RENCANA DAN PROGRAM ADOPSI PENUH (FULL ADOPTION) IFRS dan STRUKTUR SERTA TANTANGAN DEWAN STANDAR AKUNTANSI KEUANGAN (DSAK)

RENCANA DAN PROGRAM ADOPSI PENUH (FULL ADOPTION) IFRS dan STRUKTUR SERTA TANTANGAN DEWAN STANDAR AKUNTANSI KEUANGAN (DSAK)

Dewan Standar Akuntansi Keuangan (DSAK) Ikatan Akuntan Indoensia (IAI)

Catatan dari Brawijaya Accounitng Fair 2008

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RENCANA DAN PROGRAM ADOPSI PENUH IFRS

Alasan Adopsi Penuh IFRS

Adposi penuh IFRS dilakukan untuk meningkatkan kualitas SAK dan mengurangi biaya penyusunannya.  Selain itu, untuk meningkatkan kredibilitas dan kegunaan Laporan Keuangan (LK) melalui peningkatan kualitas dan kredibilitas LK.  Merupakan permintaan dari regulator melalui surat yang mengingatkan pentingnya align dengan IOSCO.

Manfaat Adopsi Penuh IFRS

Adopsi penuh IFRS bermanfaat untuk memudahkan pemahaman atas LK, karena penggunaan SAK yang telah dikenal secara internasional (enhance comparability).  Diharapkan akan meningkatkan arus investasi global melalui transparansi.  Juga menurunkan biaa modal dengan membuka peluang penggalian dana (fund raising) melalui pasar modal secara global.

Tantangan Adopsi Penuh IFRS

Aspek Regulasi

Ada beberapa regulasi yang mengatus aspek pencatatan seperti ekuitas dan tanah yang mengatur secara berbeda dengan IFRS.  SAK-IFRS tetap mengacu pada hirarki perundang-undangan nasional.  Adopsi Penuh IFRS dilakukan dengan memasukkan muatan lokal.

Infratruktur Lingkungan Ekonomi Nasional

Tidak tersedia pasar untuk menentukan nilai wajar aset nonkeuangan.  Selain itu, tingkat inflasi yang relatif tinggi dibandingkan negara-negara maju akan meningkatkan volatilitas nilai wajar.  Permasalahan yang sama yang dihadapi oleh berbagai negara berkembang yang mengadopsi penuh IFRS.

Tingkat Kesiapan

Penggunaan profesisonal judgement akan menjadi kendala tersendiri.  Pemahaman penyusun, auditor, akademisi, dan regulator yang belum tentu sama.  Akan semkin mengningkatkan ketergantungan pada profesi lain. Sehingga, pelu pelatihan profesional yang masif dan berkelanjutan.

Masalah Penerjemahan

Terbatasnya sumberdaya dan konsumsi waktu yang tidak sedikit.  Penerjemahan harus mudah difahami.  Sehingga, peningkatan pelatihan profesional perlu dilakukan secara masif.

Strategi Adopsi Penuh IFRS

Alternatif Strategi

Big Bang Strategy, adopsi penuh dilakukan sekaligus tanpa masa transisional.  Telah banyak dilakukan oleh negara-negara maju dan sebagian kecil negara berkembang seperti Afrika Selatan.

Gradual Strategy, adopsi penuh dilakukan secara bertahap dengan masa transisi.  Strategi yang banyak digunakan oleh negara-negara berkembang.  Syaratnya memerlukan kesiapan yang mencukupi dan tidak menimbulkan gegar psikology (psychological shock).  Strategi yang mampu mengurangi dampak negatif.  Untuk Indonesia, yang paling cocok adalah Strategi Gradual Terakselerasi (dipercepat).

PSAk harus menggunakan Bahasa Indonesia sebagaimana amanat Undang-Undang 4/2004 tentang Pembentukan Peraturan dan Perundang-undangan.

Tahapan (roadmap) Adopsi Penuh IFRS

1.       Tahap Adopsi (2007—2009)

Waktu yang diperlukan untuk mengadopsi seluruh IFRS ke PSAK.  Waktu untuk persiapan infrastruktur yang diperlukan.  Waktu untuk evaluasi dan kelola dampak adopsi terhadap standar akuntansi.

