As Indonesia progresses towards aligning its financial reporting with international standards, several significant updates to the Indonesian Financial Accounting Standards (SAK) are set to take effect in 2025. These changes aim to enhance transparency, comparability, and reliability in financial reporting across various sectors. Below is an overview of the key updates:
1. Implementation of SAK Internasional
Effective January 1, 2025, Indonesia introduces SAK Internasional, a new tier of accounting standards that fully adopt the International Financial Reporting Standards (IFRS). This initiative allows Indonesian-registered companies, especially those trading equity shares in multiple countries, to prepare financial statements that are globally consistent. The adoption of SAK Internasional signifies Indonesia’s commitment to integrating with global financial markets and enhancing the credibility of its financial reporting.
2. Introduction of PSAK 117: Insurance Contracts
Replacing PSAK 104, the new PSAK 117: Insurance Contracts standard becomes effective on January 1, 2025. This standard aligns with IFRS 17 and aims to provide a consistent framework for the recognition, measurement, presentation, and disclosure of insurance contracts. PSAK 117 enhances transparency and comparability in the insurance industry, ensuring that financial statements reflect the true economic value of insurance contracts.
3. Amendments to PSAK 1 and PSAK 25
Amendments to PSAK 1: Presentation of Financial Statements and PSAK 25: Accounting Policies, Changes in Accounting Estimates, and Errors are set to take effect on January 1, 2025. These amendments focus on improving the clarity and consistency of financial statement disclosures, aiding stakeholders in better understanding an entity’s accounting policies and financial position.
4. Adoption of Global Internal Audit Standards (GIAS)
In a move to strengthen internal controls and governance, Indonesia will adopt the Global Internal Audit Standards (GIAS) starting January 2025. The GIAS framework encompasses five domains, fifteen guiding principles, and fifty-two specific standards, focusing on governance, risk management, and compliance. This adoption aims to elevate the quality and consistency of internal audits across both public and private sectors, aligning them with international best practices.
5. Mandatory Annual Legal Audits
A draft Presidential Regulation mandates that, beginning in 2025, all legal and business entities in Indonesia must undergo annual legal audits. This requirement is designed to enforce comprehensive compliance with Indonesian laws and regulations, enhancing transparency and accountability. Entities are required to appoint certified legal auditors to conduct these audits, with reports submitted to the Minister of Law and relevant authorities. Non-compliance may result in sanctions, emphasizing the importance of adherence to this new mandate.
These updates reflect Indonesia’s dedication to enhancing its financial reporting and auditing landscape, fostering greater trust and integration with the global economy. Entities operating within Indonesia are encouraged to familiarize themselves with these changes to ensure compliance and to leverage the benefits of improved financial transparency.