Indonesia

The Limited Liability Company Law No. 40 of 2007, the Capital Market Act No. 8 of 1995, and the Public Accountants Act No. 5 of 2011 establishes the financial reporting framework in Indonesia.

Accounting Framework

In accordance with the Law No. 40/2007 of Limited Liability Companies and Law No. 8/1995 of Capital Market, companies obligated to be audited by a public accountant must deliver an annual financial report based on the financial accounting standard established by the Indonesian Financial Accounting Standards Board (Dewan Standar Akuntansi Keuangan – DSAK-IAI). The DSAK-IAI, under the Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia – IAI), is the independent national accounting standard-setting body that establishes the Indonesian Financial Accounting Standards (Standar Akuntansi Keuangan – SAK) which are based on the latest IFRS with adjustments to the effective date.

The criteria for limited liability companies obligated to be audited by a public accountant and use the SAK includes the following:

• the Company’s business activities are related to the mobilization and/or use of public funds;
• the Company issues promissory notes to the public;
• the Company is a publicly owned company (Perseroan Terbuka).
• the Company is a state-owned company (Persero);
• the Company’s assets and/or total business turnover reach a minimum value of Rp50,000,000,000,00 (fifty billion Rupiah); or
• it is required by other prevailing laws and regulations.

The DSAK-IAI has also currently adopted SAK ETAP, which are based on IFRS for SMEs, for entities without public accountability. DSAK-IAI has launched the SAK EP (Private Entity) to replace SAK ETAP effective in 2025.

The IFRS Foundation and the DSAK-IAI note that the SAK does not incorporate all the requirements of IFRS. However, DSAK-IAI is currently developing the SAK I (SAK International), a new reporting framework adopted word-for-word from IFRS. The framework will be available for entities that meet the requirements set by relevant regulators in Indonesia, for example the Financial Services Authority (Otoritas Jasa Keuangan – OJK).

Under the Capital Market Law and the Banking Law, OJK establishes financial reporting requirements for entities under its supervision — banks, listed companies, insurance companies, and financial institutions — and mandates the use of DSAK-IAI accounting standards.

Auditing Framework

The Law No. 5/2011 of Public Accountants empowers the Indonesian Institute of Certified Public Accountants (Institut Akuntan Publik Indonesia – IAPI) as the auditing standard setter. Indonesian Auditing and Assurance Standards Board (“Indonesian AASB”) issues the Standards on Auditing which are part of the Indonesian Public Accountant Professional Standards (Standar Profesional Akuntan Publik - SPAP).

Professional accountants in Indonesia are regulated primarily by the following national legislation: Law no. 5/2011 of Public Accountant, Government Regulation No. 20/2015 of Public Accountant Practices, and Ministry of Finance Decree No. 186/2021 of Public Accountant Guidance dan Supervision. Professional accountants are also regulated by the mandatory membership in one of Indonesia’s professional accountancy organizations (PAOs): Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia – IAI) which regulates Chartered Accountants (CA) and Indonesian Institute of Certified Public Accountants (Institut Akuntan Publik Indonesia – IAPI) which regulates Public Accountants (Auditors). Management accountants may also voluntarily join the Indonesian Institute of Management Accountants (IAMI).

Chartered Accountants

Together with the Ministry of Higher Education, the MoF and IAI shared responsibility for setting initial and continuing professional development (IPD and CPD, respectively) requirements for CAs.

There are two pathways to becoming a CA in Indonesia. Under the Ministry of Higher Education Decree No. 153 of 2014 on the Professional Accountancy Education Program, individuals aspiring to be a CA are required to: (i) complete a bachelor’s degree in accounting; (ii) successfully complete the IAI Professional Accounting Education Program (Pendidikan Profesi Akuntan – PPAk) from an accredited university and pass the IAI exam; and (iii) register with the MoF in the state registered accountant title (Register Negara Akuntan – Ak).

In the second path, individuals must complete and pass the CA qualification, which is overseen by IAI. The CA examination comprises seven separate examinations, which candidates must complete over a maximum period of 3 years.

