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Government earns highest audit rating from BPK despite irregularities

Jakarta Post - July 21, 2020

Adrian Wail Akhlas and Marchio Irfan Gorbiano, Jakarta – The Supreme Audit Agency (BPK) has given the 2019 central government's financial report an unqualified opinion (WTP), the best audit grade, despite irregularities found in several issues, including the recent financial scandals involving state-owned insurance companies.

The rating is based on the audit of 88 financial reports from ministries, government institutions and the state treasury, according to the agency's chairman, Agung Firman Sampurna.

Of the 88 financial reports, 85 received a WTP, compared to 81 in 2018.

Meanwhile, the BPK gave a qualified opinion (WDP), the second-best audit grade, to two other financial reports and a disclaimer for one financial report.

"We have audited the government's financial reports and there are several problems, ranging from internal monitoring systems to unlawful practices," Agung told reporters in a press briefing on Tuesday, adding that the agency found irregularities in the handling of government accounts, as well as financial mismanagement of state-owned insurance companies.

The agency has raised concerns over the financial reports on two state-owned insurers, PT Asuransi Jiwasraya and Asuransi Angkatan Bersenjata Republik Indonesia (Asabri), stating that the government's long-term obligation on the pension program had yet to comply with accounting standards.

"Irregularities in the pension program have been occurring for years," Agung said. "Therefore, reform on pension funds management is crucial to managing the problems in Jiwasraya and Asabri."

Both Jiwasraya and Asabri have been implicated in financial fiascos after losing trillions of rupiah through investment mismanagement.

Jiwasraya is embroiled in a corruption and money laundering case following its failure to pay out Rp 18 trillion (US$1.21 billion) in matured policies due in May to policyholders. Meanwhile, Asabri suffered a loss of about Rp 10 trillion from investing in stocks allegedly used for pump-and-dump schemes, sparking a similar corruption allegation.

So far, the State-Owned Enterprises (SOE) Ministry plans to restructure Jiwasraya's policies before carrying them over to a new company, PT Nusantara Life, and then dissolving the ailing insurer.

The BPK also found that several public officials in five ministries or government institutions – including in the Defense Ministry and Religious Affairs Ministry – had yet to obtain permission from the Finance Ministry to use their personal bank accounts to store Rp 71.8 trillion in state funds.

"We have yet to find state losses from these irregularities, but there is a risk [of corruption] from using personal bank accounts to store state funds," Agung went on to say, adding that the audit on the financial reports had yet to yield findings of any fraud or corruption.

In total, the agency found 31 irregularities in the government's financial reports, ranging from tax refunds to land procurement for national strategic projects, among other irregularities.

Meanwhile, President Joko "Jokowi" Widodo lauded the government for securing the highest audit rating for the fourth time in a row since 2016.

"I am asking all ministers and agency heads to use the BPK audit as a parameter to conduct reform and make improvements in managing the state budget," the President said on Monday, adding that ministries that received a WDP and disclaimer from the BPK should "immediately start making improvements to create significant changes" in managing their budget.

"Ministries should immediately improve their budget management so that the people's funds, managed by the government, can be accounted for and benefit everyone."

The BPK should further investigate unlawful practices that may result in state losses, said the University of Indonesia (UI) public policy expert Agus Pambagio.

"The use of personal accounts to store state funds has been happening since the Soeharto era. This means that the current government has yet to learn from past mistakes," Agus told The Jakarta Post, adding that the government should take the money back immediately to prevent corruption.

Agus also raised concerns over the management of pension funds, calling for government reform to restore confidence and accountability.

Source: https://www.thejakartapost.com/news/2020/07/21/government-earns-highest-audit-rating-from-bpk-despite-irregularities.html