2.       Tahap Persiapan (2010)

Waktu untuk penyelesaian persiapan infrastruktur yang diperlukan.  Evaluasi penerapan per PSAK yang diadopsi penuh dari IFRS.  Cadangan waktu penyelesaian adopsi penuh.

3.       Tahap Implementasi (2011)

Waktu penerapan pertama kali seluruh PSAK yang sudah mengadopsi penuh IFRS.  Evaluasi dampak penerapan PSAK adopsi penuh IFRS secara komprehensif.

Dampak adopsi penuh terhadap PSAK adalah (1) revisi terhadap PSAK dan lahirnya PSAK baru; (2) PSAK untuk industri khusus dihilangkan dan dimunculkan pedoman akuntansi sebagai pengantinya; (3) PSAK derivasi dari Undang-Undang dipertahankan; dan (4) PSAK yang belum atau tidak diatur dalam IFRS akan dikembangkan.

Infrastruktur dan Dukungan

Infrastuktur

Diperlukan sumber daya finansial yang memadai.  Tidak membebani manajemen purnawaktu untuk mencari dana selain mendukung aktivitas DSAK.  Imbalan yang layak kepada pihak eksternal IAI yang ikut dalam proses adopsi IFRS.  Pembentukan dana abadi.

Diperlukan sumber daya manusia sebagai manajemen purnawaktu yang mencukupi dengan cara menambah jumlah manajemen purnawaktu dadn meningkatkan imbalan.  Selain itu, perlu penguatan kelembagaan DSAK dengan menambah jmlah anggota DSAK dan memperbaiki mekanisme kerja DSAK.

Dukungan

Perlu dukungan sumber daya finansial dengan adanya komitmen dan dukungn dari semua pihak untuk penyediaan sumberdaya finansial.  Harus dilakukan sinkronisasi regulasi antara PSAK dan peraturan dan perundangan untuk saling melengkapi dan bukan saling meniadakan.  Bagi para pemakai, seperti para penyusun perlu peningkatan kemampuan dalam hal principlebased.  Sedangkan untuk auditor perlu peningkatan kapasitas dan integritas karena IFRS penuh dengan professional judgement.  Sedangkan untuk para akademisi perlu melakukan perubahan orientasi pendidikan akuntansi ke IFRS.

Penyusunan PSAK UKM

Acuan penyusunan PSAK UKM akan menggunakan IFRS for SME yang disesuikan dengan kondisi di Indonesia.  Proses penyusunan telah mulai berjalan dengan adanya Tim Kerja yang terdiri dari IAI, akademisi, Depkeu, HIPMI, dan KAP.

Diperlukan dana Rp1 Milyar yang saat ini masih menggunakan dana talangan karena belum ada dana yang masuk.  Diperlukan dukungan komite akuntansi untuk UKM seperti Komite Akuntansi Syariah.  Diperlukan staf purnawaktu yang khusus mendukung kegiatan Komite Akuntansi untuk UKM.

STRUKTUR DAN TANTANGAN DEWAN STANDAR AKUNTANSI KEUANGAN (DSAK)

Oleh M. Yusuf Wibisono (Ketua DSAK)

Accounting Standard Setter di Indonesia terdiri dari Dewan Standar Akuntansi Keuangan (DSAK) atau Indonesia Accounting Standarb Board (IASB) dan Badan Pengawas Pasar Modal (BAPEPAM) atau Securities Exchange Committee (SEC).

DSAK merupakan lembaga privat yang bertanggung jawab untuk menyusun standar akuntansi di Indonesia.  Didukung oleh peraturan dan perundangan dan merupakan bagian dari penyusun peraturan (quasi lwa maker).  DSAK terdiri dari anggota profesi akuntansi, pakar peraturan yang terkait, dan institusi bisnis.

Peraturan Pendukung DSAK

Undang-Undang 8/1995 tentang Pasar Modal. Pada Pasal 69 (1) dinyatakan kepada Bapepam, bahwa laporan keuangan wajib disusun berdasarkan prinsip akuntansi yang berlaku umum (PABU). PABU adalah Standar Akuntansi Keuangan yang ditetapkan oleh Ikatan Akuntan Indonesia (IAI) dan praktek akuntansi lain yang lazim berlaku di pasar modal. 