To be a registered accountant by the MoF, an individual must pass either the PPAk or CA qualification, have at least three years of practical experience, and be a member of IAI.

The law grants IAI with authority for (i) setting and implementing IPD and CPD requirements for its members; (ii) issuing and monitoring a code of professional conduct for its members; (iii) establishing an investigative and disciplinary (I&D) system for all CAs; (iv) supporting the Indonesian Financial Accounting Standards Board (Dewan Standar Akuntansi Keuangan – DSAK-IAI) as independent national accounting standard-setting body in Indonesia; and (v) promoting the development of the accounting profession in Indonesia.

Public Accountants (Auditors)

Public Accountants (Auditors) in Indonesia are subject to a multi-layer system of supervision, with each responsible party responsible for regulating segments of professionals.

The MoF and the IAPI share responsibility for setting IPD and CPD requirements for Public Accountants (Auditors) in accordance the Public Accountant Act No. 5 of 2011. Individuals aspiring to be Public Accountants (Auditor) are required to: (i) complete a recognized bachelor’s degree, master’s degree, or doctorate in accounting; (ii) complete an initial examination to become an “Associate CPA”; (iii) complete the professional level examinations to achieve the “CPA - Not Practicing” status; (iv) demonstrate three years of practical experience before becoming eligible to take the final comprehensive examination; (v) pass the final examination to achieve “full CPA” status; and (vi) register with the MoF. IAPI is responsible for Public Accountants (Auditors) examinations.

The Public Accountant Act also outlines the requirements for foreign public accountants to become licensed in Indonesia, provided there is mutual recognition agreement (MoU) between the government of Indonesia and the foreign public accountant’s country of origin. There are MoU signed with the Institute of Chartered Accountants in England and Wales (ICAEW), the Association of Chartered Certified Accountants (ACCA), CPA Australia, and the Association of International Certified Professional Accountants–CIMA.

The Public Accountant Act empowers IAPI as a regulator of Public Accountants (Auditors). Its responsibilities include (i) implementing and setting IPD and CPD requirements for its members; (ii) issuing audit standards to be applied by auditors; (iii) issuing and monitoring a code of professional conduct for its members; (iv) establishing an I&D for its members; and (v) establishing a quality assurance (QA) review system for its members.

Additionally, the Finance Professions Supervisory Center (Pusat Pembinaan Profesi Keuangan – PPPK), under the MoF, was established by MoF Decree No. 100 of 2008 as independent audit oversight authority. Its responsibilities included in the Public Accountant Act and MoF Decree No. 154/PMK.01/2017, are (i) issuing practicing licenses to individual auditors and audit firms; (ii) establishing a QA review system for Public Accountants (Auditors) and firms; (iii) establishing an I&D for Public Accountants (Auditors); and (iv) setting other regulation for Public Accountants (Auditors) and firms, such as rules on auditor rotation.

Furthermore, OJK in accordance with the Capital Market Act No. 8 of 1995 also has regulatory powers over Public Accountants (Auditors) that provide services to companies under its supervision —banks, listed companies, insurance companies, and financial institutions. Accordingly, OJK is empowered to establish the following processes applicable to Public Accountants (Auditors) and Firms providing services to regulated companies: (i) maintain a register; (ii) establish an I&D system, and (iii) establish a QA review system. Additionally, under State Finance Law No. 17 of 2003 and Supreme Audit Board (Badan Pemeriksa Keuangan – BPK) Regulation No. 1 of 2008, the BPK is given the authority to review audit engagement work conducted by IAPI members on public sector entities.

In accordance with MoF Decree No. 234 of 2015 on the Organization and Working Procedure of Ministry of Finance,) the Pusat Pembinaan Profesi Keuangan (PPPK)/Finance Professions Supervisory Center is the independent audit oversight authority in Indonesia. PPPK’s responsibilities are set out in the Public Accountants Act No. 5 of 2011. They include issuing practicing licenses to individual auditors and audit firms; establishing the requirements to obtain and maintain the practicing license; setting continuing professional development requirements for auditors; setting rules on auditor rotation; and the investigation and discipline of individual auditors and audit firms. The Law No. 5 also authorizes PPPK to conduct inspections of the audit work of all auditors and audit firms.

