The manner in which the Supreme Court and the Supreme Audit Agency (BPK) resolved their dispute through President Susilo Bambang Yudhoyono's mediation on Saturday does not bode well for the development of public finance management, which unfortunately remains weak and infested with corruption.

The resolution, in which the court agreed to open all of its financial records to be audited by the BPK, but only on the basis of a special government regulation (meaning presidential decree), sets a bad precedent that could be exploited by other state institutions or government agencies to avoid accountability.

The audit agency's scope of responsibility and job description are clearly outlined in the 2004 State Audit Law, and everything related to state finances and treasury management is governed by the 2003 State Finance Law and the 2004 State Treasury Law. The BPK does not need a special directive, approval or presidential decree to examine the Supreme Court's financial records.

The State Finance Law stipulates that any fees or levies collected by government or state institutions are state revenue, and this revenue shall be audited by the BPK as the sole external auditor of the government.

So when the Supreme Court refused to be audited by the BPK with regard to the court administrative fees it collected from parties involved in civil lawsuits, it was certainly against the law.

The Supreme Court argument that according to the Civil Code, administrative fees are not state revenue and hence an audit by the BPK is not warranted, is weak. Why would an institution like the Supreme Court, which is supposed to be an expert in legal matters, refer to the Civil Code and not the State Finance Law to obtain the legally correct definition of state revenue.

The court did not cite any other reasons – other than its own interpretation of state revenue – as to why it refused to be audited by the BPK.

The audit agency has often discovered problems related to the management of administrative fees or charges at other state institutions, but these were related to deferments in the transfer of the fees to the state treasury due to cash flow problems caused by overly rigid budget disbursement procedures.

Some government offices have been forced to withhold the administrative fees they raised much longer than allowed by regulations as a bridging finance for their operations until they received budget disbursements.

If this was the case, a solution should be sought through consultations with the treasury directorate general so that budget disbursements could be expedited without increasing the risk of non-tax revenue being embezzled or abused through corruption.

But for the Supreme Court simply to refuse to allow BPK auditors to examine its books with regards to the administrative fees it raises leads to unnecessary questions about the court's financial accountability.

Hence, BPK chairman Anwar Nasution did the right thing when he recently reported Supreme Court Chief Justice Bagir Manan to the police over his refusal to provide access to BPK auditors. Unfortunately, though, there seemed to be a reluctance and even confusion on the part of the police as to how to handle this dispute between the two supreme institutions.

The President's intervention in the dispute should be welcomed, as it will hopefully prevent the conflict from affecting the work of the two bodies. But ordering the finance minister to prepare a special government regulation or directive for an audit of the Supreme Court, as the President did, is not the most appropriate solution. It would have been much better to bring the dispute to the Constitutional Court.

The government must realize that transparency and accountability demand stringent public-reporting requirements and independent audits, and this should be reaffirmed in the special government regulation being prepared.