Effectiveness of Public Sector Audit Reports in
Indonesia
(Preceding and Following Audit Reform)
By
Septiana Dwiputrianti
The Thesis Submitted for the Degree of Doctor of Philosophy
Crawford School of Economics and Government
College of Asia and the Pacific
Canberra, Australia
March, 2011
Statement of Originality
This thesis is duly my own work and it contains no material which has
previously been accepted in the award of any other degree in any other university.
The thesis contains no material written by any other person, except where due
reference is made in the text.
Septiana Dwiputrianti
March 2011
i
Publications
Journals:
Dwiputrianti, S 2011 (Submitted on March), ’How Effective is the Indonesian
External Public Sector Auditing Reports Before and After the Audit Reform for
Enhancing the Performance of Public Adminsitration?’, The International Review of
Public Administration (IRPA), the Korean Association for Public Administration
(KAPA) (ISSN 12294659).
Dwiputrianti, S 2011, ‘Inequality of Resources for Future Perspective of Indonesia’s
Fiscal Transparency and Public Accountability’, Journal of Administration and
Development, Special Edition, January (ISSN 1410-5101).
Dwiputrianti, S 2011, ‘Analyzing the Reforms of Performance Auditing to Achieve
Public Accountability and Transparency in the Indonesian Public
Administration’,Journal of Administration and Development, Special Edition,
January (ISSN 1410-5101).
Dwiputrianti, S 2009, ‘Understanding Indonesia’s Corruption Eradication Strategy’,
Journal of Administrative Sciences, Vol 6, No. 3, (ISSN 1829-8974).
Dwiputrianti, S 2008, ‘Effectiveness of Audit Reports in Establishing the Fiscal
Transparency and Acountability Public Sector in Indonesia (Post Reformation 20012008)’, Journal of Administrative Sciences, Vol. 5, No. 4, 2008 (ISSN 1829-8974).
Dwiputrianti, S 2004, ‘Good Governance in Supporting Public Services and Social
Economic Development of Nations to Increase the National Tourism Sector’, Journal
of Tourism, School of Economics and Tourism,Yapari Aktripa, Vol. 5, No. 1, (ISSN
1411-3236).
Book Chapters:
Dwiputrianti, S 2009, ‘The Concept of Weber’s Bureucracy and Practice of
Bureuacracy in Indonesia: Actualization Concept of Max Weber Bureaucracy’, in
‘Response to Challenges Bureaucracy Reform in Indonesia’, School of Public
Administration-National Institute of Public Administration (STIA LAN) Bandung
Press, Bandung (ISBN 978-979-97385-3-0)..
Dwiputrianti, S 2009, ‘Understanding External Government Auditing in Indonesia’, in
‘Capita Selekta of Indonesian Economics’, Prenada Media Group-Kencana Press,
Jakarta(ISBN 978-979-1486-59-0).
Conferences (Papers Presented):
Dwiputrianti, S 2011 (Accepted and will be presented on 31stMay – 3rd June ), ‘Role
of Indonesian Supreme Audit Institution (BPK) in Financial Transparency and
Performance Accountability’, in Innaugural International Workshop for Young
Scholars in Public Policy and Administration Researchin Xiamen, China, organised by
the Asian Society for Institutional Analysis (ASIASIA), the American Society for
Public Administration (ASPA) and Xiamen Unviersity.
Dwiputrianti, S 2011, ‘How Effective is the Indonesian External Public Sector
Auditing Reports before and after the Audit Reform for Enhancing the
ii
Performance of Public Administration?’, in Plenary Session of the First
International Conference in Public Organisation (ICONPO), 21st-22nd January,
Muhammadyah University, Yogjakarta, Indonesia, (Published in Conference
Proceedings, ISBN 979-1707-99-5).
Dwiputrianti, S 2010,‘Inequality of Resources for Future Perspective of
Indonesia’s Fiscal Transparency and Public Accountability’, International
Association of Schools and Institutes of Administration (IASIA) Conference, 12th-17th
July, Nusa Dua-Bali, Indonesia.
Dwiputrianti, S 2010,‘Analyzing the Reforms of Performance Auditing to Achieve
Public Accountability and Transparency in the Indonesian Public
Administration’, International Institute of Administrative Sciences (IIAS)
Conference 12th-17th July, Nusa Dua-Bali, Indonesia.
Dwiputrianti, S 2010, ‘Analysis of Financial Auditing Reform to Improve
Transparency and Accountability in Public Sector’, Public Administration National
Conference III, 6th-8th July, University of Padjadjaran, Jatinangor, Indonesia..
Dwiputrianti, S 2007, ‘The State Audit Policy for Effective Government Auditing to
Enhance Transparency and Public Accountability in Indonesia’, 8th APRU Doctoral
Conference, 30th August, Conference Proceedings (digital), Keio University, Tokyo,
Japan.
iii
Acknowledgements
Firstly, I would like to thank my main supervisor, Professor Richard Mulgan. I
do not have enough words to express my gratitude for his continuous support and
encouragement during my work on this thesis. I owe him deep gratitude for giving me
encouraging comments and continuous guidance during my thesis writing, and
insightful feedback on the drafts. He also showed great patience and forbearance in
regard to my family and study matters. My sincere thanks also go to my second
supervisor, Dr. Sharon Bessell, and my adviser, Pat Barrett, MD, for their genuine
support, important inputs and comments.