PPPK is a member of the International Forum of Independent Audit Regulators (IFIAR) and the ASEAN Audit Regulators Group.

Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants (IAI)

IAI was established on December 23, 1957. The IAI is responsible for the regulation of professional accountants, including setting accounting standards in the private sector, administering the Chartered Accountant Indonesia exam, providing continuing professional education, establishing a code of ethics, adopting professional standards, and maintaining a disciplinary system for members. IAI membership comprises accountants from all accounting backgrounds, including public accountants/auditors, management accountants, tax accountants, internal auditors, academics, and public sector accountants. Prior to 2014, membership in the IAI was voluntary; however, in 2014, the Minister of Finance Decree No. 25 of 2014 (PMK) on State Registered Accountants introduced the requirement for accountants to become a member of a professional organization prior to their registration with the Minister of Finance. In addition to being a member of IFAC, IAI is a member of the ASEAN Federation of Accountants.

Institut Akuntan Manajemen Indonesia/Indonesian Institute of Management Accountants (IAMI)

IAMI is a professional organization of management accountants who work as executives in state-owned, government, and private companies. IAMI was established on April 1, 2008. One of the IAMI's activities in achieving its vision is to encourage and maintain the implementation of professional standards and codes of ethics by its members. Previously, the IAMI was a part of the IAI, until it elected to be an independent organization in 2007.

Institut Akuntan Publik Indonesia/Indonesian Institute of Certified Public Accountants (IAPI)

According to the Law No. 5/2011 of Public Accountant and the Government Regulation No. 20/2015 of Public Accountant Practices, IAPI is an independent organization and regulator of Public Accountants (Auditors). Its responsibilities include (i) implementing and setting IPD and CPD requirements for its members, for example, carrying out the Professional Public Accountant Examination; (ii) issuing audit standards to be applied by auditors; (iii) issuing and monitoring a code of professional conduct for its members; (iv) establishing an I&D for its members; and (v) establishing a quality assurance (QA) review system for its members. Membership with the IAPI is mandatory for all public accountants. In addition to being an IFAC Member, IAPI is also an associate member of the ASEAN Federation of Accountants.

There is no information on ongoing projects.

Public Accountants (Auditors) in Indonesia are subject to a multi-layer system of supervision, with each responsible party conducting quality assurance (QA) reviews of auditors.

The Public Accountants Law No. 5 of 2011 requires the establishment of a mandatory QA review system for all audits in Indonesia. In accordance with the Act, the Pusat Pembinaan Profesi Keuangan/Center for Supervision of Financial Service (PPPK), under the MoF, and Indonesian Institute of Certified Public Accountants (Institut Akuntan Publik Indonesia – IAPI) are responsible for establishing a QA review system for Public Accountants and firms.

The OJK in accordance the Capital Market Law No. 8 of 1995 is also empowered to establish a QA system for Public Accountants (Auditors) providing services to companies under its supervision which include banks, listed companies, insurance companies, and financial institutions.

Additionally, under Law No. 17 of 2013 of State Finance and Badan Pemeriksa Keuangan (BPK)/ The Audit Board Republic of Indonesia Regulation No. 1 of 2008, the BPK is given the authority to review audit engagement work conducted by IAPI members.

PPPK’s inspection priorities are auditors of PIEs—listed companies and financial institutions—although PPPK also conducts inspection on auditors who audit non-PIEs. According to PPPK, it inspects Big-10 firms annually, second-tier firms biannually and other firms at least once in four or five years.

IAPI reports that its QA system is developed in line with the requirements of SMO 1 and covers its entire membership base (those who provide assurance and non-assurance services) although the adoption of ISQM 1, 2, and ISA 220 (revised) will occur over the next 2 – 3 years. IAPI reports that the QA system by PPPK is also developed in line with the SMO 1 benchmark. It is unclear if the BPK’s or OJK’s systems are in line with SMO 1.

