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Jakarta Post

Poor reporting, irregularities cause state losses: BPK

  • Viriya P. Singgih

    The Jakarta Post

Jakarta   /   Wed, October 5, 2016   /  07:07 am
Poor reporting, irregularities cause state losses: BPK Illustration of Indonesian Supreme Audit (BPK). ( Sukamto)

A state audit on the use of billions of dollars worth of tax funds has found thousands of irregularities, casting doubt on the government’s ability to improve financial transparency and accountability in the hope of boosting the economy.

The Supreme Audit Agency’s (BPK) latest investigative audit found 15,568 irregularities — mostly in last year’s financial reports from central and local governments and companies they control — that may have a financial impact of Rp 30.62 trillion (US$2.35 billion), including Rp 1.92 trillion in state losses.

Most of the irregularities were related to goods procurement that did not match contractual or regulatory specifications and missing details in spending records, said the head of the BPK’s directorate for planning, evaluation and development, Slamet Kurniawan.

Furthermore, the BPK downgraded the opinions for 12 ministries and non-ministerial government institutions, including the Foreign Ministry, the Religious Affairs Ministry and the Public Works and Public Housing Ministry, from unqualified to qualified opinions.

Moreover, three institutions received disclaimer opinions — the poorest mark — namely the National Commission on Human Rights (Komnas HAM), the Youth and Sports Ministry and the Social Affairs Ministry. The highest mark in a BPK audit is an unqualified opinion, followed by qualified, adverse and disclaimer opinions.

“Most probably, the decline in quality occurred due to ongoing transactions, such as spending that has not been recorded or is incomplete,” Slamet said on Monday.

President Joko “Jokowi” Widodo has repeatedly stressed the government’s commitment to managing its finances effectively and transparently, especially with the continuous increase in state and regional budgets aimed at boosting economic activity through infrastructure development and poverty alleviation.

Center for Reform in Economics (CORE) research director Mohammad Faisal said that 2015 had been a transition year for Jokowi’s administration. He highlighted the merger of the ministries in charge of public works and public housing under the President’s leadership, which may have led to worse financial reporting. The new ministry was downgraded by the BPK to a qualified opinion.

“This also reflects the President’s motto: Work, work, work! It might be good to cut red tape in the bureaucracy, but it also forces government institutions to streamline their procedures, which could lead to missing details in their financial reports,” he went on.

From January 2015 to June 2016, the BPK submitted 61,931 recommendations to related institutions to fix their financial irregularities. However, only 39.6 percent of the recommendations have been properly implemented, according to the auditors.

The BPK has also found criminal irregularities amounting to Rp 44.62 trillion in the period of January 2003 to June 2016. Law enforcement authorities have processed 94 percent of those irregularities.

Institute for Development of Economics and Finance (Indef) executive director Enny Sri Hartati said the government had to ensure that law enforcers followed up all of the BPK’s findings and recommendations.

“Otherwise, this will just be a routine discovery by the BPK, and the same thing will happen over and over again in future,” she said.

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