the changing landscape of accounting profession in indonesia · * new pillar introduced by dsak iai...

The Changing Landscape of Accounting Profession in Indonesia

Rosita Uli Sinaga, CA

National Council Member of IAI

IKATAN AKUNTAN INDONESIA

Change on Business Environment

• Globalization and Global Competition • With lack of jurisdiction, new challenge for profession and

regulators, and law enforcement.

• ASEAN Economic Communities (AEC) • AEC opens good and service flow among ASEAN countries.

• Technology Disruptions • Using technology in business including FinTech (Financial

Technology), has significantly disrupted conventional business / financial services.

IKATAN AKUNTAN INDONESIA 3

Major Change in Business Environment

We are living in a fast changing world

Below are the example of the most common FinTech in Indonesia: Category #startups Overview Examples

Digital Payment 15+ • Mobile wallet POS payments

• Online B2C and P2P transfers

Aggregator 8+ • Collect and compare financial products (cards, loans, etc)

P2P Lending 6+ • Connect individual borrowers and lenders

• Due diligence on potential borrowers

The Impact of AI in the accounting profession

Deloitte wins “Audit Innovation of the Year 2015” • International Accounting Bulletin Awards has awarded Deloitte “Audit

Innvoation of the Year 2015”.

• Deloitte used a leading-edge audit analytics tool called “ARGUS”

• Argus innovates the audit electronic documents by making use of cognitive technologies-computer systems capable of performing tasks normally requiring human intelligence.

• “By employing state of the art tools like Argus in our audit work, our professional are able to spend more time interpreting results, exercising professional skepticsm and focusing on risks” (John Raphael, Chief Innovation Officer, Deloitte & Touch LLP

Risk:

• Large accounting firms as the biggest accounting graduate employers has predicted that Graduate recruitment at auditors and accountants could fall significantly due to the impact of increasing automation and artificial intelligence.

• The economies in 2014 predicted accountants and auditors most likely to be replaced by robots in the next 20 years.

• Below are some examples of what potentially might change:

1. Automate admin type accounting & finance tasks

2. Real time “smart” audit

3. Reduce the need for many lower quantum – high volume manual audit processes (e.g. use of data analytics).

4. Blockhain promises a world where all transaction can be locked, viewed and monitored in a real time.

How technology disruptions will change accounting profession

How technology disruptions will change accounting profession

Opportunities:

• Drive significantly growth of SMEs

• More SMEs creates more business/accounting advisory opportunities.

• The use of technology can reduce significantly manual process and redeploying talent to do higher value activities

• The role of accountant will move to more analytical and strategic type of job.

Change on Indonesian Financial Accounting Standards

CONVERGENCE STATUS AS AT 1 JANUARY 2015

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STANDAR AKUNTANSI KEUANGAN

AS AT EFFECTIVE 1 JANUARY 2015

INTERNATIONAL FINANCIAL REPORTING STANDARDS

AS AT EFFECTIVE 1 JANUARY 2014

Substantially in line, with a number of exceptions

1 year gap

• During 2013-2014 DSAK IAI has issued (including new and revision): 13 PSAK and 4 ISAK along with annual improvements of SAK.

• During 2015 DSAK IAI has issued (including new and revision): 11 PSAK and 2 ISAK along with annual improvements of SAK.


PILLARS OF SAK SA

K U

MU

M

SAK

ETA

P

PSAK SYARIAH

SAK

EM

KM

IFRS based

entities with no public accountability

SAK UMUM

SAK ETAP

SAK EMKM* micro, small & medium entities

PSAK SYARIAH

Sharia based transactions


* New pillar introduced by DSAK IAI on 24 October 2016, effective 1 January 2018.

IFRS STANDARDS

IFRS

Effective

Date

SAK

Target Effective

Date

1 IFRS 15: Revenue from Contracts

with Customers 1 Jan 2018 1 Jan 2019

2 IFRS 9: Financial Instruments 1 Jan 2018 1 Jan 2019

3 IFRS 16: Leases 1 Jan 2019 1 Jan 2020

4 IFRS 17: Insurance Contracts* 1 Jan 2021 1 Jan 2022

IAI International Seminar Ritz Carlton Jakarta, 25 May 2016

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IFRS COMPLETED STANDARDS ~ 2016

*IFRS 17 is Phase II of IFRS 4 Insurance Contracts planned to be issued by IASB on 1st quarter of 2017