My grateful appreciation goes to my family; Achmad Haris, my husband;
Hana Eka Hidayati and Hasna Ghina Ishmahyati, my beautiful daughters; and to
Harsa Ilman Prakoso, my brave son; for their love, patience and support. My special
thanks go to my parents for their continuing prayers for the completion of my study,
and for taking care of my baby Hasna while I did fieldwork.
This research was made possible by a scholarship provided by the Australian
Agency for International Development (AusAID). I appreciate the efforts of Billie
Headon as the AusAID Liason Officer at Crawford School. My grateful thanks also
go to all academic and administrative staff at Crawford School and to all the
Australian-Indonesian community who always gave me support to complete this
thesis and to help my family and I during my study in Canberra. I wish you all the
best and may God bless us all.
iv
Abstract
This research aims to enrich the existing literature on public administration,
public accountability and public sector auditing. The research was undertaken
through a comprehensive examination of the quality of information in the audit
reports of the Indonesian State Audit Institution (Badan Pemeriksa Keuangan or BPK)
with comparisons made between pre audit reform (1945-2000) and post audit
reform (2001-2009). The study also evaluates the factors influencing the
effectiveness and ineffectiveness of BPK audit information. To achieve these
purposes, two main research questions were the focus of the study: How is the
quality of information in BPK audit reports before and after audit reform? What are
the key factors influencing the effectiveness and ineffectiveness of information in
BPK audit reports?
Data were collected through triangulation of observations, documentation,
questionnaires and personal interviews. Purposive sampling and snowball
techniques were applied in this study. The respondents and key informants engaged
in this study were:(i) BPK auditors, Board members and managers;(ii) members of
both central and regional Parliaments;(iii) public sector officials (auditees) at both
the central and local level; and (iv)academics, researchers, and non government
organisations (NGO).
The study revealed that the Indonesia’s Executive (the President, Governors,
Regents and Mayors)has historically neglected the roles and functions of BPK. Since
the third amendment of the 1945 Constitution in 2001, the Indonesian government
has reformed laws and regulations related to public sector auditing, including setting
new rules for strengthening and improving BPK’s roles and functions. In situation
where the Indonesian government needs immediate reform, BPK has been
attempting to improve its professionalism and independence to provide better
quality audit reports.
Independence, professionalism and integrity are among the most important
factors that influence public sector audits. However, in the past, BPK auditors lacked
independence as the Executive influenced its administration and finances.Auditors
also lackedopportunities to increase their professionalism by undertaking additional
education and training. Since there was little incentive for auditors not to accept
audit fees from auditees, the objectivity and integrity of auditors were reduced
significantly.
Fortunately, in response to the audit reform in 2001, the roles and functions
of BPK have been strengthened. BPK has been able to give much more attention to
education, training and the development of other skills and knowledge. BPK has also
implemented improved remuneration and applied a rewards and sanctions system
to strengthen auditor professionalism and integrity. This study revealed a significant
improvement in the quantity and quality of BPK’s audit resources, including
increases in the number of qualified auditors, representative offices, modern
v
equipment, and in the use of Information Technology (IT). However, the
improvement inaudit resources have not quite matched with the increasing number
of auditees and the authority given to the BPK. In terms of the quality of auditors,
BPK has many new auditors, but they lack experience. To execute performance
audits, BPK requires more auditors with diverse educational backgrounds in addition
to accounting and finance.
The research also showed that many factors have impeded the ‘followup’on
information and recommendations in BPK audit reports.For example, Parliament’s
lack of willingness to politically oversee the Executive, insufficient serious ‘buy-in’ by
government to implement audit recommendations, and an unintegrated approach
by authorised investigators to follow up on audit findings that indicate criminality
and corruption. To what degree these factors influence the ineffectiveness of public
sector auditsremains an open question and an areafor further research.
It is clear from the research that there is further space for improvement of
BPK’s functions to enhance the quality of public administration and accountability.
Towards this, the study suggests recommendations to the BPK relating to four
different aspects, namely: legal basis, institutional and resources, effectiveness of
audit reports, human resources development.