Undang-Undang 1/1995 tentang Perseoran Terbatas.  Pada Pasal 58 (1) menyatakan bahwa perhitungan tahunan dibuat sesuai dengan Standar Akuntansi Keuangan (SAK).  SAK adalah prinsip-prinsip akuntansi yang telah diakui dan disetujui oleh kalangan akuntan Indonesia bersama instansi pemerintah yang berwenang.

Dewan Konsultatif Standar Akuntansi Keuangan (DKSAK) merupakan bagian khusus yang menjadi bagian dari IAI untuk memberikan pandangan mengenai arah dan skala prioritas DSAK.  DKSAK berwenang memberikan pandangan-pandangan mengenai arah dan skala prioritas pemilihan standar dan interpretasi yang akan diberlalukan dalam profesi akuntansi di Indonesia.  Berwenang melakukan upaya penggalangan sumber dana bagi pengembangan standar dan interpretasi yang akan diberlalukan dalam profesi akuntansi di Indonesia.  Dibentuk oleh dan bertanggung jawab pada DPN.       

Dewan Standar Akuntansi Keuangan (DSAK)

DSAK adalah badan yang menjadi bagian dari organisasi IAI yang memunyai otonomi untuk menyusun dan mengesahkan standar dan interpretasinya.  DSAK dibentuk oleh DPN dengan pembiayaan sepenuhnya diupayakan oleh DPN.  Pengawasan terhadap mekanisme dan kinerja DSAK dilakukan oleh DPN.  Tata kerja DSAK diatur lebih lanjut dalam PO yang dibuat oleh DPN.

Pemilihan anggoa DSAK diutamakan berdasarkan kompetensi, pengalaman, integritas, dan komitmen pada IAI serta komitmen untuk mencurahkan waktu dan perhatian pada tugas sebagai anggota DSAK.  Masa kerja anggota DSAK maksimum 4 tahun dan dapat diangkat kembali 1 kali saja.  Kesinambungan keanggotaan DSAK selalu dipelihara.  Ketua DSAK diangkat dari dan oleh anggota DSAK terpilih.  Dibentuk badan pekerja purna waktu (full timer management & staffs) sebagai tim teknis penyusunan PSAK dan ISAK.

Tugas utama DSAK adalah (1) menentukan materi serta skala prioritas pilihan topik untuk dijadikan angenda kerja; (2) mempertimbangkan masukan DKSAK mengenai hal-hal yang berkaitan dengan pengembangan SAK; (3) memberikan arahan serta supervisi badan pekerja teknis dan membahas hasil pekerja teknis.  Badan pekerja teknis dibentuk oleh dan bertanggung jawab kepada DSAK.  Proses penyusunan standar harus mengikuti due process procedures yang telah disetujui pengurus pusat.

Due process procedures harus disusun sedemikian rupa untuk menunjang kualitas PSAK dan ISAK yang diberlakukan.  Orientasi penyusunan standar berfokus pada kualitas.  Menjalin hubungan baik dengan (1) badan penyusun standar internasional seperti IASB, FASB dan lain-lainnya; (2) instansi pemerintah dan badan lainnya yang berkepentingan dengan pengembangan SAK; (3) KAP yang memunyai kapasitas teknis dalam pengembangan SAK.

Due Process Procedures

1.       Identifikasi isu untuk dikembangkan menjadi PSAK.

2.       Konsultasi isu dengan DKSAK.

3.       Membenttuk tim kecil dalam DSAK.

4.       Melakukan riset terbatas.

5.       Melakukan penulisan draf awal.

6.       Pembahasan dalam DSAK.

Draf hasil tim kecil dibahas lagi dalam DSAK.  Dilakukan pendekatan teoretikal dan non teoritikal.

7.       Peluncuran draf sebagai exposure draft dan pengedarannya.

ED dikirim langsung sebagai sisipan dari Media Akuntansi dan Web IAI.  Juga dikirim langsung sebanyak 1000—2000 eksemplar ke KAP, PT, IAI Wilayah, dan instansi terkait (Bapepam, BEI, BPKP), serta DKSAK.  Masa edar 2 bulan.

