Supervision to Bank Indonesia - Bank Sentral Republik Indonesia
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September 26, 2018

SUPERVISION TO BANK INDONESIA

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 The supervision/control function to Bank Indonesia cannot be separated from the function of Bank Indonesia as an independen public institution in the state order of Indonesia. Supervision to Bank Indonesia is carried out as the manifest of checks and balances mechanism inter the state institutions. This is required to realize the accountability of authority and duty implementation of Bank Indonesia to public.

Law on Bank Indonesia demands accountability and transparency in every implementation of duties, authorities and budget of Bank Indonesia. The accountability and transparency required from Bank Indonesia is intended so that all parties concerned can participate in performing control to every policy measure conducted by Bank Indonesia (checks and balances).

Pursuant to the mandate of the Law, the parliament (DPR) constitutes the party granted authorities constitutionally to conduct the control function to other state institutions, including Bank Indonesia. In accordance with its essence, this legislative control aims to improve the quality of decision making through the enhancement of responsiveness toward the public needs and demands to control the abuse of the Government power through investigation, and to uphold the performance of state agencies.

To assist DPR in carrying out its control function in certain fields toward Bank Indonesia, as regulated in Law concerning Bank Indonesia, a Supervisory Body of Bank Indonesia (Badan Supervisi Bank Indonesia-BSBI) has been established. BSBI was set up pursuant to Law concerning Bank Indonesia and directly responsible to DPR-RI, and it is not included in the organizational structure of Bank Indonesia. BSBI shall present its review related to the financial and operational activities of Bank Indonesia to DPR-RI every quarter, and shall not evaluate the performance of the Board of Governors of Bank Indonesia. The presence of BSBI is expected to strengthen the control function of DPR-RI to Bank Indonesia in order to enhance accountability, independency, transparency, and credibility of Bank Indonesia.

Bank Indonesia must submit a Report on Bank Indonesia Authorities and Duties Implementation to DPR-RI and the Government quarterly and annually pursuant to the mandate of Law concerning Bank Indonesia. The report shall also be disseminated to public through mass media by specifying its summary in the state gazette. Reports of Bank Indonesia Authorities and Duties Implementation can be accessed in Laporan kepada DPR.

In the financial field of Bank Indonesia, the mechanism of checks and balances becomes an important matter. This is considering that Bank Indonesia has a specialty as an independent institution that manages a separate budget from the State Budget (APBN). In relation to the budget transparency, Bank Indonesia is obligated to submit its annual budget to DPR which includes the budget for operations and budget for policies. In the submission of the budget, Bank Indonesia shall also present an evaluation related to the use of current year budget in the form of Evaluation Report of Operational Budget Implementation and Investment Plan of Bank Indonesia.

Supervision to Bank Indonesia from financial side shall be conducted in the form of audit to the Annual Financial Statements of Bank Indonesia (Laporan Keuangan Tahunan Bank Indonesia -LKTBI) by the Financial Audit Board (Badan Pemeriksa Keuangan-BPK-RI). The result of BPK-RI audit shall be submitted to DPR-RI and announced to public through mass media. Meanwhile, in the preparation and audit of LKTBI, Bank Indonesia and BPK-RI shall refer to the accounting standard of central bank as recommended by the Committee of Accounting and Finance of Bank Indonesia (Komite Akuntansi dan Keuangan Bank Indonesia).

Based on LKTBI audit, Bank Indonesia has obtained unqualified opinion (Wajar Tanpa Pengecualian-WTP) from BPK-RI since LKTBI of 2003. The achievement cannot be separated from the efforts of Bank Indonesia that constantly follow ups the audit findings delivered by BPK-RI. This shows the seriousness and commitment of Bank Indonesia in implementing duties that is transparent and accountable. Further, Bank Indonesia shall publish its annual financial statements to public after the audit implementation result of BPK-RI conveyed to Bank Indonesia Aside from conducting audit to LKTBI, BPK-RI can also conduct a special audit to Bank Indonesia upon the request of DPR-RI if required. The special audit upon the request of DPR-RI toward Bank Indonesia is intended to know a problem or a particular activity related to the financial management and budget implementation by Bank Indonesia deeper.

The existence of this audit process is expected to support the duty implementation of Bank Indonesia with regard to financial management and budget implementation that is orderly, complying with laws and regulations, efficient, effective, transparent and responsible by taking into account reasonableness and fairness.

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