The central government consist of several existing institution at the central level
which are legislature (MPR, DPR, DPRD), the executive (president, vice president, and
secretary), as well as the judicial power institution (MA, KY, MK), and BPK. According to
Act No. 32 year 2004, the affairs that handled by central government are the foreign policy,
defense, security, judicial, national monetary and fiscal, as well as religion. In addition to
performing this obligation, the central government is also obliged to carry out the
management of state finances in orderly manners, obey the laws and regulations, efficient,
economical, effective, and transparent, taking into account the sense of justice and propriety.
To prove that the central government perform its obligation according to the standard, the
government have to provide financial report as the form of their accountability. Then, the
auditing process in which defined as process of problem identification, analysis, and
evaluation have to be conducted by State Inspection Agency (BPK) as an independent entity
in order to access the validity, accuracy, credibility, and reliability of the accounting
information on the management and financial responsibility of the state.
As a result, those accounts must be observed more deeply because this account have
higher risk since in Indonesia the corruption case is not a rare anymore. Almost every day in
every mass media reported about corruption cases that committed by state officials and
government officials either done individually or in groups and the most shocked news that the
turned out of corruption and collusion in Indonesia is not only done by the executive, but also
the legislative and judicial authorities. The corruption may occurs due to the pressure,
opportunity in which created because of lack of internal control in which defined as an
integral process and activities that carried out continuously by the entire people within the
government in order to provide reasonable assurance on the achievement of organizational
goals and to provide reliable financial report (Mahmud, 2011). One of the biggest factor that
plays a significant role to fraud occurrence due to lack of control within the government
entity. The accounts affect the internal control weaknesses because the high number of the
budget provided budget is not balanced with the better internal control. As a result, there will
be a lot of budget misuse as the object of corruption by the legislature and executive who are
not responsible to their position.
Moreover, the auditors have to create their audit strategy to overcome this problem.
First, they need to do analytical procedures which consist of the investigation and comparison
between the documents. For instance, comparing the item in expenditure account according
to budget and realization expenditure item that includes calculation and the use of ratios,
vertical analysis, percentage reports, mathematical and statistical model (regression), as well
as comparison among the historical data or budget. Then, do the inspection in which defined
as the detail examination process towards the transaction and physical evidences such as bank
account, receipts from the transactions to evaluate whether the transactions are according to
the budgeted and realization value as well as to decide which invoice or contract that need
further bottom-up examination. Confirming is the next step that auditor have to do in order to
attain further direct information from any other independent entity outside the company,
obtain information from the treasury that involve in purchasing or allocating budget
activities. Next step is to do inquiring which is the process when the auditor request
information orally or written to the employees or management and usually arise after
analytical producers implementation. Next is do physical counting towards tangible
resources, such as the amount of cash and existing inventory and account of all documents,
do tracing to choose the documents created at the time the transaction occurs and determines
that the information provided by the document has been properly recorded in the accounting
records. Besides, another important things to do in audit is the implementation of the re-
calculation and reconciliation undertaken by the public sector (re-performing).
References:
Arens, Alvin A., Randal J Elder and Mark S Beasley. Auditing and Assurance Services. 2012.
2 February 2017.
Indonesia, Badan Pemeriksaan Keuangan Republik. "Ikhtisar Hasil Pemeriksaan Semester 1
Tahun 2015." 2015. 2 February 2017.
. "Laporan Hasil Pemeriksaan BPK atas Laporan Keuangan Pemerintah Pusat Tahun
2015." 2015. 30 January 2017.
"Peraturan Pemerintah Republik Indonesia Nomor 71 Tahun 2010 Tentang Standar Akuntansi
Pemerintahan." n.d. February 2017.