vi
Table of Contents
PUBLICATIONS ......................................................................................................................... II
ACKNOWLEDGEMENTS ........................................................................................................ IV
ABSTRACT .................................................................................................................................. V
TABLE OF CONTENTS .......................................................................................................... VII
LIST OF TABLES ...................................................................................................................... XI
LIST OF FIGURES .................................................................................................................XIII
LIST OF ACRONYMS, ABBREVIATIONS AND GLOSSARY ......................................... XV
CHAPTER 1
STATEMENT AND RATIONALE FOR THE RESEARCH ON THE
INDONESIAN PUBLIC SECTOR AUDITING......................................................................... 1
1.1 DEFINING PUBLIC SECTOR AUDIT .....................................................................................1
1.1.1 Financial (and Compliance) Auditing ............................................................................1
1.1.2 Performance Auditing ....................................................................................................3
1.1.3 Difference between Financial and Performance Audits.................................................5
1.2 DEVELOPMENT OF PUBLIC SECTOR AUDITING AND ACCOUNTABILITY ............................7
1.3 THE IMPORTANCE OF PUBLIC SECTOR AUDITING..............................................................9
1.3.1 The Role of Auditing in Public Accountability ...............................................................9
1.3.2 Audit for Effectiveness and Efficiencyin Public Administration...................................11
1.3.3 Auditing for Good Governance ....................................................................................12
1.4 STATEMENT OF RESEARCH PROBLEM ..............................................................................13
1.5 SIGNIFICANCE AND OBJECTIVES OF THE STUDY ..............................................................16
1.6 RESEARCH QUESTIONS ....................................................................................................17
1.7 RESEARCH DESIGN AND METHOD ...................................................................................17
1.8 LIMITATIONS OF THE STUDY ............................................................................................22
1.9 STRUCTURE OF THE THESIS..............................................................................................23
CHAPTER 2
LITERATURE REVIEW ON CRITERIA AND FACTORS FOR
QUALITY OF INFORMATION IN PUBLIC SECTOR AUDIT REPORTS ...................... 25
2.1 THE QUALITY OF INFORMATION IN PUBLIC SECTOR AUDIT REPORTS ............................26
2.1.1 The Content of Information in the Audit Reports .........................................................26
Scope and Objectives of Auditing ..................................................................................................................... 26
Access for Reliable Audit Evidence .................................................................................................................. 30
Objectivity and Credibility of Information ........................................................................................................ 31
2.1.2 Communication of Information in Audit Reports .........................................................32
Understandable Information with Precise and Informative Formatting ............................................................. 33
Timely Reporting of Information ....................................................................................................................... 34
2.1.3 Acting on Information in Audit Reports .......................................................................35
Publication of Audit Reports ............................................................................................................................. 35
Realistic Audit Recommendations ..................................................................................................................... 37
Followup of Audit Report Findings and Recommendations .............................................................................. 38
2.1.4 Summary .......................................................................................................................39
2.2 FACTORS INFLUENCING THE QUALITY OF INFORMATION IN AUDIT REPORTS ................42
2.2.1 Factors Influencing Content and Communication of Information ...............................43
Independence of Audit Institution and Auditors ................................................................................................ 43
The Importance of an Audit Institution and Auditor‘s Independence ............................................................ 44
vii
Aspects of Audit Independence ..................................................................................................................... 47
Integrity and Professionalism of Auditors ......................................................................................................... 54
Professionalism and Audit Standards ............................................................................................................ 55
Auditors‘ Proficiency and Experience ........................................................................................................... 56
Internal and External Quality Assurance ........................................................................................................... 60
Resources of the Audit Institution ..................................................................................................................... 61
