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INDONESIA CODE OF ETHICS

Sylvie Soulier, IESBA Member

IESBA Meeting

New York

June 29 – July 1, 2015


General Information on Indonesia

1) No. of registered public accounting firms – 396 firms2) No. of certified public accountants – 1,638 CPAs3) No. of listed companies – 511 companies4) Total market cap of the Indonesia Stock Exchange - approximately USD405 billion


• A convergence with the IESBA Code• Established by the Indonesian Auditing and Assurance Standards Board of the

Indonesian Institute of Certified Public Accountants• Adopted and implemented since January 1, 2011• Mainly translated into the Indonesian language from the IESBA Code as set out in

the Handbook of International Auditing, Assurance, and Ethics Pronouncements - 2008 Edition issued by the IFAC with certain modifications to conform with the existing public accounting practices in Indonesia

• No approval from any regulatory body is necessary for its issuance

Indonesia Code of Ethics


• Translation process into the Indonesian language by the Indonesian Auditing and Assurance Standards Board

• Conduct meetings to discuss the translation results and contents of the materials covered

• Harmonization process with the applicable existing practice in Indonesia• Discussion and consultation with relevant counterparts/committees within the

Indonesian Institute of Certified Public Accountants, if necessary• Approval and decision-making process for issuing exposure draft

Due process of convergence of the Indonesia Code of Ethics with the IESBA Code


• Public exposure (public hearing and/or limited hearing)• Discussion on feedback received from public exposure• Re-performing public exposure if there is any material update on the exposure draft

as a result of feedback received during the initial public exposure• Approval and decision-making process for issuing the Indonesia Code of Ethics

Indonesia has not yet fully adopted the IESBA Code. The convergence process is ongoing

Due process of convergence of the Indonesia Code of Ethics with the IESBA Code (continued)


• The Indonesia Code of Ethics is sourced from the 2008 IFAC Handbook and therefore, has not covered any updates of the IESBA Code since then

• The Indonesia Code of Ethics has only covered Part A (fundamental principles of the code of ethics) and Part B (illustration of the implementation of conceptual framework of the code of ethics on certain situations and the related safeguards) of IESBA Code and has not covered Part C of the IESBA Code (code of ethics for accountants in business)

Main differences between the current Indonesia Code of Ethics and the current IESBA Code


• Re-performing an engagement by a practitioner from an accounting firm that has been previously performed by another practitioner from another accounting firm is prohibited, unless required by authorized regulatory bodies either in Indonesia or outside of Indonesia. This requirement is not covered in the IESBA Code.

• The Introduction section of the Indonesia Code of Ethics emphasizes the requirements for practitioners to comply with both the applicable national laws and regulations and the Indonesia Code of Ethics in the event there are differences between the two requirements mentioned above.

Main differences between the current Indonesia Code of Ethics and the current IESBA Code (continued)


Indonesia Code of Ethics: The Audit Partner and Quality Review Partner – 7 years with 2 years cooling-off period (applicable only to listed companies)

Government regulations: 5 years with 2 years cooling–off period for Partners involved in the audit of the following entities:1) state–owned enterprises2) commercial banks3) capital markets institutions (listed companies, securities companies, investment

management companies, brokers, mutual funds, etc.)

Partner Rotation Rules


Government regulations: 5 years with 2 years cooling–off period for Partners involved in the audit of the following entities (continued):4) insurance/reinsurance companies5) pension funds

Auditing firms which audit companies that fall under the above categories should follow the government regulations on partner rotation.

Partner Rotation Rules (continued)


1) Bookkeeping or other services related to the clients accounting records or financial statements;

2) Financial information system design and implementation;3) Internal audit services;4) Management advisory services;5) Human resources services;6) Financial advisory services;

Prohibited services for audit clients under the Independence rules of the Indonesian SEC applicable to listed companies


7) Taxation services unless preapproved by the Audit Committee. The Audit Committee preapproval does not include tax services to represent clients in and out of the Tax Court and/or to provide tax calculations and reporting services;

8) Other services which may cause conflict of interests.Since there is no further elucidation on the above restricted services, the above rules are more stringent than the IESBA Code and the US SEC rules. Therefore, the above services or variants thereof are not allowed to be provided by auditors to their audit clients except tax services with the above condition. Only audit, review and other assurance services are allowed for listed companies in addition to the permissible tax services.

Prohibited services for audit clients under the Independence rules of the Indonesian SEC applicable to listed companies (continued)

The Ethics Boardwww.ethicsboard.org

http://www.ethicsboard.org/

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