SYNOPSIS
The main function of SAI is to address the asymmetric information problem between public as principal and government as the agent. There is a general agreement that SAI could play an effective role in enhancing the transparency, governance and accountability of the government. However, a lack of adequate independence and resources still representbarriers which prevent the SAIs from playing their role and function.
INTOSAI through Mexico Declaration set the Guidelines on SAI’s Independence. The independence of an SAI means that an SAI should be independent from the legislative, executive and also the audited body in order to perform its tasks objectively and effectively. Previous research has revealed that the concept of independence isgenerally understood by SAIs and preserved by the constitution as well asother legal frameworks. Nevertheless, there are several barriers standing in the way ofSAI’s independence; the reasons behind which are varied.
In light of this, the present study attemptsto establish whether BPK RI is also facing challenges regardingits independence, and if so, what are these challenges and what aretheir impact onBPK’s role and function. Thisis interesting because BPK is positioned as its constitutional statutory as external auditor just after reformation era in 2000s, despite the fact that it was established in 1947. The study is carried out by way of desk-based research, withthe analysis focusing on BPK’s legal frameworks and current cases faced by BPK.
The study findsthat BPK is established via aproper legal framework designed especially to preserve its mandate and independence. The prominent legal frameworks for BPK’s independence are the Constitution, Act on BPK and Set of Acts in State Finances as well as BPK’s internal regulations.
Based on current cases faced by BPK, BPK also face the same problem that has been revealed in previous researches. The challenges whichare faced by BPK and theirimpacts consist of: First, politicisation of BPK’s board members selection process. This means there is a possibility that the BPK’s board members are not professional and independent. This eventually results in both BPK and its audit report losing credibility and effectiveness as one of accountability tools. The second challenges pertain to the bribery practices conducted by individual auditors. This results in the decrease of public trust towardsthe BPK as well as a non-credible audit report since the auditor has no independence in determining the audit report contents. Third, BPK is still facing challenges when it comes to acquiring access to the data and information needed for auditing purposes. Hence, the audit cannot capture the real condition of audit object whichresults in reduced quality of the audit report.
Fourth, although the follow up mechanism on BPK’s recommendation doesexist, it isnot yet effective. The government and parliament are not proactive in pushing the audited entities to follow up the BPK’s audit report, hence, BPK’s audit reportlacks power. BPK also has no “single standard” in determining the status of follow up, meaning that this system has thepotentialto be abused. In addition, the BAKN, acting as BPK’s working partner following up BPK’s audit report recommendation has not functioned properly yet. Consequently, recommendations in BPK’s audit reports are not being reviewed and followed up properly by the legislature. Lastly, the BPK’s human and financial resources cannot be fully independent from the executive due to the statutory roles and function of the executive in managing the state’s resources. This means thatthe executive has access to control BPK.