Budget and Human Resources ....................................................................................................................... 62
Offices and Information Technology (IT) Resources .................................................................................... 62
2.2.2 Factors Influencing Acting on Information ..................................................................64
2.3
Political Support from the Legislative ............................................................................................................... 65
Support from the Executive ............................................................................................................................... 67
Law Enforcement Support ................................................................................................................................. 69
Public and Media Support .................................................................................................................................. 71
ANALYTICAL FRAMEWORK OF REPORTING INFORMATION IN PUBLIC SECTOR AUDITING
73
CHAPTER 3
THE HISTORICAL DEVELOPMENT OF INDONESIAN PUBLIC
SECTOR AUDITING (FROM THE DUTCH COLONIAL PERIOD TO THE
REFORMATION ERA) ............................................................................................................. 75
3.1 PUBLIC SECTOR AUDITING FROM THE DUTCH COLONIAL PERIOD TO THE OLD ORDER
(1945-1965) ................................................................................................................................75
3.2 BPK UNDER THE NEW ORDER ERA (1966-1998) .............................................................80
3.3 AUDIT REFORM UNDER THE REFORMATION ERA (1999-PRESENT) .................................83
3.3.1 Policies in Accountancy and Auditing for Transparency and Accountability ..............85
Law of Audit (2004) and Law on BPK (2006) .................................................................................................. 87
Regulation on State Finances Audit Standards and Code of Conducts (2007) ................................................... 88
3.3.2 Reforming Audit Institutions in Indonesia ....................................................................91
3.4
Limited and Duplicated BPK Functions Pre Audit Reform (2001).................................................................... 91
Organisational Change of BPK .......................................................................................................................... 94
CONCLUSION ....................................................................................................................95
CHAPTER 4
QUALITY OF BPK REPORTS: CONTENT OF INFORMATION ....... 99
4.1 SCOPE OF AUDIT ..............................................................................................................99
4.1.1 Legal Basis for Audit Scope of BPK ...........................................................................100
4.1.2 Comparing Different Audit Scopes of BPK before and after Reform .........................102
Scope of Audit before Audit Reform ............................................................................................................... 102
BPK Financial AuditingAfter Reform ............................................................................................................. 104
Scope of Financial and Compliance Auditing .................................................................................................. 107
Scope of Performance and Specific Purposes Audits after Audit Reform ....................................................... 110
4.1.3 Survey Results and Comments on Scope of BPK........................................................118
4.2 RELIABILITY OF AUDIT EVIDENCE.................................................................................125
4.2.1 Laws and Regulations as the Basis of Strong Audit Evidence ...................................125
4.2.2 Survey Results and Comments on Strong Audit Evidence ..........................................127
4.3 OBJECTIVITY AND CREDIBILITY OF AUDIT REPORT INFORMATION ..............................131
4.3.1 Regulations and Rules for Objectivity and Credibility of Information.......................131
4.3.2 Survey Results and Comments on the Objectivity and Credibility of Audit Reports ..133
Positive Results and Comments ....................................................................................................................... 134
Negative Results and Comments ..................................................................................................................... 138
CHAPTER 5
QUALITY OF BPK REPORTS: COMMUNICATION OF AND ACTING
ON INFORMATION ................................................................................................................ 145
5.1 UNDERSTANDABLE INFORMATION ................................................................................145
5.1.1 Basic Rules for Clear and Understandable Reports ..................................................145
5.1.2 Survey Results and Comments on Clear and Understandable Reports ......................146
viii
5.2 PRECISE AND INFORMATIVE FORMATTING ....................................................................150
5.2.1 Basic Rules for Precise and Informative Audit Report Formatting ...........................150
5.2.2 Survey Results on Precise and Informative BPK Audit Report Formatting ...............151
5.3 TIMELY REPORTING .......................................................................................................154
5.3.1 Basic Laws and Rules on Timely Reporting of Information .......................................154
5.3.2 Survey Results on Timely Reporting ...........................................................................155
5.4 ACTING ON INFORMATION IN BPK REPORTS .................................................................158
5.4.1 Publication of Audit Reports ......................................................................................158