4 new “big” IFRS Standars will become effective in the period of 2018 to 2021 and will be adopted in Indonesia in the period of 2019 to 2022 ~ a 1-year gap

significant changes will impact Indonesia accounting practices in period 2019 to 2022 ~ another “tsunami” after Phase 2 of the IFRS’s convergence into SAK


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DSAK IAI COMPLETED STANDARDS ~ 2016

IFRS Standards & Conceptual

Framework

• Amandemen PSAK 2 & PSAK 46 (Amendments to IAS 7 & IAS 12)

• Penyesuaian Tahunan 2016 (Annual Improvements to IFRSs 2012 – 2014 Cycle)

• Kerangka Konseptual Pelaporan Keuangan (Conceptual Framework for Financial Reporting)

• ED PSAK 71 Instrumen Keuangan (IFRS 9)

• ED PSAK 72 Pendapatan dari Kontrak dengan Pelanggan (IFRS 15)

• ED Amandemen PSAK 62 (Amendments to IFRS 4)

Own Standards

• SAK Entitas Mikro,Kecil & Menengah (Standard for Micro,Small & Medium Entities)

• PSAK 70 Akuntansi Aset & Liabilitas Pengampunan Pajak (Tax Amnesty)

• ED ISAK 32 Definisi & Hierarki SAK


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DSAK IAI WORK PLAN ~ 2017

Completed due process procedures for adoption of IFRS 9 & IFRS 15 into PSAK 71 & PSAK 72

Completed due process procedures for ISAK 32

Start due process procedures for adoption of IFRS 16 & IFRS 17 into ED PSAK 73 & ED PSAK 74)

Post Implementation Review of SAK ETAP

Further research on Standard for Not for Profit Entities

Further research on Full Adoption of IFRS in Indonesia

CHALLENGES TO FULLY ADOPT IFRS IN INDONESIA

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CHALLENGES

LEGAL STRUCTURE

CONSISTENCY OF INTERPRETATION / IMPLEMENTATION ISSUES

STAKEHOLDER ENGAGEMENT

SHARIA-BASED TRANSACTIONS

TRANSLATION OF IFRS INTO LOCAL LANGUAGE

PUBLIC EDUCATION

SUPPORTING PROFESSIONS


Change in Accountancy Regulations

HISTORY OF INDONESIAN ACCOUNTANCY QUALIFICATION

PTS

ACCOUNTANT

Accountancy National Exam FOUNDATION

Level

1954-2002

Accountancy National Exam PROFESIONAL

Level

PTN/PTS

2014-NOW 2002-2014

* PPAK dilaksanakan di PT yang mendapat rekomendasi dari IAI

CA EXAM

PRACTICAL EXPERIANCE

PPAK

New PTN

10 PTN

PTN: State University, PTS: Private University PPAK: Professional Accountancy Education Program

IAI MEMBER

PTN/PTS

19 IKATAN AKUNTAN INDONESIA

Before 2012 • Regulated by UU no 34/1954

• After graduated from Accounting Profession Program (PPAk), automatically obtain “Ak” degree (registered at Ministry of Finance, without obligation to pass professional examination)

• Total number of Ak. holders, registered at Ministry of Finance is 53.300 individuals.

• Ak. holders are registered only, without any obligations to maintain (no mandatory requirement to attend CPD)

• It is higly suspected that a lot number of Ak. holders are no longer active as accountant.

Statutory & Regulatory Framework - Indonesia


After 2012 • UU no 5 tahun 2011 tentang Akuntan Publik (Public Accountant

Act), states that assurance and audit service are to be performed by individuals with CPA qualification.

• PMK 25/PMK.01/2014 tentang Akuntan Beregister Negara (Financial Minister Regulation on State Registered Accountant) is mandated by Law 34/1954 which has been delayed for 60 years.

• Mandatory to restructuring the IAI profession legalized through PMK 25/2014 and KMK 263/KMK.01/2014 to make re-arrangement in structuring the accounting profession based on global best practice, which has been proved in creating a Professional Accountant.

• There is mandatory requirement to attend CPD.

Statutory & Regulatory Framework - Indonesia


• Main regulators

• Pusat Pembinaan Profesi Keuangan (P2PK)

• Komite Profesi Akuntan Publik (KPAP)

• Otoritas Jasa Keuangan (OJK)

• UU no 25 tahun 2007 tentang Penanaman Modal (Act 25/2007 on Investment)

• UU no 40 tahun 2007 tentang Perseroan Terbatas (Act 40/2007 on Corporation)

• Regulate the submission of financial statement to BKPM (Investment Board) and related ministry, but the big question: Has it been fully implemented?

