With a population of around 22 million in 2006, Indonesia is the world’s fourth largest country. Indonesia comprises of many distinct ethnic groups, with different religions and languages and yet, the national motto, “Bhinneka Tunggal Ika” (Unity in Diversity) articulates the diversity that shapes the country.
The government is exercised in the framework of a presidential representative democratic republic and of multi-party system. Political system in Indonesia consisting of eight state institutions. With huge natural resources, Indonesia is the world’s second largest gas exporter. Meanwhile, through its agricultural crops, such as rice, tea, coffee, spices, and rubber, agricultural sector in Indonesia employs 44,3% of the million of manpower. Service sector is the major contributor to gross domestic product (GDP).
The Audit Board of the Republic of Indonesia (in Indonesia known as BPK RI, Badan Pemeriksa Keuangan Republik Indonesia) with the first office located in Magelang, Central Java, was established on December 28th, 1946 under the Government Stipulation No. 11/OEM. It started to perform its role on January 1st 1947 and changed its name into Dewan Pengawas Nasional (National Supervision Board) when Republic of Indonesia Serikat (The United Republic of Indonesia) was established. However, since the issuance of Presidential Decree on July 5th 1959 and Indonesia returns to the 1945 Constitution, in pursuance to Article 23, Paragraph 5, Financial Supervisory Board returned to Badan Pengawas Pemeriksa Keuangan Operasional (Operational Financial Audit Board). In undertaking the tasks, BPK RI refers to Law No. 15, Year 2006.
The function of BPK RI is enshrined in the 1945 Constitution in separate chapters that comprise three article – Chapter VIIA, Article 23E, 23F and 23G, wich says : “To audit state finance management and responsibility, an independent and self-reliant Audit Board is established. The result of the financial audit is submitted to the House of Representatives (DPR), Regional Representatives Council (DPD) and Regional House of Representative (DPRD) according to their respective authority. The result of the audit are followed up by representative of institutions and/or institution based on the law.
BPK RI has mandate to conduct a number of audit consisting the management of state finances and responsibilities undertaken by the central government, local government and other state institutions : Bank Indonesia, State-Owned Enterprises, Public Service Board, the Regional Owned Enterprises and institutions or other agencies that manage state finances.
BPK RI submits the results of the examination to House of Representative (DPR), Regional Representative Council (DPD) and Regional House of Representatives (DPRD) according to their respective authority. The result of the audit are followed up by representatives institutions and/or institutions based on the law. Examination results hev been submitted is stated open to the public.
For the continuation of examination, BPK RI also presents the written examination result to the President, governors, regents or mayor according to their respective authority.
If any criminal element found in the inspection process, BPK RI reports these results to the authorized party, maximum of one month since the finding.
BPK RI is authorized to determine the object of inspection, plan and carry out the examination, determine the time and method of examination, as well as inspection reports.
BPK RI have the authority to look for information or request any documents needed from the auditees. BPK RI also have the authority to assess and determine the amount of loss suffered by the state. State assessments and state financial losses or the determination of which party is obliged to pay compensation determined by the decision of BPK RI.