8.       Publlic hearing & limited hearing.

Limited hearing dilakuan hanya bila perlu, standar yang rumit, kontroversial dan banyak direspon.  Penekanannya untuk meminta tanggapan dan bukan memberikan penjelasan.

9.       Pembahasan tanggapan atas ED dan masukan public hearing.

Berupa tanggapan tertulis, ada yang dapat diakomodasi tetapi ada yang ditolak, setelah tanggapan diakomodasi, draf dimasukkan ke Pusat Bahasa.

10.   Persetujuan ED PSAK menjadi PSAK.

Harus quorum untuk pengesahan oleh anggota DSAK.

11.   Optimal: final checking oleh full time staff.

Koherensi dan kelancaran kalimat atau paragraf, konsistensi istilah, ejaan dan lain sebagainya.

12.   Sosialisasi standar.

Sebagai bagian dari Program Pendidikan Profesional Berkelanjutan, melalui media masa, dan lain sebagainya.

Tantangan

1.       Keterbatasan pengetahuan terhadap standar, khususnya untuk standar yang kompleks.

2.       Kemudahan aplikasi dan penerimaan standar tidak sesuai harapan.

3.       Konsekuensi ekonomi naik pada standar-standar tertentu memengaruhi kualitas standar.

4.       Menuju standar tunggal dengan kualitas yang tinggi, IFRS.    

Exploring The Dark Side of Accounting (Fraud) (1) And Accounting Practice: Between Evil and Angel (2) By Hendrik Manurung ME (1) and Kevin D. Click (PT HM Sampoerna) (2) Note from Brawijaya Accounting Fair (BAF) 2008

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Exploring The Dark Side of Accounting (Fraud)

What is Fraud?

Black Law Dictionary said “Fraud is intentional perversion of truth, false representation of a matter of fact, whether by words or conduct.  For the purpose of inducing another, in reliance upon perversion of truth.  To part with some valuable thing belonging to him or to surender a legal right.

Why Fraud is a Costly Business Problem

Fraud losses reduce net income.  If profit margin is 10%, revenues must increase by 10 times losses to recover affect on net income.  Fraud rob income.  To restore income to Rp10.000, need Rp10.000 more Rupiah of revenue to generate Rp1.000 more Rupiah of income.

These Are Inteeresting Time

Number and size of financial statements fraud are increasing.  Number and size of frauds against organization are increasing.  Some recent fraud include several people, as many as 20—30 peoples.  Seems to indicate moral decay).  Many investors have lost confidence in credibility of financial statements and corporate reports.  More interest in fraud than ever before, now a course on many college campuses.

Perspective on Fraud

Bad Fraud

Acquierer overpays.  Earnings management like false revuneu recognition schemes, costs and expenses schemes, understatement liabilities, and many more.  Illegal conduct like liablitiy for past conduct, impoct upon future earnings, and many more.

Good Fraud

Acquierer underpays.  Misconduct that if discovered, reduces costs, and increase earnings.

Why So Many Financial Statement Frauds All of a Sudden?

Good Economy was maskng many problems.  Moral deacy in society.  Executive incentives, to achieve the target.  Wall street expectation, reward for short term behavior.  Nature of accounting rules.  Behavior of CPA Firms like Arthur Andersen in the Enron case,  Greed by investment banks, commercial banks, and investor.  Educator failures, the fraud knowledge not deliver well to the student.

Types of Fraud

Employee fraud, vendor fraud, customer fraud, investment scams, bankrupty frauds, miscellaneous frauds.  The common element is deceit or trickery.

The 21st Century Landscape

Civil and crimina legislation like Sarbanes Oxley Act of 2002.  Professional standards like Committee of Standard Organinzation (COSO), Statement of Auditing Standards (SAS) 99, Public Company Accounting Oversight Board Standards Integrated Audit.  Institute for Internal Auditors (IIA) Standards, ABA Rules for Professional Responsibility.

