CONVERGENCE OF

ACCOUNTING STANDARDS AND

TAX LAWS
Josua Pranata (008201600059)
Kevin Kenn Tangkas (008201600013)
Nathania Neysa (008201500022)
Silvia Sely Grace Gea (008201600062)
Ding Zisheng (008201600082)
 DEVELOPMENT OF
ACCOUNTING STANDARDS
Period of the Accounting Development
in Indonesia
■ Towards the PAI (Prinsip Akuntansi Indonesia) before 1973
■ The period of PAI in 1973-1984
■ The practice of PAI in 1984-1994
■ The practice of SAK (Standard Akuntansi Keuangan) in 1994-2006
■ The convergence of IFRS (International Financial Reporting Standards)
in 2006-2012
Before 1973

■ Indonesia had no official and conditioned financial accounting

standards
■ Annual auditing was commonly done only of the Government owned
company financial report
■ The needs of the relevant, reliable, and understandable financial
report emerged
■ The quality and quantity of accountant was not enough
1973-1984

■ A temporary committee was formed to collect and compile PABU

(Prinsip Akuntansi Berterima Umum) in Indonesia
■ PAI became a reporting infrastructure in order to support the capital
market which was growing
■ The committee was guided by the result of Paul Grady from AICPA in
USA, though it wasn’t developing because the amount of the company
was less than 25
1984-1994

■ The committee of PAI made a fundamental revision to the PAI 1973

then published the PAI 1984
■ In order to adjust the accounting standard with the growth of
business industry
■ The committee of PAI made a revision to the PAI 1984 actively by
publishing 7 PAI’s Statement and 9 PAI’s Interpretation
1994-2006

■ PAI was ought to be developed by referring to the IAS and

PAI changed into SAK
■ In 1994 the SAK committee used IAS as the fundamental in
developing the standard in Indonesia
2006-2012

■ Full convergence of IFRS was to be finished in 2008 but it

faced problems
IFRS (International Financial Reporting
Standards)
IFRS is the basic standard, definition and framework which was adapted by the
International Accounting Standards Board (IASB).

Some parts of IFRS was known as International Accounting Standards (IAS)

IFRS includes

■ Rules of International Financial Reporting Standards (IFRS) – published after 2001

■ Rules of International Accounting Standards (IAS) – published before 2001
■ Interpretation from International Financial Reporting Interpretations Committee
(IFRIC) – published before 2001
■ Standing Interpretations Committee (SIC) – published before 2001
■ Framework for the Preparation and Presentation of Financial Statement (1989)
Purpose of IFRS convergence

The purpose is to make sure that the financial report and the interim
report for the annual report contains highly qualified information which
are:
■ Transparent for the users and comparable within the presented period
■ Provide enough starting point for IFRS based accounting
■ Can be produced with the expense less than the benefit for the users
The Development
Adoption Process
(2008-2010)
Full Adoption of IFRS to
PSAK
Preparation of the required
infrastructure
Impact evaluation and
management of the
adoption effect
Final Preparation Implementation
(2008-2010) (2008-2010)
Settlement of the required The gradually
infrastructure preparation implementation of the IFRS
based PSAK
The gradually The comprehensively
implementation of some of evaluation of the
the IFRS based PSAK implementation of the PSAK
Advantages in converging the IFRS

■ Able to provide the financial report with the same standards

as the foreign competitors, making it easy to compare
■ A big company with subsidiary located in the IFRS based
countries doesn’t have to make another report with different
standards
Disadvantages

■ Companies in the non IFRS based countries (e.g. USA)

which has no significant transactions, subsidiaries,
investors, etc. might refuse to use IFRS because they have
no intensive usage of the standards
Comparison of PSAK and IFRS
PSAK IFRS
Until 2006, PSAK consists of 59 standards and Until 2006, IFRS consists of 37 standards and
6 interpretation 20 interpretation
Developed from 1994 Started from 1974
There are many special industry standards (15 Use more general standards (only 4 special
standards) industry standards)

