7th Meeting of The 10th ASOSAI Research

ProjectTeheran, 16-18 December 2014

The Audit Board of The Republic of Indonesia

Company Logo

I. BackgroundAudit Board of Indonesia (BPK)

• Established on January 1947

• Main duty (constitution of 1945)

“To audit the management and accountability of state finance, there shall be a Supreme Audit Board which shall be free and independent.”

Law 15/2004

BPK could conduct investigative audit to reveal any corruption indication and/or state loss

Law 15/2004

BPK could be expert witness before the court regarding state loss examination

• Position in state administration

Considerable level of independence, same level with president, parliament, and supreme court

II. Evaluation of Current Situation of Fraud and Corruption

Serious and Pervasise

Abuse of Power and Bribery

Law Enforcement, Tax, Procurement

Weak and Lack of Anti Corruption System

III. Evaluation of Current Condition of Anti- Corruption

In general, Indonesia has an adequate tools to fighting against corruption1. Indonesia has a National Anti Corruption Strategy, define the

strategy to action plan; and has employed all of the measures in fighting against corruption;

2. Indonesia has an Anti Corruption Agency with a comprehensive functions;

3. Indonesia has a strong legal basis to fight against corruption, include a special law for corruption;

4. Indonesia has developed an International Cooperation in fighting against corruption with moderate success level;

5. Indonesia has an intensive efforts to promote awareness in fighting against corruption.

III. Obstacles in Anti-Corruption

The biggest obstacles are collusion and a light punishment for fraudster.

PREVENTIVE DETECTIVE REPRESSIVE

Optimizing prevention on

potential fraud

Immediate action to detect fraud conducts

when exist

Litigation support on prosecution with highly and legally accurate accounting

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Investigative AuditBoard initiative

1st Investigation 2nd Investigation Prosecution Court

Corruption Eradicating Comm.

General Attorney

National Police

Supreme Court

High Court

District Court

RECOMMENDATION ON

INTERNAL CONTROL

Financial Audit

Performance Audit

Audit for Specific Purpose

(non Investigative)

IV. Role of Audit to Detect Fraud and Corruption

Forensic Audit Expert Witness

IV. Role of Audit to Detect Fraud and Corruption

Investigative Audit Methodology

• Analize available data• To Create a Predication

• Create the hypothesis• Worst-Case Scenario

• Test the hypothesis• Audit Technique;

• Refine and amend the hypothesis.• Proved vs Unproved

Audit Techniques

• Document analysis go substance, not only form!

• Analytical review• Re-performance/re-computation• Observation• Physical examination• Confirmation• Interview 2-ears..one-

mouth..s

IV. Role of Audit to Detect Fraud and Corruption

Audit Experiences to Detect Fraud and Corruption1. Hambalang Case (procurement)2. Century Case (bank bailout)

Limitation3. Organizational (Non existence of Formal Investigative Audit

Unit)4. Lack of Resources (financial, fraud examiner)

V. Typical Audit Practices

PreventiveGoal: Corruption

Prevention1. E Audit2. Public Awareness3. Training on Fraud

Awareness

DetectiveGoal: Corruption detection

in earlier phase1.Investigative Audit

Manuals2. Training on Investigative

audt

Follow Up and Reporting

Goal: Quick and precise response by LEA on

corruption case1. MoUs with LEA2. Expert Witness3. Training on State Loss Examination and Expert Witness (moot court)

201063 cases

USD 49,326

201129 casesUSD9,759 2012

20 casesUSD13,385

201342 cases

USD24,698

200945 cases

USD 61,897

V.Reporting and Follow Up RoleNumber of corruption cases submitted to the Law Enforcement Agency

VI. Measures on Improving Audit’s Function in Detecting Fraud and Corruption

MoU between/Among SAIsActive Member of INTOSAI, ASOSAI, ASEANSAICooperation with Donors (World Bank, USAID)

Mandate to do Investigative AuditCollaboration with LEA for combating corruption (ex: MoUs)Indirect role for strengthening Government Anti Corruption Standard (ex: Performance Audit on Gov’t Fraud Control System)

Whistleblowing SystemInvestigative Audit ManualsTraining on Fraud Awareness and Investigative Audit

http://www.google.co.id/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://lintahindonesia.wordpress.com/2010/05/04/ucapan-terimakasih/&ei=QoWNVKO0BMySuATd5ICYBw&psig=AFQjCNFUUpyxni8WEkoU2fG2iCIcmMqf3Q&ust=1418647216371215