Expenses Avoided by Fraud

Tax crimes, failure to pay, false statement, evasion.  Fraud against suppliers and customer.  Improper labor practtices.  Environmental, health, and safety violations.  Money Laundering.

Applying COSO Framework

 Control Environment

Code of conducts or ethics; ethics hotline; hiring and promotion; audit committee oversight; investigative process; remedition.

Fraud Risk Assessment

Systematic process; level within organization; likelihood and significance.

Control Activities

Linking controls to identified fraud risks.

Information/Communication

Information systems and technology; knowledge management; training.

Monitoring

Ongoing monitoring by management; separate “after the fact” evaluations by internal aduit.

Educators

Need to teach ethics more.  Need to teach student about fraud and offer a fraud course.  Need to teah student ho to think.  Do analysis not do copy and memorize.

Accounting Practice: Between Evil and Angel

Company Overview

PT HM Sampoerna is the largest tobacco company in Indonesia.  In 2007 net sales is IDR29.8 Trillion, in 2008 (9 moths) growing 17.2%.  Approximately 30,000 employees.  Brand sold: A Mild, Dji Sam Soe, Marlboro.  Listed on Indonesian Stock Market.  Majority owned by Philip Morris International (PMI).  One of largest tobacco companies in the world.  Listed on New York Stock Exchane.

Tone at the Top

Nothing is more important than our commitment to integrity – no financial objective, no marketing target, no effort to outdo the competition.  No desire to please the boss outweighs that core commitment.  Our commitment to integrity must always come first (Louis Camilleri, CEO of PMI).

Company Culture

(1)   Establish compliance and integrity guidlines on business ethics;

(2)   integrity is one of the core performance competencies;

(3)   Promote “whistle blower” with free hotline number to report any suspected non compliances;

(4)   No tolerance for retaliation;

(5)   Stringent follow up and reporting of allegatios received;

(6)   Increase employees awareness on compliance and integrity through training and campaigns.

Resources Qualifications

(1)    Selective recruitment and placement process to ensure the right talents with high integrity.

(2)    Continuous training of soft and technical skills. In example GAAP Academy Programs, accounting technical updates. Developing PMI Managers.

(3)    Develop key employees to be member of professional accounting body (ACA, CIA).

Policies and Procedures

Establish policies and procedures for all aspects of the business process.  Finance policies (50 policies); Accountting Guidelines (1); Capex/Lease/Disposal (10); Travel and Entertainment (2); Cash management (8); Credit controls (6); Equity investent/acquisition (7); other finance policies (8).  Information systems (11 policies).  Compliance (16 policies).  Other (procurement, human resource, CA, operations (17 policies).

Internal Processes

Adequates segregation of duties.  Supervisory review and approval.  Adequate approval authoriztions.  Comprehensive automated IT controls within applications.  Adequate control on user access to systems and applications.

Monthly reconciliation on balance sheet, income statement and cash flow against the underlying financial accounts.  Monthly review and analysis (Sampoerna & PMI). In example mojor balance sheet accounts, income statement (against budget, standards, and previous period), suspense, clearing and inter company account.  Regular independent counts of cash, inventory and fixed assets.  Job rotation of executives (averaging 3 years) to improve capacity and to prevent the abuse of power.

Internal Independent Review

Internal independet review by (1) Corporate Audit Department (repporting to PMI).  The audit based on risk assessment, covered revenue, disbursement, payroll, marketing expenses, procurement. And financial reporting.  (2) Internal Audit and Control Department (Sarbanes Oxley Act section 404), audit 18 major business process, document and test over 300 key controls, external auditor independently review SOX testing results. (3) Appoinment of Independent Audit Committees.  Sampoerna (3 qualified members: senior accounting lecture from state university, senior partner of local accounting firm, and ex managing director of HM Sampoerna).  Meet at least quarterly. PMI: Independent, experienced international business leader.

External Review

External auditors conduct comprehensive review to ensure true and fair reflection of financial statements.  Substantive review of key accounts, systems and controls.

Government & Shareholders

As listed company, sampoerna is required to comply with detailed and tranparent reporting requirement form BAPEPAM.  Published reporting in the company website.  As a subsidiary of a company listed in NYSE, meet the reporting requirements from NYSE SEC.  Government tax audit. Shareholders inquiries.

