Graduate student in public policy, University of Chicago
Earlier this year, Governor Anies Baswedan was delighted to announce that the Jakarta administration had been granted an unqualified opinion (WTP) for its 2017 financial report by the Supreme Audit Agency (BPK). A week later, it was President Joko “Jokowi” Widodo who publicly stated the central government had also obtained a similarly “clean” bill for its consolidated financial report.
Despite the difference in hierarchy and size of government, they both seemed to be equally satisfied. It was an improvement for Jakarta after several years of qualified opinion (WDP) — a level below WTP — under the previous leadership. As for President Jokowi, the WTP was not unprecedented. The central government had also received the same opinion the year before, but still, it was quite a feat for there is no guarantee that once an entity gets a WTP from the BPK, it will continue to do so the following period.
In part, a WTP is seen as a proxy for good governance, but for most public office holders it is appealing because of its ability to provide political leverage: Better audit results indicate better governance that, in turn, may deserve higher trust from taxpayers. It is not surprising Governor Anies and President Jokowi flaunted the good endorsement from BPK auditors. In fact, dozens of ministers, agency heads and local leaders who have gotten WTPs have also shown off their “good and clean” records.
Notwithstanding the annual endorsement, some may wonder if having a seal of WTP actually matters. To taxpayers, in particular, the question is whether a WTP necessarily means there has not been any wasteful government spending or corruption.
A WTP simply implies that the BPK’s auditors have audited a government entity’s financial report and found fairly presented information, adequate disclosures, effective internal control and compliance with governmental accounting standards. They also check whether recommendations and findings as noted in the preceding year’s auditor’s report, if any, have been followed up on and addressed accordingly.
In auditing and producing a final report, the auditors follow certain rules, auditing standards and the code of ethics. An auditor’s opinion is the most notable part of the report, in which four measures are used to indicate an audit outcome: WTP, WDP, adverse and disclaimer opinions.
Besides the regular financial audit, however, the BPK also undertakes what is called performance as well as investigative audits. A performance audit seeks to evaluate an institution’s ability to spend a program’s budget effectively and efficiently, while an investigative audit thoroughly examines specific government activities in response to some findings or allegations.
BPK semiannual reports from 2015 to 2017 explain that it conducted performance and investigative audits of around 280 and 330 objects, respectively, every year. These were carried out at national and local levels. The
performance audits focused on prioritized sectors such as education, health care and bureaucracy reform, whereas the investigative audits covered more diverse issues.
It is apparent that both audits were done selectively on only a limited number of objects, unlike the financial (general) audits that were done on all government entities (more than 600 objects annually).
A WTP is simply a product of regular financial audits that do not probe budget inefficiencies, let alone irregularities. It is still possible for a government entity to achieve a WTP even when corruption occurs, so long as spending is in accord with the approved budget and reporting complies with accounting standards.
Throughout 2018, the Corruption Eradication Commission (KPK) caught a number of governors and regents for alleged corruption — some of them belonged to an office that had previously been granted a WTP by the BPK. Hence, thinking of a WTP as validation of the absence of inefficiencies and corruption is a
This is not to say that a WTP is worthless, nonetheless. Without a WTP, a financial report will bear doubts among its users. A WTP gives assurance on the overall quality of financial reporting so that the top management in government can use it as a basis for making budgetary or even strategic decisions. As importantly, external stakeholders can consult the audited report with higher confidence — no more garbage in, garbage out.
A WTP does matter, and public institutions ought to have it. However, rather than an endpoint or the final goal, one should see it as a beginning of better governance in the public sector.
The writer teaches public sector accounting at the department of economics and business at the University of Indonesia (UI) in Depok. The views expressed are his own.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.