• Question remains for private entity that has not been specifically regulated.

Monitoring & Enforcement


Other Challenges

• Education Quality Gap in Indonesia • Java vs Outside Java • Accounting lecturer with Professional experience • Readiness to produce graduates who meet the market demands due to fast

business environment changes.

• The absence for Financial Reporting Acts (UU Pelaporan Keuangan) • Regulator states that regulations for public accountant have been completed

through UU 5/2011 dan PMK tentang Akuntan Publik; yet wider regulation related to accountant and financial reporting not yet exist.

• Law Enforcement and Regulatory • Enforcement for public accountant and financial statements preparers. • Roles of audit committee strengthen. • Integrated and consistent regulation on public accountant (P2PK vs. OJK).

• Contribution of Government/OJK to the development of accounting standards in Indonesia


Other Challenges for Accounting Profession in Indonesia

Number of Public Accountants

2013 2014

2015

2016

25

999 AP

377 KAP

119 Branches

1.053 AP 388 KAP

122 Branches

1.124 AP 403 KAP

125 Branches

1.189 AP 407 KAP

135 Branches

*per 18 November 2016; Source:

PPPK Kemenkeu RI IKATAN AKUNTAN INDONESIA

Public Accounting Firm (KAP) and Public Accountant (AP) Total: 1.189 AP & 407 KAP

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Jakarta

552 AP & 226 KAP

Sumbagut 37 AP & 18 KAP

Sumbagsel 24 AP & 11 KAP

Jabar 213 AP & 45 KAP

Bali & NTB

18 AP & 9 KAP

Jatim 134 AP & 41 KAP

Sumbagteng 28 AP & 10 KAP

Kalimantan

9 AP & 7 KAP

Jateng & DIY 52 AP & 13 KAP

Banten 106 AP & 17 KAP

Sulawesi

16 AP & 10 KAP

*per 18 November 2016; Source: PPPK

Kemenkeu RI IKATAN AKUNTAN INDONESIA

Challenges (or Opportunities?) Accounting Services in INDONESIA

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• 3,261 higher education institution

• 364 NGO

• 100,000 Not-for-profit entities

• 558 Governmental units

INSTITUTE OF INDONESIA CHARTERED ACCOUNTANTS

• 44,398 companies (452

public companies)

• 141 SOEs

• 1,007 ROEs

• 186,907 cooperatives

• In total more than 300,000 potential clients

• If half of them required by various law to be audited, there are 150,000 entities need to be audited

• Total audit opinion produced is only about 20,000 audit opinions


• The market place would continue to revolve: accounting standards, regulation, business transactions and technology

• Technology would significantly change human behaviour and create new competency and skill demands.

• How the accountancy profession in Indonesia will response? • Inward looking or forward looking?

• Accountancy education play important role to maintain the relevancy of the accounting profession

About IAI

IAI at Glance

• IAI was established in Jakarta on December 23, 1957 and is the main professional

accountancy body in Indonesia.

• IAI is a full member and founder of the organization of the accounting profession

world-International Federation of Accountants (IFAC) and the organization of

regional accounting profession- ASEAN Federation of Accountants (AFA).

• IAI members originate from all background, either practicing as a public accountant,

accountants public sector, the private sector, educators accountants, management

accountants, tax accountants, forensic accountants, and others.

• As a self-funded professional accountancy organization, IAI responsible for

enforcing the code of professional conduct, compile accounting standards, carry out

the certification exams, and running a continuing professional education.

• IAI has representatives in 33 provincial regions.

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Institute of Indonesia Chartered Accountants is a professional organization that houses the entire accountants Indonesia


ACTIVITIES of IAI

Registration and Membership

Services Development of

Financial Accounting Standard, Professional

Standards & Ethics

Competence Enhancement

Accountant

Contributions for Public Policy

International Relations

Publication

Contributions to the

Community

Enforcement Ethics and Discipline and Member

Advocacy

Knowledge and Professional

Development Center

Implementation of Certification

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IAI ROLE AND ACTIVITIES


Institute of Chartered Accountant Grha Akuntan Jl Sindanglaya 1 Menteng Jakarta 10310 www.iaiglobal.or.id [email protected] Tel (021) 3190 4232

Thank You

the changing landscape of accounting profession in indonesia · * new pillar introduced by dsak iai...

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