involve the use of ICT in various forms and levels. Based on the various policies that
have been there for this and the fact findings of the study, this paper with reference to
Williamson (Williamson, 2000) and Bunel and Lescop (2013), put forward a perspective of
institutional arrangements for data exchange as part of the financial stability purposes, as
illustrated in Figure 2.
6
Translated by authors
10
Embeddedness: informal; customs,
traditions, norms, religion
Financial stability to achieve
sustainable economic growth
Institutional environment:
formal rules of he games
t
esp. - (property (polity, 1st order
judiciary, economizing bureaucracy
Financial institution, bank
stock exchange (i,e: BI Law,
OJK Law, LPS Law, Public
Finance Law)
Governance : play of the game esp. contract , governance 2nd order
judiciary, aligning structures
transactions
Resource allocation and
employment: prices and quantities,
incentive alignment
MoU BI-OJK-LPS-MoF
RTGS, DIS, Listed
Companies’ e-Reporting,
National Payment Gateway
BPK’s SNSI initiative
(National Data Center,
e-Audit)
BPK-Auditee MoU, data
privacy, information
exchange protocols,
service level
agreements
Figure 2. BPK’s e-Audit as an Alternative Information Exchange Infrastructure for
Financial Stability and its (proposed) Institutional Arrangements
(adapted from Williamson (2000) and Bunel and Lescop (2013) )
Referring to the response of the members of FKSSK on the results of the assessment of
financial stability by IMF (2010) and FSB (FSB, 2013) concerning how they exchanged
information between them, have explained that there was a change in the way they
exchange information. They decided to establish MoU among each member of FKSSK. The
problem is, as far authors known, this agreement has not become an institutional
arrangement as Williamson (2000) emphasised. In this concept, institution at the level of 3-4
(see Figure 2), should form an operational framework as a means to an end. In this case,
namely information exchange as ruled by institutions at level 2 (i.e. Article 43 OJK Law). In
this constellation, SNSI/e-Audit is gaining its momentum to be seen as an alternative
information exchange infrastructure, especially for the financial stability purposes. It is
actually also in line with the earlier idea of SNSI initiative as way to eastablish the national
data center. Furthermore, why SNSI/e-Audit is chosen as an alternative? Because, this
system-application supported by relatively more appropriate institutional arrangements. In
authors perspective, e-Audit as institution at level 3, is already supported by information
exchange MoU between the BPK as auditor (information user) and auditees as data owner,
one which includes the matters related to information privacy and confidentiality issues.
Finally, at level 4, it can be found that e-Audit already has its: (1) standard data exchange
with appropriate mechanisms in term of using relational database or file system as data
sources; (2) procedures for accessing or utilizing the data. All of this propositions reveal that
e-Audit relatively has proper institutional arrangements.
11
4. Conclusion
This study found that information gathering mechanisms/infrastructures have been
developed by the BPK through its e-Audit approach (as a part of BPK’s SNSI initiative), to
some extents, should be viewed as an alternative information gathering/exchange
mechanisms which can be used by financial stability management stakeholders to reduce
the information gaps and in turn support the exchange of information to carry out the
FKSSK’s coordination function. In the context of institutional arrangment in Indonesia, the
authors found that the advantages of using a data consolidation mechanism through e-Audit
are: (1) BPK has the authority to request data to many agencies, based on the BPK's
authority legal position as state auditor; (2) BPK has developed an ICT-based information
gathering that satisfies the institutional arrangements in terms of public finance system in
Indonesia. It means that to some extents the FKSSK’s information exchange mechanism
better to consider of using BPK’s e-Audit infrastructure; (3) Especially related to the OJK’s
function, technically speaking, e-Audit’s technology and model of information gathering can
be implemented to capture data from many types of non-bank financial institutions since
from technological perspective such institutions still have not sufficient information
management capacity to provide reports by using an application or data standardization
approach.
There are things should be explored further with regard to the position of BPK in this
institutional arrangment. This circumstance seems to pose BPK (as state auditor) become a
part of day-to-day public finance management. BPK possesses the authority to conduct
examination of financial management, so it might just be a potential debate on why the
supervisory authorities are also be involved in the management process. In the authors’
view, that opinion may arise, but also will easily be broken with a broader interpretation of
the definition of what the financial supervision is. It can also be assumed that the
implementation of e-Audit is a continuous online auditing techniques. Thus, by using the
institutional arrangements perpective, the authors concluded that the use of BPK’s e-Audit
as data consolidation mechanism with the aim of reducing the financial information gaps and
supports coordination functions for the benefit of financial stability, remains feasible to be
implemented. The consequence of this choice is how to establish a legal framework as a
form of governance concerning the use of collected information in BPK’s data center. This
should be emphasised, because the nature of the information gathering through e-Audit
scheme (or SNSI inititative) are for financial audit purposes conducted by BPK. Therefore,
the use of collected data outside of initial purposes such as data for supporting information
exchange mechanism for coordination functions of FKSSK to achieve stability of financial
system requires adequate more formal legal frameworks.
Acknowledgment
Authors would like to thank to the commitee of conference for providing financial assistance
to attend the conference, Dr. Rochmadi Saptogiri (Head of IT Bureau, Supreme Audit
Board), Mr. Agus Hermanto (Secretary of Finance Education and Training Agency, Ministry
of Finance) and his staffs for providing administrative supports, and Mr. Arifin Rosid
(University of New South Wales, Sydney) for helps and comments.
12
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