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Thursday, 06 May 2021 11:55 GMT

PUBLIC ACCOUNTANT New Regulation Leaves Chance For Moral Hazard


( MENAFN Editorial )

JAKARTA May 13 2015—Despite the affirmation of Public Accountant independence the issuance of Government Regulation No. 20/2015 about Public Accountant Practice still leaves a little space for moral hazard.

Member of Honorary Council of Indonesian Public Accountant Institute Wahju Tumakaka assesses that two fiscal years of hiatus before the Public Accountant allowed to offer the audit service again as being mandated in article 11 paragraph (4) of the regulation still can be a chance for fake Public Accountant.

“Indeed it needs to be watched. Along the two years they probably can look for ‘easy controlled’ auditor. It’s also a problem” he told Indonesia Business Daily Monday (5/11/2015).

Wahju said that such condition should be prevented by strengthening the controlling mechanism. He also said the government indeed couldn’t distort because the control is in public mainly the trust.

In the article 11 paragraph (1) of the regulation it’s mentioned that a public accountant can only audit maximally in 5 consecutively fiscal years. Next in paragraph (4) of the same article it’s mentioned that new audit service can be conducted after a two fiscal-year respite. The regulation is a derivative of the Act No.5/2011 about Public Accountant.

However Wahju said the regulation issuance was not good enough to build Public Accountant Independence.

If there is no limitation there will be bigger potency of moral hazard because the more close a Public Accountant with an entity in a long time- theoretically—will reduce the independency.

Limitation regulation itself was begun from the scandal between Enron Company with its auditor for years Arthur Andersen which was revealed in October 2014.

Arthur Andersen which was one of the big five –group of five largest public accountant and audit institution in the world—proven destroying key document of Enron losses. Read more..

 


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