Laws and Regulations Related to the Publication of Audit reports .................................................................. 158
Publication of Audit Reports Pre and Post Audit Reform ................................................................................ 160
Publication in Corruption and Irregularity Cases ............................................................................................. 162
Survey Results and Comments on the Publication of Audit Reports ............................................................... 165
5.4.2 Realistic Audit Recommendations ..............................................................................171
Regulations and Rules for Realistic Audit Recommendations ......................................................................... 172
Survey Results on Realistic Audit Recommendations ..................................................................................... 172
5.4.3 Following up Audit Findings and Recommendations.................................................175
Laws and Regulations for Following up Audit Reports ................................................................................... 175
Followup on BPK Reports Before andAfter Audit Reform ............................................................................. 177
Survey Results and Comments on the Following up of BPK Reports ............................................................. 181
5.4.4 Conclusion on the Quality of Information in BPK Reports ........................................186
CHAPTER 6
FACTORS INFLUENCING THE CONTENT AND COMMUNICATION
OF INFORMATION IN BPK REPORTS .............................................................................. 193
6.1 INDEPENDENCE AND AUTONOMY OF AN AUDIT INSTITUTION.......................................193
6.1.1 The Independence of BPK ..........................................................................................194
The Independence of the BPK before the Reform ........................................................................................... 194
The Independence of BPK after Audit Reform ................................................................................................ 196
6.1.2 Independence in Budgeting ........................................................................................199
Independence in Budgeting Pre Audit Reform ................................................................................................ 199
Independence in Budgeting Post Audit Reform ............................................................................................... 200
6.1.3 Independence of Board Members and Auditors .........................................................203
Independence of the Board Members Pre and Post Audit Reform ................................................................... 203
Pre Audit Reform ........................................................................................................................................ 203
Post Audit Reform ....................................................................................................................................... 205
Independence of Auditors Pre and Post Audit Reform .................................................................................... 207
Pre Audit Reform ........................................................................................................................................ 207
Post Audit Reform ....................................................................................................................................... 208
6.1.4 Conclusion on BPK Independence .............................................................................214
6.2 INTEGRITY AND PROFESSIONALISM OF BPK MEMBERS AND AUDITORS ......................215
6.2.1 Legal Basis for BPK’s Integrity and Professionalism ................................................215
6.2.2 Professionalism and Integrity of BPK Pre Audit Reform ...........................................216
6.2.3 Professionalism and Integrity of BPK Post Audit Reform .........................................219
6.2.4 Survey Results and Comments on Professionalism and Integrity ..............................222
6.2.5 Conclusion of BPK Integrity and Professionalism .....................................................225
6.3 AUDITING RESOURCES OF BPK .....................................................................................226
6.3.1 Budget Resources .......................................................................................................227
6.3.2 Human Resources .......................................................................................................230
Organisational Reform ..................................................................................................................................... 231
Quantity and Quality of Personnel ................................................................................................................... 233
6.3.3
6.3.4
6.3.5
6.3.6
Training and EducationCentre ...................................................................................238
Information Technology and Modern Office Equipment Resources ..........................242
Office Resources .........................................................................................................245
Conclusion on BPK Resources ...................................................................................250
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CHAPTER 7
REPORTS
FACTORS INFLUENCING ACTING ON INFORMATION IN BPK
252
7.1 POLITICAL SUPPORT FROM THE LEGISLATURE ..............................................................252
7.1.1 BPK Reports and Parliament Pre and Post Audit Reform .........................................252
7.1.2 Communication and Agreement between BPK and the Legislature...........................253
7.1.3 Survey Results and Comments on Political Support from the Legislature .................263
7.1.4 Conclusion on Political Support from the Legislature ...............................................266