Summary

HM Sampoerna condutcs business using sound internal process and controls across all levels of the organization to ensure full compliance to (1) all applicable laws and regulations; (2) local and international accounting standards and best practices.  This has provided a solid platform to ensure the company’s financial statement are true reflection of business performance and actual financial results.

FORENSIC ACCOUNTING: Exploring the Dark Side and Strengtehing the Bright Side of Accounting

FORENSIC ACCOUNTING: Exploring the Dark Side and Strengtehing the Bright Side of Accounting

Note from Brawijaya Accounting Fair 2008

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Note form I Gusti Agung Rai (The Board Member of BPK-RI)

Indonesia is in high ranking position for the most corrupted countries.  Corruption has penetrated into all sectors and activites.  To combating the corruption, we need knowledge and experience in Forensic Accounting (FA).  FA is a good tool to overcome and disclose the impact of accounting fraud.

What is the Forensic Accounting and Accounting Fraud

Merriam Webster’s Collegiate Dictionary 10^th Edition define that “forensic (1) used in or suitable to court or judicature or to public dicussion and debate; (2) argumentative  or rhetorical; (3) relating or dealing with the application of scientific knowledge to legal problems.  So, forensic covers the application of various knowledge and science into legal problems.  In fact, there are already many examples of the uses of forensic in other disciplines such as forensic anthropoloist, forensic chemist, and forensic dentist.  Forensic accounting in another example of the use of forensic that relates to accounting discipline.

Regarding the forensic in accounting discipline, D.L. Crumbley (Editor in Chief of Journal of Forensic Accounting) has written: “Simply put, forensic accounting is legally accurate accounting.  That is, accounting that is sustainable in some adversarial legal proceeding or within some judicial of administrative review.”  He used more general terms like legal proceeding and judicial or administrative review to describe the use of forensic in accounting discipline.  As such, Forensic Accounting involve three discipline like The Accountancy, The Law, and The Audit.

There are other terms that relate to be percieved to have the same meaning with Forensic Accounting like Fraud Auditing, Investigative Accounting, Ligitation Support, and Valuation Analysis.  However, there are no clear definintions regarding to these terms yet.

Bologna & Lindquist () explained tha some traditional accountants differentiated Forensic Accounting to Fraud Auditing. According to traditional group, The Forensic Auditing relates to the proactive methods and approach to investigate fraud.  The purpose of the Fraud Auditing is to obtain evidence to proof that fraud has happened.  Then, the Forensic Accountant will be called when evidence already gathered, or when the suspicions become allegations, complaints, or discovery.

The Associaon of Certified Fraud Examiners (ACFE) identified some differences between traditional Audit and Frauyd Examination (Forensic Accounting).

Issue	Auditing	Fraud Examination
Timing	Recurring: Audit are conducted on a regular recurring basis.	Non Recurring: Fraud examinations are non recurring.  They are conducted only with sufficient predication.
Scope	General: The scope of the audit is a general examination of financial data.	Specific: The fraud examination is conducted to resolve specific allegations.
Objective	Opinion: An audit is generally conducted for the purpose of expressing an opinion on the financial statement or related information.	Affix Blame: The fraud examination’s goal is to determine whether fraud has/is occuring and to determine who is responsible.
Relationship	No Adversial: The audit process is non adversial in nature	Adversial: Fraud examinations, because they involve efforts to affix blame are adversial in nature.
Methodology	Audit techniques: Audits are conducted primanly by examining financial data.	Fraud Examination: Fraud examinations are condusted  by (1) document examination; (2) review of outside data such as public records; and (3) interviews.
Presumption	Professional Skepticism: Auditors are required to apporach audits with professional skepticism.	Proof: Fraud examiners approach the resolution of a fraud by attempting to establish sufficient proof to support of refure an allegation of fraud.

Source: ACFE

In Indonesia, the development of forensic accounting got its momentum when we experienced financial crisis in 1998—1999. During this period, many forensic accountings have been undertaken as part of the loan provisions.  This development then accelerated when new elected government created Corruption Eradication Commission (Komisi Pemberantasan Korupsi).

