ACCOUNTING STANDARDS in INDONESIA

By: Group 2

1. Novita Soviani Saragih (CIC017017)

2.Siti Zaleha(C1C017083)

3.Zahara Khairina(CIC019072

4.Muhammad Iqbal(C1C019118)

FACULTY OF ECONOMICS AND BUSINESS

BENGKULU UNIVERSITY
What Are Financial Accounting Standards?

Financial Accounting Standards (SAK) is a standard that regulates the process

of making and presenting financial statements in order to create uniformity that
can be understood by various parties. SAK is made and determined by an
official institution in the field of accounting which is also called the Standard
Setting Body. In Indonesia, the Standards Setting Body governing and making
SAK regulations is the Indonesian Accountants Association (IAI), particularly
by the Accounting Standards Board.

In its development, SAK stems from accounting standards established by IAI in

1973 which were named "Indonesian Accounting Principles" (PAI). PAI was
originally conceived because it began to grow and develop capital markets in
Indonesia, so as to assess the need for standardized financial statements. This
standard continues to develop, becoming "1984 Indonesian Accounting
Principles" and "Financial Accounting Standards (SAK) as of October 1, 1994".

Then in 2012, SAK again underwent renewal and adjustment based on several
international accounting standards such as International Financing Reporting
Standards (IFRS), International Accounting Standards (IAS), Generally
Accepted Accounting Principles (GAAP), and so forth. This is so that financial
statements can be understood and used by more parties, also makes it easier for
business people who want to expand into global market networks.

Types of Financial Accounting Standards

Although referring to the principles and standards of global accounting,

Indonesian GAAP in Indonesia must be adjusted to the existing conditions and
needs. In Indonesia, there are five types of SAK that apply and are also called
the Financial Accounting Standards Pillar. The following are the types of SAK
that are implemented in Indonesia:

1. PSAK-IFRS

The first SAK is a Statement of Financial Accounting Standards which refers to

standards made by IFRS. PSAK-IFRS is also another name for the latest SAK
that was made and implemented by IAI in 2012. The reference to IFRS
standards is done because Indonesia is a member of the International
Federation of Accountants (IFAC) and as a member of the London G20 forum
that has agreed to use the standard.

Some basic accounting principles applied by IFRS are the importance of

interpretation and application of the financial statements that are made, the
existence of an assessment and evaluation of whether the reports have reflected
economic reality, and professional judgment or audit is required in the
application of SAK. This PSAK-IFRS is usually used in businesses and
organizations that are on a public scale and are of a general nature, such as
BUMN, public companies, banking, insurance, and issuers.

2. SAK-ETAP

The second SAK is SAK-ETAP, which is the Financial Accounting Standards

created and applied to Entities without a Public Accountant
(ETAP). Understanding ETAP is an entity (institution / organization) that does
not have accountability or responsibility in the public sphere. SAK-ETAP is a
simple form of PSAK-IFRS and is usually used in small to medium companies
that make general financial statements for external parties.

The simplification of SAK-ETAP is carried out in order to adapt to the

conditions in Indonesia, so that it can be more flexible and easily understood,
especially in accessing funding. Although simpler than PSAK-IFRS, SAK-
ETAP still provides reliable information in the financial statements
provided. SAK-ETAP also still requires professional judgment conducted by the
audit process, although not as much as in the PSAK-IFRS.

3. SFAS-Sharia

The Statement of Sharia Financial Accounting Standards (PSAK-Sharia) or

often referred to as the Sharia Accounting Standards (SAS), is a standard made
for institutions that use a sharia basis. This PSAK-Sharia was made by the
Sharia Accounting Standards Board (DSAK) based on the phenomenon of the
growth and development of sharia institutions in Indonesia, which also refers to
the fatwa of the Indonesian Ulema Council (MUI). The main pillar in making
PSAK-Sharia is Al-Qur'an verse Al-Baqarah 282-283 which discusses honest,
fair, and correct financial records.
PSAK-Sharia was first made in 2002, then underwent an update in 2007 and
most recently in 2011. Some institutions that can use PSAK-Sharia are sharia
banks, zakat institutions, sharia pawnshops, sharia cooperatives, and so
forth. PSAK-Sharia is not only limited to sharia institutions because it is based
on general SAK, so it can also be applied by institutions on a non-sharia basis.

4. SAP

SAK is Government Accounting Standards (SAP) which are prepared and

issued by the Government Accounting Standards Committee and have been
established as Government Regulations (PP). All government institutions both
at the central and regional levels must refer to SAP in making the Central
Government Financial Reports (LKPP) and Regional Government Financial
Reports (LKPD). It is intended that the management of state finances carried
out by government institutions be more transparent and can be accounted for.

In SAP, there are four main reports that must be made namely the Budget
Realization Report, Balance Sheet, Cash Flow Report, and Report on Financial
Statements. This is certainly different from general financial statements, where
there is no budget realization report in the presentation of financial
statements. While the basis for making financial statements in SAP itself can be
divided into two, namely cash-based SAP (including revenue, expenditure,
financing) and accrual-based SAP (including income, expenses, assets, debt,
equity).

Thus the discussion on Financial Accounting Standards (SAK) and the types of
SAK used in Indonesia and become the Pillars of Financial Accounting
Standards. The existence of SAKs made and regulated in such a way will
certainly make it easier to prepare financial reports. As well as maintaining that
the financial statements remain at the standards they should, and are used
properly.

5,SAK-EMKM

This standard is aimed at businesses that have not been able to meet
the previously accepted Public Accountability (ETAP) accounting
standards. SAK EMKM is designed simpler than SAK ETAP.

As the name implies, SAK EMKM is specifically designed for Micro,

Small and Medium Enterprises in accordance with Law No. 20/2008
which is active starting January 1, 2018.The aim is as a reference in
preparing financial statements that contain information on financial
position and performance.This information is useful for creditors and
investors for economic decision making as well as management
accountability to business owners.

There are at least 3 Financial Statements according to SAK EMKM:

(a) Statements of financial position (balance sheet);

(b) income statement;

(c) Notes to the financial statements, which contain additions and

details.

Presented in the form of two periods / 2 years (minimum) to be

compared with each other.
The good news is that SAK EMKM will be easier to implement with
Tebi because the workings of Tebi have been designed in accordance
with the SAK EMKM provisions and will continue to develop to
complete a number of further provisions.