7.2 SUPPORT FROM THE EXECUTIVE ....................................................................................267
7.2.1 BPK Opinion and Findings on Public Sector Accountability ....................................268
7.2.2 Survey Results and Comments on Support from the Executive ..................................273
7.3 LAW ENFORCEMENT SUPPORT FROM AUTHORISED INVESTIGATORS ............................276
7.3.1 Mechanisms and Findings Indicating Corruption......................................................279
7.3.2 Survey Results and Comments on Support from Authorised Investigators ................284
7.4 PUBLIC AND MEDIA SUPPORT ........................................................................................288
7.4.1 Media and the Public to Disseminate BPK Reports ...................................................288
7.5 CONCLUSION ON FACTORS INFLUENCING PUBLIC SECTOR AUDITING IN INDONESIA...292
CHAPTER 8
CONCLUSIONS AND RECOMMENDATIONS .................................... 301
8.1 CONCLUSION OF THE INDONESIAN PUBLIC SECTOR AUDITING (BPK) BEFORE AND
AFTER AUDIT REFORM .............................................................................................................301
8.1.1 Content of BPK Audit Report Information .................................................................302
8.1.2 Communication of and Acting on Audit Report Information .....................................304
8.2 CONCLUSION OF FACTORS INFLUENCING INDONESIAN PUBLIC SECTOR AUDITING .....306
8.2.1 Independence and Autonomy of BPK .........................................................................306
8.2.2 Integrity and Professionalism of BPK Members and Auditors ..................................307
8.2.3 Auditing Resources of BPK ........................................................................................309
8.3 RECOMMENDATIONS ......................................................................................................317
8.3.1 Legal Basis Aspects ....................................................................................................317
8.3.2 Institutional and Resources Aspects ...........................................................................318
8.3.3 Effectiveness of Audit Reports Aspects .......................................................................319
8.3.4 Human ResourceDevelopment Aspects ......................................................................319
8.4 FURTHER RESEARCH ......................................................................................................320
LIST OF REFERENCES ......................................................................................................... 322
Appendix A: Questionnaires ............................................................................................................................ 352
Appendix B: List of Interviewees .................................................................................................................... 356
Appendix C: Comparison of BPK Before and After the Audit Reform ........................................................... 360
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List of Tables
TABLE 1-1 COMPARISON BETWEEN FINANCIAL AND PERFORMANCE AUDITS ................................ 6
TABLE 2-1 SUMMARY OF CRITERIA FOR THE QUALITY OF AUDIT INFORMATION AND
FACTORS INFLUENCING THE EFFECTIVENESS OF INFORMATION ................................. 25
TABLE 2-2 40
TABLE 2-3 DEFINITION OF FACTORS INFLUENCING THE EFFECTIVENESS OF INFORMATION IN
AUDIT REPORTS ............................................................................................................ 42
TABLE 3-1DIFFERENCES BETWEEN FORMER (SAP 1995) AND NEW (SPKN 2007) AUDIT
STANDARDS .................................................................................................................. 89
TABLE 3-2 LEGAL CHANGES SINCE AUDIT REFORM (2001) IN INDONESIA ................................... 90
TABLE 3-3 RESOURCES OF BPK AND BPKP (2004) ....................................................................... 92
TABLE 3-4 INDONESIAN EXTERNAL AND INTERNAL AUDIT INSTITUTIONS AND THEIR
REPORT TO MAIN STAKEHOLDER(S) ............................................................................ 94
TABLE 3-5 COMPARISON OF INTERNAL AND EXTERNAL PUBLIC SECTOR AUDITING BEFORE
AND AFTER AUDIT REFORM (2001) .............................................................................. 97
TABLE 4-1 AUDITEES AND BPK AUDIT OPINION PERIOD 2006-08 .............................................. 105
TABLE 4-2 AUDITED ENTITIES AND VALUE(IN BILLION RUPIAHS) OF PERFORMANCE AND
SPECIFIC PURPOSES AUDITS 2005-2007 ..................................................................... 113
TABLE 5-1 EXAMPLES OF APPROXIMATE NUMBERS OF NEWS ARTICLES OF BPK‘S
FINDINGS/RESULTS IN 2006........................................................................................ 161
TABLE 5-2 FOLLOWUP OF CASES AND THEIR VALUE (IN BILLION RUPIAHS) OF STATE
LOSSES DURING 2005-2006........................................................................................ 178
TABLE 5-3 FOLLOW UP OF BPK AUDIT FINDINGS (NUMBERS AND VALUE OF CASES) AT THE
CENTRAL AND LOCAL GOVERNMENT AND SOES IN 2008 ......................................... 180
TABLE 5-4 SUMMARY OF IMPROVEMENTS AND AREAS FOR FURTHER IMPROVEMENTFOR
PUBLIC SECTOR AUDIT REPORTS SINCE AUDIT REFORM (2001) ............................... 191
TABLE 6-1REMUNERATION INCOME OF BPK MANAGERS AND STAFF IN 2004 AND 2006(IN
RUPIAH) ...................................................................................................................... 221
TABLE 6-2 ANNUAL BUDGET ALLOCATION FOR BPK BEFORE (1993-2000) AND AFTER
AUDIT REFORM (2001-2009) ...................................................................................... 229
TABLE 6-3 NUMBER OF EMPLOYEES WHO RECEIVED REWARDS AND PUNISHMENTS(200408)............................................................................................................................... 232
xi
