Audit board
INDONESIA

Independence

The Audit Board of the Republic of Indonesia (SAI Indonesia) is established under the constitution. The SAI is a state institution that is independent from the Legislative and Executive branch. The Board members are appointed by the People’s Legislative Assembly with due observance of Regional Representative Council’s considerations.

The SAI performs its audit duties in a free and independent manner. In the context of preserving the freedom and independence, the SAI has the following obligations:

1. conduct audit in accordance with State Financial Auditing Standards;
2. comply with the auditors’ code of ethics; and
3. apply a quality control system.

The state financial auditing standards contains at least the following matters:

1. Auditors shall not have a family relationship by blood to the upper level, lower level, and by marriage up to the second degree with the management of the audit objects;
2. Auditors shall not have any financial interest both directly and indirectly with the audit objects;
3. Auditors shall have never worked or provided services to audit objects within the last year;
4. Auditors shall not have a cooperative relation with audit objects; or
5. Auditors shall not be involved both directly and indirectly in the activities of the audit objects, such as providing asistance, consultation services, system development, preparing and/or reviewing audit objects’ financial statements.

Jurisdiction

The SAI has the duties to audit state financial management and accountability performed by the Central Government, other State Institutions, Bank Indonesia, State-owned Enterprises, Public Service Agencies, Regional-owned Enterprises, and other institutions or agencies managing state finance.

The SAI performs financial audit, performance audit, and special-purpose audit. If the audit is implemented by a public accountant based on the provisions of law, report on the results of such audit must be submitted to SAI and shall be subsequently published.

Powers

In implementing its duties, the SAI has the authorities to:

determine the audit object, plan and implement audits, determine the audit timefrime and method as well as prepare and present audit report;
request for information and/or documents that must be submitted by any persons, Central Government organizational units, Regional Government, other State Institutions, Bank Indonesia, State-owned Enterprises, Public Service Agencies, Regional Government-owned Enterprises, and other institutions or agencies managing state finance;
perform audit at the places where state money and properties are kept, at the places of the implementation of activities, book-keeping and state financial administration, as well as audits on the calculations, letters, evidences, current accounts, accountability reports and other lists related to state financial management;
determine the types of document, data, as well as information on state financial management and accountability that must be submitted to SAI;
stipulate state financial auditing standards following consultation with the Central Government/Regional Government that must be used in state financial management and accountability audit;
stipulate the code of ethics for state financial management and accountability audit;
employ experts and/or auditors outside SAI who shall work for and on behalf of SAI;
develop Auditors’ functional positions;
provide considerations on the Government Accounting Standard; and
provide considerations on the Central Government/Regional Government’s draft internal control system prior to its stipulation by the Central Government/Regional Government.

Audit Procedures and Functions

The SAI prescribes Financial, Performance, and Special Purpose audits in its scope of Audit. The power to perform these audits are mandated by the Act No 15 of year 2006.

The SAI metodology/procedure for each main type of audit are:

work is to be adequately performed
staff are to be properly supervised
when laws, regulations and other compliance requirements are significant to audit objectives, auditors should design the audit to provide reasonable assurance about compliance with them
auditors should obtain an understanding of the internal control systems that are relevant to the audit
Collecting evidence for reporting.

The SAI establishes the state loss, corresponding minister/ head of agency demands the financial officer to pay back. The decision of the SAI is same as that of the judge of a civil court. In case of willful losses/frauds the audit board can only request for follow ups, but lacks mandate for enforcement. The SAI is not required to follow specific guidelines in conducting audit and reporting, it has its own standards and guidelines.

The SAI can consult and/or collaborate with other countries/SAIs and international organisations on matters relating to audit. The SAI can engage consultants and/or obtain professional services in conducting audit. As per the amendments of November 2001 in the Audit act Audit Board should use professional auditors, having sufficient integrity and independence provided with sufficient means. If the Audit disclose matters which give rise to suspicion that a criminal offence or act detrimental to state finance, the Audit board shall present such cases to the Government. The SAI reports on the acts that infringe upon State economic interests like mass embezzlements of state assets etc. The SAI requires that any fraud or embezzlement be reported by the auditees mandatorly but it does not have powers to oversee the ultimate disposal of such cases.

The SAI submit the results of audits on state financial management and accountability to People’s Legislative Assembly, Regional Representative Council, and Regional People’s Legislative Assembly in accordance with its authority. The results of audit on state financial management and accountability that have been submitted shall be declared open for public.

Organisation

The SAI is constituted as a collegial multi member body (Board-Committee-Chamber) and Court/Tribunal Audit/accounts. It is a Board of Audit. The audit board has the form of a council comprising of nine members, including a chairman and a vice chairman. All the members of the Board are high officials of State (ie. they are not govt. officials). They are not subject to criminal proceedings in the conduct of their duties, subject to prior consent of the Head of State. The Board directs, oversees, and is responsible for the functioning. The Secretary general is the highest administrative officer of the SAI. The Audit Board is considered as the only External auditor of the state, audits on all government ministries and agencies/institutions, at the central government, as well as the provincial governments, state and provincial owned enterprises and all organisations using public funds. The SAI can engage external auditors/ agencies/consultants as required.

Administrative functions and miscellaneous

The SAI can not expend resources budgeted independently but it has full independence in forming its workplan. With in general civil service regulation, the SAI has power to determine the entry qualifications of new staff and qualifications of the existing staff. The SAI is not subject to an independent audit but by law, the SAI could be subject to independent external audit by invited external audits.