Some of the PSAK have not adopted the IFRS standards

IFRS’ Adoption Level

■ Full adoption, in this level a country fully adapt the whole IFRS and translate it word
by word
■ Adapted, adapt whole IFRS but still adjust it with the countries’ condition
■ Piecemeal, a country only adapt parts of IFRS, either certain standards or
paragraphs
■ Referenced, the applied standards only refers to certain IFRS with the language and
paragraphs arranged by the standard-making institution themselves
■ Not adoption at all, a country does not adapt the IFRS at all
The Preparation of PSAK-IFRS
Convergence
■ Midst of August 2004, Dirjen Pembinaan Akuntan dan Jasa Penilai invited the DPN-
IAI, IAI compartment, DSAK-IAI, DSPAP-IAI, Bapepam, KSAPPD to discuss the
readiness of accountant to converge the international applied standards
■ As the full members of the International Federation of Accountant (IFAC), IAI is
responsible to fulfill the statements of membership obligation (SMO), in between is
the IFRS application
■ From the discussion, it is agreed that the SAK’s composition is not changed. The
composition refers to the IAS which is adjusted by the condition in Indoneisa
Problems Aroused in Implementing and
Adopting IFRS
■ The translation, as IFRS uses international language (English)
■ Discrepancy between the International Standards and the National Law
■ The structure and complexity of the international standards
■ The frequency of changes and complexity of the international standards
FINANCIAL STATEMENTS
BASED ON PSAK
Financial Statements
■ Definition
Based on PSAK No.1 (Revised 2009) paragraph 9, financial
statements is a structured presentation of the financial position
and financial performance of an entity.

■ Objective
to provide information about the financial position, financial
performance, and cash flow of the entity that is beneficial for most
users of financial statements in making economic decisions.
Information inside the Financial
Statement
■ Asset
■ Liability
■ Equity
■ Revenues and expenses include gains and losses
■ Contributions from and distribution to owners in their capacity as writers
■ Cash flow
 Complete Component of The Financial
Statements
Based on PSAK No.1 (Revised 2009)
■ Statement of Financial Position (Balance Sheet) at the end of the period
■ Income Statement during the period
■ Statement of Changes in Equity during the period
■ Cash Flow Statement during the period
■ Notes to Financial Statement that contain summary of important accounting
policies, and other explanatory information
■ Statement of financial position at the beginning of the comparative period that is
presented when the entity applies a retrospective accounting policy or makes
restatements of financial statement items or when the entity reclassifies the items
in its financial statements
Standar Akuntansi Keuangan Entitas Tanpa
Akuntabilitas Publik (SAK ETAP)
Objective
to be used by entities without public accountability, namely entities
that:
– Not having significant public accountability
– Publish financial statements for general purposes for external
users.
For example : owners who are not directly involved in business
management, creditors, and credit rating agencies
Terms of entities allowed to use SAK ETAP:
■ the entity has submitted a registration statement, or in the
process of submitting a registration statement to the capital
market authority or other regulator for the purpose of
securities issuance in the capital market
OR
■ controlling entity in the capacity as a fiduciary for a large
group of people such as banks, insurance entities, brokers
and / or securities traders, pension funds, mutual funds,
and investment banks
The Transitional Provisions of SAK-ETAP

1. Applied retrospectively, if not practical, it is permissible to be prospective

2. Entities that apply prospectively and have previously prepared financial
statements must:
Recognize all assets and liabilities according to SAK ETAP
Does not recognize assets and liabilities if not permitted by SAK ETAP
Reclassify items that previously used old PSAK into items according to
SAK ETAP
Implement measurement of assets and liabilities that are recognized in
accordance with SAK ETAP.
The Transitional Provisions of SAK-ETAP

3. The entity that prepares the financial statements based on SAK ETAP
then does not meet the requirements of the entity that is permitted to
use SAK ETAP, the entity is not permitted to prepare financial
statements based on SAK-ETAP.
For example, there are medium-sized companies that decide to use
SAK-ETAP in 2011, but then register to become a public company the
following year. The entity is required to prepare financial statements
based on non-ETAP PSAK and is not permitted to apply this SAK ETAP
again.
The Transitional Provisions of SAK-ETAP

4. An entity that previously used non-ETAP PSAK in preparing its

financial statements and then fulfilling the requirements of an entity
that can use SAK ETAP, the entity can use SAK ETAP in preparing its
financial statements.

5. In the initial year of the implementation of SAK-ETAP, Entities that

meet the requirements to apply SAK ETAP can prepare financial
statements not based on SAK-ETAP, but based on non-ETAP PSAK as
long as they are consistently applied. The entity is not permitted to
then apply this SAK ETAP for the preparation of the next financial
report.
 FINANCIAL STATEMENTS
BASED ON SAK ETAP