As there are overlaps in the respective responsibilities of different agencies who are involved in QA reviews of auditors in the jurisdiction, IAPI and PPPK hold a coordination meeting at the beginning of year to determine the list of firms and CPAs that will be reviewed by each agency and the timing as well. Similar coordination meetings with OJK were conducted beginning in 2023.

Current Status: Partially Adopted

In Indonesia, the Ministry of Higher Education, Ministry of Finance (MoF), Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants (IAI), and Institut Akuntan Publik Indonesia/Indonesian Institute of Certified Public Accountants (IAPI) have a role in implementing IPD and CPD requirements for professional accountants.

Under MoF Decree No. 25 of 2014, and with the approval of the Ministry of Higher Education, the IAI is responsible for setting IPD requirements for Chartered Accountants. There are two pathways to becoming a CA in Indonesia. First, individuals aspiring to be a CA are required to: (i) complete a bachelor’s degree in accounting; (ii) successfully complete the IAI Professional Accounting Education Program (Pendidikan Profesi Akuntan – PPAk) from an accredited university and pass the IAI exam; and (iii) register with the MoF in the state registered accountant title (Register Negara Akuntan – Ak). In the second path, individuals must complete and pass the CA qualification, which is overseen by IAI. The CA examination comprises seven separate examinations, which candidates must complete over a maximum period of 3 years. To register with the MoF, three years of practical experience is also required.

The IAI has developed the Standar Pendidikan Akuntansi Indonesia/Indonesian Accounting Education Standards, with the support of the World Bank. These standards are to be used when developing accounting education programs.

The Public Accountants Act of 2011 and MoF Regulation No. 17 of 2008 set forth the requirements for becoming a Public Accountants (Auditors). The MoF and the IAPI share responsibility for setting IPD and CPD requirements for Public Accountants (Auditors). Individuals aspiring to be Public Accountants (Auditor) are required to: (i) complete a recognized bachelor’s degree, master’s degree, or doctorate in accounting; (ii) complete an initial examination to become an “Associate CPA”; (iii) complete the professional level examinations to achieve the “CPA - Not Practicing” status; (iv) demonstrate three years of practical experience before becoming eligible to take the final comprehensive examination; (v) pass the final examination to achieve “full CPA” status; and (vi) register with the MoF. IAPI is responsible for Public Accountants (Auditors) examinations.

Both IAI and IAPI report that the latest IES requirements are incorporated into the educational programs in Indonesia for all professional accountants.

Current Status: Adopted

Under the Public Accountants Law of 2011, the Institut Akuntan Publik Indonesia/Indonesian Institute of Certified Public Accountants (IAPI) has direct responsibility for setting auditing standards in Indonesia. It does so via the Indonesian Auditing and Assurance Standards Board (“Indonesian AASB”) which has adopted the Indonesian Public Accountant Professional Standards (SPAPs) based on the ISA and translated into Bahasa Indonesia. The SPAPs are currently based on the 2020 IAASB Handbook. The Indonesia AASB is reviewing and has made plans to adopt ISA 315 (revised 2019), ISQM 1, 2, and ISA 220 (revised), and ISA 600 over the next two—three years.

Current Status: Partially Adopted

The Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants (IAI) and the Institut Akuntan Publik Indonesia/Indonesian Institute of Certified Public Accountants (IAPI) are responsible for setting ethical requirements for their members, in accordance with the Minister of Finance Decree No. 216/PMK.01/2017, and the Public Accountants Act No. 5 of 2011.

IAI, IAPI, and IAMI as the three recognized PAOs in Indonesia have published a joint Code of Ethics for all professional accountants in Indonesia called the Kode Etik Akuntan Indonesia. This Code is aligned with the 2020 International Code of Ethics for Professional Accountants.

Currently, IAI, IAPI and IAMI are in an ongoing process to adopt revisions that are a part of the 2022 International Code of Ethics.