In public sector, the pracitice forensic aacounting usually carried out by govermental institutions dealing with legal matter, such as the Police, the Attorney General, PPATK, and KPK.  In addition to the institutions, the BPK also has authority to perform and has performed forensic accounting for several years.  This authority stipulated in Law 15/2004 and Law 15/2006.  According to these laws, BPK has a mandate to conduct three types of audit: Financial Audit, Performance Audit, and Special Purpose Audit. The forensic accounting comes under the definition of Special Purpose Audit.

Similar to general practices, the practicie of forensic accounting in public sector deal with the fraud.  The already well known type of fraud is corruption.  There many examples of corruption that will be elaborated further in the following sessions.

What is Accounting Fraud

Our understanding about the nature of accounting is the services activities, which provide quantitative information regarding business or economic activities.  The objective of accounting is to provide management with financial-related information that will be used in decision making.  The information is provided through a set of financial reports, which are the output of series procedures to record, summarize, and report economic transactions and activities.  We might never imagine that such well-developed process of recording and reporting transactions could be used as a tool to commit fraud.

Simply defined, fraud is a violation of the laww, planned deceit, and dishonesty.  Its consists of various types of white collar crime, including embezzlement, larcerny, concealment of informataion, concealment of liabilities, concealment of facts, engineering of facts, and corruption (Rezaea, 2002).  In termes of business, frauds related to financial accounting sometimes referred to as occupational fraud and abuse.  The ACFE defined this type of raud as “The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.”  Three major types of occupational fraud are corruption, asset misappropition, and fraudelents statements (which include financial statement schemes).

There are many theories explaining why people commit fraud.  One of them is agency problem that derived from the agency theory.  The agency theory, firstly intriduced by Jensen & Mackling (1976).  Explained the principal – agent relationship, relationship between management and the owners.  Referrinng to this theory, fraud happens becuase managements (the agents) behave not in the interest of the owners, but for his/her individual interest as opportunistic behaviors.

Another theory is called asymmtric information.  This theory is based upon the asymmetric access to information between the principals (owners) and the agents (management).  This differences generate two types of agent’s behaviors like hidden action and hidden information.  By hiddening some actions and/or information, managements could commit fraudulent activities for their benefit.

Cressey (Fraud Examiners Manuals, 2006) identified three common causes that trigger fraud.  He depicted the causes in a triangle, which then is known as the fraud triangel.  First, there is pressure engage in fraud, such as economical needs.  Second, there is opportunity that allows individual to commit fraud or to causal dishonest act.  Third, the ability to justify an act and to exploit legal loopholes to cover up/conceal fraud.

More over, ACFE has identified types of fraud and presented in a chart that is called fraud tree.

The Relation between Forensic Accounting and Accounting Fraud

Referrig to above explanations, we could see that forensic accounting is carried out to investigate financial statement related fraud, by using some investigative audit techniques.  Several traditional audit techniques can be used to perform investigative audit, such as physical examination, documentation review, reperformance, an inquiries.

With the increase in importance and demand, the forensic accounting and invesitigative audit har emerged to be a profession.  Being a certified fraud investigator, which is called Certified Fraud Examiner (CFE), give the accountants/auditors credentials that highly valued by business society.  However, to be a good fraud auditors/forensic accountants need additional skills and knowledge.  Davia (2010) advised five rules that should be followed when performing forensic accountants/audit:

1)      Avoid becoming premturely entangled in developing endless facts and circumtances of a case of fraud, to the exclusion of identifying a perpetrator or perpetrators, and providing their involement.

2)      Fraud auditors must constantly strive to prove perpetrator’s intent to commit fraud.

3)      Be creative, think like perpetrator, do not predictable.

4)      Fraud auditing detecting procedures must take into account that much fraud involves conspiracy.

5)      Proactive fraud detection strategy must consider that fraud may appear accounting records as distinct entries or hosted entries, and in some instances may not appear in the records at all.

