Over the past 10 years, the accountability of the APBN, as manifested through the Central Government Financial Report (LKPP), has undergone various dynamics and transformations, presenting credible, transparent and accountable evidence of the presence of the APBN in the life of the nation.

Accrual accounting

The need to comply with accounting standards produces quality, reliable and relevant financial reports, as well as the accounting and measurement of financial transactions which, in turn, will produce comparable information.

To fulfill the mandate of the State Finance Law, the issuance of Government Regulation (PP) No. 71/2010 on Public Accounting Standards (SAP) provides the government with a basis for implementing state accounting. exercise.

Accrual accounting is considered more effective in describing government financial performance because it records, presents and discloses all government financial transactions, both rights and obligations, within the National Public Procurement Agency .

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The first year of accrual accounting in 2015 was marked by the development of financial reporting on the accrual method in all ministries and institutions, which were subsequently consolidated in the LKPP. This represents an important step towards greater transparency and accountability in government financial management.

Development of the LKPP opinion

The government’s financial reporting journey began in 2005 with the preparation of the LKPP 2004, facing problems related to the preparation of a credible initial balance sheet, including tracing state property assets ( BMN), the organization of government accounts and the improvement of the administration of state expenditure and revenue.

The Supreme Audit Commission (BPK) issued a disclaimer during the five years of the LKPP from 2004 to 2008, transforming into a qualified opinion of the LKPP 2009.

From 2010 to 2015, the government prepared infrastructure to achieve two goals, achieving the accrual-based LKPP and obtaining the highest unqualified opinion (WTP) audit rating.

Information systems and regulations related to the implementation of accrual-based SAP play an important role in efforts to achieve both goals, such as the State Treasury and Budget System (SPAN), the State Revenue Module (MPN), and the agency’s accrual-based accounting system. (SAIBA). In terms of regulations, the government has prepared rules governing the implementation of accrual-based SAP, from accounting policies and systems to the issuance of technical instructions.

The government first obtained an unqualified opinion of the BPK with the 2016 LKPP, maintaining this goal for eight consecutive years until the 2023 LKPP.

Efforts to maintain unqualified opinion

Maintaining an unqualified opinion for eight consecutive years is no easy task, with different challenges each year to present responsibilities for each implemented program in a credible and transparent manner.

In the LKPP of 2018, the government was asked to explain the revaluation process that resulted in a significant increase in fixed assets, and the BPK accepted the results of the revaluation of the assets in question in the LKPP of 2019 with an increase fixed assets from Rp 1,931.05 trillion ($124.45 million) to Rp 5,949.60 trillion.

With extraordinary policies adopted to sustain the national economy amid the COVID-19 pandemic, the government was also responsible for the Coronavirus Management and National Economic Recovery Program (PC-PEN) with a total achievement of 1,627, 23 trillion rupees over three years, as shown in the report. LKPP data for 2020, 2021 and 2022.

Improving the quality of the LKPP is inseparable from the measures taken by the government to improve the system and procedures for implementing the APBN; accounting regulations, policies and technical instructions; the quality of the guidelines for the agency’s accounting system (SAI) and the regular monitoring of the implementation of the BPK’s recommendations. BPK data shows that as of the second half of 2023, the government had implemented 987 recommendations, or 96.56% between 2004 and 2022.

The responsibility of the APBN is stipulated annually in the Law on Accountability for Implementation of the APBN (UU P2 APBN), which was formulated through a discussion mechanism in the House of Representatives. The Chamber submits recommendations that play an important role in improving the quality of state financial accountability, and which the government is also committed to implementing.

In terms of regulations, improvements are made every year to take into account various recommendations and adjustments with regard to the evolution of business processes, aimed at improving data quality, maintaining accountability and transparency of the LKPP and anticipating risks audit for the next period.

A number of regulations were improved in 2023, including through the Ministerial Finance Regulations (PMK) on Changes to the Central Government Accounting Policy, PMK on the Accounting System and Financial Reporting for Special Transactions and the PMK on the central accounting system and financial information.

Crucial improvement efforts in the technical readiness of the LKPP over the past 10 years include the implementation of automated reconciliation and consolidation of agency financial data as part of the ministry and institution financial reporting (LKKL) via the E-Rekon&LK system in 2016.

This year, the Agency Level Financial Implementation System (SAKTI) pilot project was also carried out as a means for financial management agencies covering the planning stages through to budgetary accountability. SAKTI integrates all previously used agency applications into a single database, performing all accounting and reporting transactions electronically.

By 2022, all ministries and institutions have fully utilized SAKTI as a system integrating the planning and budgeting process, implementation and accountability of APBN in government agencies.

The government developed the Integrated SPAN-LKPP application in 2018, which was used to facilitate the consolidation process and preparation of a better LKPP. Improvements were made to the financial management app in 2019, followed by the launch of the Standard Account Chart (BAS) mobile app. The application comes with a list of codifications and classifications related to financial transactions which have been systematically compiled as a guideline for government planning, budgeting, budget execution and financial reporting.

Unqualified opinion: what’s next?

The government continues to integrate performance reporting with financial reporting in an effort to improve the quality of accountability of the APBN. This integration is carried out based on the results of each planned program or activity, thus all outcome achievements can be used as evaluation material to achieve the planned program results.

Furthermore, the LKPP serves as an instrument to evaluate programs that have been implemented and provides a basis for future policy development. Efforts to establish increasingly credible and transparent accountability for the APBN should be proof that the APBN is truly present within society, while being an instrument of state that plays an effective role in achieving a prosperous and just Indonesia.

Source: Ministry of Finance