Require honest or free from the influence of transactions, events and

other conditions in accordance with has been guided in the definition or
limitation, and criteria for recognition of assets, income obligations and
expenses.
The complete contents of the entity's financial statements in
accordance with SAK ETAP include the following:
1. balance sheet (statement of financial position), including:
a. cash and cash equivalents
b. trade receivables and other receivables
c. supply
d. investment property
e. fixed assets
f. intangible assets
g. Account payable and other debt
h. assets and tax liabilities
i. estimated liability
j. equity
2. income statement, including:
a. income
b. financial burden
c. profit or loss section from investments using the equity method
d. tax burden
e. net profit or loss
3. Statement on changes in equity and income statement and business
balance.
presents:
a. profit or loss of an entity for periods of income and expenses that are
recognized directly in equity for the period.
b. the effect of changes in accounting policies and corrections of errors
recognized in that period.
c. the amount of investment and dividends and other distributions to
equity owners during the period.
4. Statement of cash flows.
Presenting information on historical changes to the entity's cash and
cash equivalents, which show separately the changes that occurred
during the period from investment and financing operations.

5. Notes to financial statements.

Contain information as additional information presented in financial
statements that provide narrative explanations or details of the and
information on items that do not meet the recognition criteria in the
financial statements.
Financial accounting standards for micro, small and
medium entities.
The financial accounting standard board-IAI
has issued an exposure draft which contains: Scope, pervasive concepts and
principles, presentation of financial statements, income statement, notes
to financial statements, accounting policies, estimates and errors,
financial assets and liabilities, inventories, investments in joint ventures,
fixed assets, intangible assets, liabilities and equity, income and
expenses, income taxes, transactions in foreign currencies, transitional
provisions, and effective dates.
Income tax

■ Includes all domestic and foreign taxes as a basis for taxable income.
■ Income tax entities must recognize liabilities for all unpaid income for the
current period and previous periods.
■ if the amount of income tax that has been paid for the current period and
the previous period exceeds the amount owed for the period, the entity
must recognize the excess as an asset.
Transactions in foreign currencies.

In initial recognition, transactions in foreign currencies arise

when the entity:
1. buy or sell goods or services whose prices are denominated in
foreign currency.
2. Borrow or lend funds for a number of debts or receivables
denominated in foreign currencies.
3. Obtaining or releasing assets, or occurring or settling
obligations denominated in foreign currencies.
At the end of each reporting period, the entity is required:
■ 1. Reporting monetary items in foreign currencies using the exchange rate
(the exchange rate at the reporting date)
■ 2. Reporting non-monetary items as measured by historical cost in foreign
currency using the exchange rate on the date of the transaction.
■ 3. Reporting non-monetary items measured at fair value in foreign currency
using the exchange rate at the time the fair value is determined.
REPORTING CURRENCY
(SAK ETAP)
The reporting currency is the currency used in the preparation of financial
statements. SAK ETAP has regulated that entities in Indonesia use the Rupiah as
the reporting currency
The financial statements are intended to provide financial information
about the entity's performance, financial position and cash flows.
Financial statements are generated from the entity's accounting records,
so that the currency used in accounting records is the currency used in
financial statements. With this concept, the procedure of measuring
back from the accounting records of financial statements or the
translation of financial statements is no longer needed, because
essentially the financial statements have been presented in the
functional currency.
■ A currency is a functional currency if it meets the following indicators
as a whole:
■ Cash flow indicators: cash flows related to the entity's main activities
are dominated by certain currencies.
■ Selling price indicator: the selling price of an entity's product in the
short term period is strongly influenced by the movement of the
exchange rate of a particular currency or a dominantly marketed entity
product for export.
■ Cost indicator: the entity's costs are predominantly influenced by
certain currency movements
■ To determine the functional currency of an entity, consideration is needed of
indicators. In determining the functional currency, the level of relevance and
reliability is obtained, for example through giving weight to each of the indicators
above, then the weight of this individual indicator is determined by its overall
weight. In this case, cash inflows have the greatest weight. Besides giving weight,
also need to consider other factors that can affect economic conditions in the
long run.

■ Sak etap chapter 25 reporting currency

 Undang Undang Perpajakan
■ According to UU No.7 of 2011 states that recording transactions or bookkeeping is required to use the
rupiah currency. For taxpayers, it is also arranged that bookkeeping can use US dollars and English if:
■ The taxpayer is for foreign investment
■ WP is an oil and gas contractor
■ Have direct affiliation with a parent company abroad
■ Taxpayers register their shares on foreign stock exchanges
■ Get involved in mining work contracts
■ Collective investment contact
■ Permanent form of business regulated in Article 2 paragraph 5 of the UU Pph
■ The Director General of Taxation also regulates the exchange rate itself for transactions using foreign
currency so that in making the tax invoice must also follow the exchange rate set by the tax.