This short case study was published in ACCA Magazine: “Accountancy Futures”, 07 edition, August 2013. Page 37.
Indonesia has been converging with IFRS since 2008. Indonesian GAAP currently is very close with IFRS and we aim to continue working toward full IFRS adoption, although the decision has not been made by Indonesian FSA and Indonesia Financial Accounting Standard Board (IFASB) for the full IFRS adoption target year. As of 1 January 2013, Indonesia has a set of standard based on IFRS (as of 1 January 2009), a set of standard for non-publicly accountable entities and standards for shari’ah accounting transaction based on Islamic law.
As more Asian countries, including Indonesia, have decided to adopt, or converge with, IFRS, the implementation challenges will only become more daunting than before. Asia is more fragmented than Europe, with a different level of maturity in its accounting profession and capital markets, as well as different socioeconomic characteristics, legal framework and business culture. Currently in Indonesia, the main challenge is the multi interpretations to the principle-based standards among accounting practitioners. IFASB as a member of AOSSG and EEG Working Group has been very active in the last two years to discuss country-specific accounting issues with IFRIC, however with the current mechanism it is very difficult for the national standard setter (NSS) to seek IFRIC resolution as the deliberation can be time consuming. Accounting for land right and telecommunication tower are two examples of Indonesian issues brought up by IFASB to the EEG Working Group and IFRIC. There should be formal mechanism between IASB/IFRIC with NSS which allowed NSS to develop its own interpretation should a country-specific issues genuinely emerged. The IASB and IFRIC need to be more responsive in dealing with different interpretations of IFRS, otherwise one global accounting standard will abide as a divine goal, incongruous with multiple accounting practices that remain diverged and inconsistent.
Rosita Uli Sinaga is the chairperson of the Indonesian Financial Accounting Standards Board (IFASB), a partner
at Deloitte and an accounting lecturer at the University of Indonesia. Ersa Tri Wahyuni is technical advisor at IFASB and PhD researcher at Manchester Business School.