TABLE 6-4 RECRUITMENT OF NEW BPK PERSONNEL FOR THE FINANCIAL YEAR 2007-08 ........ 235
TABLE 6-5 FIELDS OF DUTIES AND FUNCTION OF INDIVIDUAL BPK MEMBERS, 2007 ................ 237
TABLE 6-6 NUMBER OF PARTICIPANTS IN BPK TRAINING AND EDUCATION (2004-06).............. 239
TABLE 6-7 NUMBER OF COMPUTERS, NOTEBOOKS AND PRINTERS AT BPK OFFICES (19942003)........................................................................................................................... 243
TABLE 6-8 NUMBER OF PERSONAL COMPUTERS, NOTEBOOKS, PRINTERS AND SCANNERS
(2004-2006) ................................................................................................................ 244
TABLE 6-9 OPENING DATES OF BPK REPRESENTATIVE OFFICES (1950-2008) ........................... 247
TABLE 7-1 SUMMARY OF REFORMS IN FACTORS INFLUENCING INFORMATION IN BPK
REPORTS ..................................................................................................................... 299
xii
List of Figures
FIGURE 2.1 DIFFERENT LEVELS OF ACCOUNTABILITY AND SCOPE OF AUDITING ......................... 28
FIGURE 2.2 INDEPENDENT BUDGET PROCESS OF THE AUDIT INSTITUTION OFFICE IN
GERMANY ..................................................................................................................... 50
FIGURE 2.3 ANALYTICAL FRAMEWORK FOR REPORTING INFORMATION IN PUBLIC SECTOR
AUDITS ......................................................................................................................... 74
FIGURE 3.1 BPK UNDER 1945 CONSTITUTION AND PEOPLE‘S ASSEMBLY (MPR) ........................ 78
FIGURE 3.2 POSITION OF BPK UNDER THE THIRD AMENDMENT OF THE 1945 CONSTITUTION
(2001) ........................................................................................................................... 84
FIGURE 4.1 SURVEY RESULTS OF ‗BPK REPORTS PROVIDE CLEAR INFORMATION FOR AUDIT
SCOPE AND OBJECTIVES‘............................................................................................ 119
FIGURE 4.2 SURVEY RESULTS OF ‗INFORMATION IN AUDIT REPORTS IS SUPPORTED BY
STRONG EVIDENCE‘.................................................................................................... 128
FIGURE 4.3 SURVEY RESULTS OF ‗INFORMATION IN BPK AUDIT REPORTS IS OBJECTIVE
(USING APPROPRIATE AUDIT TECHNIQUES AND PROFESSIONAL JUDGMENT)‘ ......... 134
FIGURE 4.4 SURVEY RESULTS OF ‗INFORMATION IN BPK AUDIT REPORTS IS CREDIBLE
(TRUSTED BY STAKEHOLDERS)‘ ................................................................................. 135
FIGURE 5.1 SURVEY RESULTS OF ‗INFORMATION IN BPK AUDIT REPORTS IS CLEAR AND
EASY TO UNDERSTAND‘ ............................................................................................. 147
FIGURE 5.2 SURVEY RESULTS FOR ‗FORMAT OF BPK AUDIT REPORTS IS PRECISE AND
INFORMATIVE‘ ............................................................................................................ 151
FIGURE 5.3 SURVEY RESULTS ON ‗BPK REPORTS ITS AUDIT RESULTS IN A TIMELY
FASHION‘ .................................................................................................................... 155
FIGURE 5.4 SURVEY RESULTS OF ‗BPK PUBLISHED ITS AUDIT REPORTS‘ .................................. 166
FIGURE 5.5 SURVEY RESULTS OF ‗BPK AUDITORS PROVIDE REALISTIC
RECOMMENDATIONS‘ ................................................................................................. 173
FIGURE 5.6 SURVEY RESULTS OF ‗BPK AUDIT REPORTS ARE FOLLOWED UP‘ ........................... 182
FIGURE 6-1 PERCEPTIONS OF ‗BPK IS AN INDEPENDENT AUDIT INSTITUTION‘ ........................... 197
FIGURE 6.2 BPK BUDGETING RESOURCES ................................................................................... 201
FIGURE 6.3 APPOINTMENT PROCESS FOR MEMBERS, CHAIRMAN AND VICE CHAIRMAN OF
BPK ............................................................................................................................ 206
xiii
FIGURE 6.4 SURVEY RESULTS OF ‗BPK AUDITORS PERFORM WITH PROFESSIONALISM AND
INTEGRITY‘ ................................................................................................................. 223
FIGURE 6.5 SURVEY RESULTS OF ‗BPK HAS SUFFICIENT AUDIT RESOURCES‘ ............................ 227
FIGURE 6.6NUMBER OF BPK EMPLOYEES FOR THE PERIOD 2000-2008 ...................................... 234
FIGURE 6.7 REPRESENTATIVE OFFICES OF BPK IN 33 PROVINCES (2008) ................................... 249
FIGURE 7.1PROCESS OF BPK AND PARLIAMENT FUNCTIONS FOR PUBLIC ACCOUNTABILITY .... 255
FIGURE 7.2 COORDINATION BETWEEN BPK AND THE LEGISLATIVE ........................................... 257
FIGURE 7.3 SURVEY RESULTS THAT ‗MEMBERS OF PARLIAMENT PROVIDE POLITICAL
SUPPORT FOR THE ROLES AND FUNCTIONS OF BPK‘ ................................................. 263
FIGURE 7.4 SURVEY RESULTS ON ‗GOVERNMENT PROVIDES SUPPORT FOR BPK RESULTS
AND RECOMMENDATIONS‘ ......................................................................................... 273
FIGURE 7.5 COORDINATION BETWEEN BPK AND THE ATTORNEY GENERAL INDICATING
CORRUPTION............................................................................................................... 283
FIGURE 7.6 SURVEY RESULTS OF ‗AUTHORISED INVESTIGATORS SUPPORT THE AUDIT
FINDINGS OF BPK INDICATING CORRUPTION AND FRAUD‘ ....................................... 284
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List of Acronyms, Abbreviations and Glossary
AAB
ADB
AIPRD-GPF
APIP
APRU
AKN
ANAO
Angbintama
ANZO
APBD
APBN
ASOSAI
AusAID
Bappenas
Bawasda
BI
BLBI
BKN
BLU
BNI
BPK
BPKP
BPS
BRR
BULOG
BUMD
BUMN
GAS
GGR
DPA
DPD
DPR
DPRD(s)
Fatwa
FCPP
US GAO
GOI
HAPSEM
HRB
IAI
IAR
IBRD
IBW
ICW
Advisory Audit Board
Asian Development Bank
Australia Indonesia Partnership for Reconstruction and DevelopmentGovernment Partnership Fund
Aparat Pengawasan Internal Pemerintah or Akuntabilitas Kinerja Instansi
Pemerintah; Government Internal Auditors or Performance Accountability of
Government Agencies
Association of Pacific Rim Universities
Auditama Keuangan Negara; Auditors of State Finances
Australian National Audit Office
Anggota Badan Utama; Member of BPK