Frauds In Indonesia

Let’s see where Indonesia in Global Corruption Index.  One of the indicators of corruption index widely used is Corruption Perception Index (CPI).  This index is developed by Transparency Intenational 9TI), a Non Govermental Organization (NGO) concerned with the fighting against corruption in the world.  In 2007, Indonesia is number 143 from 179 countries in the world. Very low position, it’s mean corruption in Indonesia is very high.

Prof. Dr. Soemitro once estimated that the fraud procurement process in Indonesia could involve as much as 30% of procurement budget.  However, some procurement fraud cases bring into the court indicated that the amount of money involved could be much larger.

One of the largest fraud incdence is the distribution Bank Indonesia’s Liquidity Supports (BLBI) during and after crisis of 1997.  This fraud involved as large money as RP650 Trillion and spread over 10 years.  The natures od BLBI which involving large amount of money but lacking strong controls is good conditions for fraud to happen.

There are many other examples how fraud has penetrated deeply into sectors and segments in governement suc as (1) laws; (20 defence; (3) banking system; (4) local governemnets; (5) state owned enterprises; and (6) parlement.

How is the Forensic Accountant Disclose the Accounting Fraud

Every perpetrator always tries to find ways to commit fraud succesfully.  The scheme he/she used ussually follows the cycle of accountancy.  This cycle can be divided into three phases: input – process – output.

In the input phases, where transaction document are prepared and captures, the fraud scheme invlove such activities as forging documents, enginering fictitious documents, creating corroborating documents, and omitting illegal transactions.  In the process phases, ussualy committed by exploting the weakness in the internal control systems, issuing internal policies to justify committed planned fraud changing or manipulating financial records, and misapplication of accounting principles.  In the output phases, when the financial reports are produced, the fraud ussually committed by disclosing inadequately and by exploiting the loopholes in the Financial Accounting Standards.

For the govermental sector, the incidence of fraud also follows the same process.  It happens in all phases of budgeting cycle.  Some examples of fraud in govermental sector are (1) reallocating between expenditures account; (2) not recording revenue transactions; (3) recording fake transactions; (4) overlauing assets; and (5) inadequate disclosure.

The fundamental principle that has proven to be effective in conducting forensic accounting, that is follow the money.  One example of the application of this principes is in the Bank Bali Case.

How he Forensic Accounting Deal With Acccounting Fraud

The objective of the forensic accounting is to proof whether the incidence of fraud happened or not.  As such at the end of the audit, the forensic acccountant/investigative auditors should be able to provide adequate, sufficient, and reliable evidence o answer the audit objective.  If the auditors concluded that there is a incidence of fraud, the evidence obtained during the audit could be used for litigation.

In general, the process of identifying and the proofing the incidence of fraud is as follow (ACFE).

1)      Develope fraud theory.

(1)    Who migh be involved?

(2)    What might have happened?

(3)    Where are the possible concealmnet places or methods?

(4)    When did this take place (past, present, or future)?

(5)    How is the fraud being perpetrated?

2)      Determine where the evidence is likely to be.

(1)    On book versus off book.

(2)    Direct or circumstantial.

(3)    Identify potential witness.

3)      What evidence is necessary to prove intent?

(1)    Number of occurences.

(2)    Other areas of impropnery.

(3)    Witneess.

4)      Revise fraud theory

5)      Prepare chart linking people and evidence

6)      Determine defense to allegation

7)      Is evidence sufficient to proceed? Yes!

(1)    Complete the investigation through interviews, document examination, observations.

Article 14 of Law 15/2004 stated, that should during the audit BPK found the indication of fraud, the BPK should report in appropiate time such incidences to the legal institutions authorized by law to deal with such incidences.

References

The Associaon of Certified Fraud Examiners (ACFE). (2006).  Fraud Examiners Manual.

Bologna, G.J. & Lindquist, R.J. (). Fraud Auditing and Forensic Accounting: New Tools and Technique.

Davia, H.D. (2010).  Fraud 101: Techniques and Stategies for Detection. John Wiley & Sons.

Jensen, M.C. & Meckling, W.H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.  Journal of Financial Economics. No. 3.

Merriam Webster’s Collegiate Dictionary 10^th Edition

Zabihollah, R. (2002). Financial Statement Fraud Prevention and Detection.  Canada: John Wiley & Sons Inc.