Current Status: Partially Adopted

The Government Accounting Standard Committee (KSAP), established under Minister of Finance Decree No. 379 of 2004, is responsible for setting Public Sector Accounting Standards in Indonesia. The KSAP is an independent committee comprising representatives from the Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants, academia, and government practitioners, among others. The KSAP uses IPSASs as the main reference when drafting national public sector accounting standards; however, modifications are made to allow for the differences in Indonesia’s legal and regulatory environment. As of 2015, Indonesian public sector accounting standards are defined as full accrual standards.

Current Status: Partially Adopted

The investigation and discipline (I&D) of accountancy professionals in Indonesia is shared between the Pusat Pembinaan Profesi Keuangan/Center for Supervision of Financial Service Professions of the Ministry of Finance of the Republic of Indonesia (PPPK), Otoritas Jasa Keuangan/Financial Service Authority (OJK), Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants (IAI), and the Institut Akuntan Publik Indonesia/Indonesian Institute of Certified Public Accountants (IAPI).

In accordance with the MoF Decree No. 216/PMK.01/2017 the IAI has established I&D mechanisms for its members. The IAPI, empowered by the Public Accountants Act No. 5 of 2011, also established an I&D system for its members. Disciplinary actions can lead to written warnings, membership suspension, or revocation of membership depending on the severity of the offense. Both systems are aligned with the requirements of SMO 6.

The PPPK and OJK are authorized to conduct I&D for professional accountants registered to provide services to entities under its supervision — banks, listed companies, insurance companies, and financial institutions. Their responsibilities include the capacity for issuing a variety of sanctions. They work with both the IAI and IAPI to minimize the potential overlap. It is not clear whether the PPPK and OJK I&D systems incorporate all the requirements of the SMO 6.

Current Status: Partially Adopted

In accordance with the Law No. 40/2007 of Limited Liability Companies and Law No. 8/1995 of Capital Market, companies obligated to be audited by a public accountant (primarily companies considered to have public accountability) must deliver an annual financial report based on the financial accounting standard established by the Indonesian Financial Accounting Standards Board (Dewan Standar Akuntansi Keuangan – DSAK-IAI). The DSAK-IAI, under the Institute of Indonesia Chartered Accountants (Ikatan Akuntan Indonesia – IAI), is the independent national accounting standard-setting body that establishes the Indonesian Financial Accounting Standards (Standar Akuntansi Keuangan – SAK) which are based on the latest IFRS with adjustments to the effective date.

The DSAK-IAI has also currently adopted SAK ETAP, which are based on IFRS for SMEs, for entities without public accountability. DSAK-IAI has launched the SAK EP (Private Entity) to replace SAK ETAP effective in 2025.

The IFRS Foundation and the DSAK-IAI note that the SAK does not incorporate all the requirements of IFRS. However, DSAK-IAI is currently developing the SAK I (SAK International), a new reporting framework adopted word-for-word from IFRS. The framework will be available for entities that meet the requirements set by relevant regulators in Indonesia, for example the Financial Services Authority (Otoritas Jasa Keuangan – OJK), which supervises banks, listed companies, insurance companies, and financial institutions.

Current Status: Partially Adopted

Relevant Organizations

• Institute of Indonesia Chartered Accountants

• Institut Akuntan Publik Indonesia (IAPI)

Relevant Publications

• Financial Stability Board, “Global Shadow Banking Monitoring Report 2014—Indonesia,” October 2014.
• IAI, SMO Action Plan, 2021.
• IAPI, SMO Action Plan, 2023.
• International Forum of Independent Audit Regulators (IFIAR), “Member Profile—Indonesia”
• IFRS Foundation, “IFRS Application Around the World—Jurisdictional Profile: Indonesia,” March 2017.
• World Bank, “Current Status of the Accounting and Auditing Profession in ASEAN Countries,” September 2014.
• World Bank, “Report on the Observance of Standards and Codes (ROSC)—Accounting and Auditing (A&A): Indonesia,” 2010.