Audit New Zealand Office
Anggaran Pendapatan Belanja Daerah; Regional Government Budget
Anggaran Pendapatan Belanja Negara; State Government Budget
Asian Organisation of Supreme Audit Institutions
Australian Aid for International Development
Badan Perencanaan Pembangunan National; The National Development
Planning Board
Badan Pengawasan Daerah: Regional Supervision Agency
Bank Indonesia; the Central Bank of Indonesia
Bantuan Likuiditas Bank of Indonesia; Liquidity Aid of the Central Bank of
Indonesia
Badan Kepegawaian Negara; State Personnel Board
Badan Layanan Umum; Public Service Board
Bank Nasional Indonesia; Indonesia State Bank
Badan Pemeriksa Keuangan; Indonesian State Audit Board
Badan Pengawas Keuangan dan Pembangunan; Financial and Development
Supervisory Board
Badan Pusat Statistik; Central Board of Statistics
Badan Rehabilitasi dan Rekonstruksi; Rehabilitation and Reconstruction Board
Badan Urusan Logistik; Logistic Agency
Badan Usaha Milik Daerah; Regional-owned Enterprise
Badan Usaha Milik Negara; State-owned Enterprise (SOE)
Ghana Audit Service
The Comptroller General of the Republic
Dewan Pertimbangan Agung; Supreme Advisory Council
Dewan Perwakilan Daerah; the Senate
Dewan Perwakilan Rakyat; Parliament
Dewan Perwakilan Rakyat Daerah; regional Parliament(s)
Legal decision, edict
Financial Crime Prevention Project
The United States Government Accountability Office
Government of Indonesia
Hasil Pemeriksaan Semester; Summary of Semester Report
Human Resources Bureau
Ikatan Akuntansi Indonesia; Indonesian Accountants Association
Instructie en verdere bepalingen voor de Algemeene Rekenkamer; Instruction
and further provisions for the Office of State Audit
International Bank for Reconstruction and Development
Indische Bedrijvenwet; Trade laws for the East Indies
Indische Comptabiliteitswet; Laws for financial accountability for the East
Indies
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ICW
INCOSAI
INTOSAI
ISSAI
IG
JCPAA
KAP
KKN
KPK
KY
LAN
LHP
LKBI
LKD
LKL
LKPD
LKPP
LP3ES
MA
MENPAN
MK
MOF
MoU
MPR
NAD
NAO
NAD Province
NGO
PAP/PAC
PAN
PDAM
PDIP
PDS
PHP
PG
PKB
PKS
PLN
PNS
PP
PPATK
PPPI
PSAK
PSP
R2
RAB
Indonesian Corruption Watch
The International Congress of Supreme Audit Institutions
International Organisation of Supreme Audit Institutions
The International Standards of Supreme Audit Institutions
Inspektorat Jenderal; Inspectorate General (IG)
Joint Committee of Public Accounts and Audit
Kantor Akuntan Publik; Public Accountant Office
Korupsi, Kolusi dan Nepotisme; Corruption, Collusion, and Nepotism
Komisi Pemberantasan Korupsi; the Corruption Eradication Commisssion
Komisi Yudisial; Judicial Comission
Local Area Network
Laporan Hasil Pemeriksaan; Audit Result Report
Laporan Keuangan Bank of Indonesia; Financial Statement of the Central Bank
of Indonesia of Indonesia
Laporan Keuangan Daerah; Regional Financial Statement
Laporan Keuangan Lembaga; Institutional Financial Statement
Laporan Keuangan Pemerintah Daerah; Financial Report of the Regional
Government
Laporan Keuangan Pemerintah Pusat; Central Government‘s Financial Report
Lembaga Penelitian, Pendidikan dan Penerangan Ekonomi dan Sosial ;
Economic and Social Research, Education and Information Agency
Mahkamah Agung; Supreme Court
Kementrian Pendayagunaan Aparatur Negara; Ministry of Empowerment
State Apparatus - changed to Kementerian Pendayagunaan Aparatur Negara
dan Reformasi Birokrasi (Ministry of Administrative and Bureaucratic
Reforms) on the 2nd Cabinet of Susilo Bambang Yudhoyono
Mahkamah Konstitusi; Constitutional Court
Ministry of Finance
Memorandum of Understanding
Majelis Permusyawarahan Rakyat; People‘s Consultative Assembly
National Audit of Department
National Audit Office
Nangroe Aceh Darussalam Province
Non Government Organisation
Panitia Akuntabilitas Publik; Public Accountability Committee
Partai Amanat Nasional; National Mandate Party
Perusahaan Daerah Air Minum; Water Drinking Regional Enterprise
Partai Demokrasi Indonesia Perjuangan; Indonesian Democratic PartyStruggle
Partai Damai Sejahtera; Prosperous Peace Party
Provincial Health Project
Partai Golkar; Golkar Party
Partai Kebangkitan Bangsa; National Awakening Party
Partai Keadilan Sejahtera; Prosperous Justice Party
Perusahaan Listrik Negara; National Electricity Company
Pegawai Negeri Sipil, Public/Civil Servants
Peraturan Pemerintah; Government Regulation
Pusat Pelaporan Analisis dan Transaksi Keuangan; the Centre of Reporting
and Analysis of Financial Transaction
Pusat Pengkajian Pelayanan Informasi; Centre for Information Service
Research
Pernyataan Standard Akuntansi Keuangan; Statement of Financial Accounting
Standard
Pernyataan Standard Pemeriksaan; Statement of Auditing Standard
Rehabilitation and Reconstruction Phase
Reglement voor het Administratief Beheer; Regulations for administrative
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Retribusi
ROE(s)
Rp.
SAI(s)
SAP 1995
SAP 2005
SNAO
SOE(s)
Sosialisasi
SPAP
SPI
SPIP
SPKN 2007
STAR-SDP
SUN
TMP
TW
UN
USAID
WDP
WTP
WTP-DPP
management
Charges or levies
Regional-owned Enterprise(s)
Rupiahs; Indonesian currency
The Supreme Audit Institution(s)
Standard Audit Pemerintahan 1995; Government Audit Standards 1995
Standard Akuntansi Pemerintahan 2005; Government Accounting
standards2005
Swedish National Audit Office
State owned Enterprise(s)
Promoting an idea or program usually by disseminating information
Standard Professional Akuntan Publik; Professional Standard for Public
Accountants
Satuan Pengawas Internal; Internal Controller Unit
Sistem Pengawasan Internal Pemerintah; Government‘s Internal Control
System
Standar Pemeriksaan Keuangan Negara 2007; State finance audit standards
2007
State Audit Reform Sector Development Project
Surat Utang Negara; State Debt Letter
Tidak Memberikan Pendapat; Disclaimer (No Opinion)
Tidak Wajar; Adverse Opinion
The United Nations
The United States Aid
Wajar Dengan Pengecualian; Qualified Opinion
Wajar Tanpa Pengecualian; Unqualified Opinion
WTP Dengan Paragraf Penjelasan; Unqualified Opinion with explanatory
paragraph
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