Get to know the Financial Accounting Standards in Indonesia

Financial Accounting Standards in Indonesia – In order to regulate or manage finances, there is a certain procedure that a country must have. In the financial accounting standards in Indonesia , there are a number of types of standards, so that it is useful for presenting financial information by certain business entities.


The first standard that serves as a benchmark for financial management is PSAK-IFRS. This is an accounting procedure for the company to use in various business activities. To better understand it, here’s a full explanation.

1.1 Explanation of PSAK-IFRS

PSAK-IFRS stands for Statement of Financial Accounting Standards ( International Reporting Standards ). This is the management basis issued by the Financial Accounting Standards Board in 2012 through an Indonesian Accounting Association (IAI).

The use of this standard has reasons because Indonesia is a country that is a member of IFAC ( International Federation of Accountants ). A number of benefits from the guidelines include increasing comparability and providing quality information on the capital market.

1.2 Financial Accounting Standards (SAK)

SAK is a Financial Accounting Standard that serves as a guideline for carrying out a number of activities. That starts from the process of making, compiling, to the stages of presenting Indonesian financial information.

The use of a standard follows the times. Until finally the Indonesian state SAK has standard guidelines for determining from following international accounting procedures. This is so that all financial information can be recognized globally.

1.3 Reasons for Using SAK

With a guideline, the process of presenting financial information becomes more structured. In general, this standard is useful for a number of parties, such as investors, to know a number of risks and financial conditions. Then, shareholders can monitor the company’s financial condition. 

SAK is also useful for creditors because it has a function to assess the ability to pay credit or loans. Then, for suppliers this is useful in order to be able to see the credibility of a company whether it is able to pay on time or not. 

1.4 Types of SAK

Each country has its own Financial Accounting Standards. In Indonesia alone, the guidelines for presenting this information are divided into four types. Everything is useful to provide quality and accurate data.

The four types of standards in presenting financial information include Statements of Financial Accounting Standards (PSAK), Sharia Accounting Standards (SAS), PSAK – IFRS (Statements of Financial Accounting Standards – International Reporting Standards), and SAK – ETAP.

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2. Explanation of the International Financial Accounting Standard (IFRS)

IFRS is an international accounting standard that is useful in the preparation and public reporting of company finances.

The purpose of using this guide is to make it easy to compare high-quality information for each company.

2.1 Application of IFRS in Indonesia

As a developing country in all fields, including the economy, it is very important to use an accounting standard. The application of IFRS in Indonesia began in 2012. In its implementation, there are three main stages.

The initial stage of the first use of IFRS is adoption. This process started from 2008 – 2011. The first activity was to carry out a number of activities to gradually adopt IFRS to PSAK.

The next stage after adoption is to finalize the infrastructure for various needs. This process took place starting in 2011. All forms of activity focused on all preparations for the implementation of IFRS.

IFRS implementation or implementation activities in Indonesia are carried out in stages. Then, there are a number of processes to find out what are the benefits and constraints in its implementation. This has continued until now.

2.2 Advantages of Using IFRS

The first advantage of using the IFRS standard is that it makes it easier to prepare financial reports. This happens because the method of presenting data related to company funds is very good and systematic.

By using IFRS, a company will be better able to reduce the cost of financial statements. Based on the experts and the results of use after a long time, it can make investors save even more when making comparisons.

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By using IFRS, it will have an impact on investment flows that are more transparent. As you already understand, transparency is very important to make it easier to access information on benefits and risks.

3. The difference between SAK and IFRS

The task of an accountant is very important in carrying out company financial reporting. However, using certain procedures, this process becomes easier. There are two types of references in this activity, namely SAK and IFRS. Here’s the difference between the two.

The first difference comes from the source. The point is the foundation of the standard issuance. For SAK, it comes from PSAK No. 1 (Revised 1998) concerning Presentation of Financial Statements. Meanwhile, IFRS itself comes from IAS1, Presentation of Financial Statements.

In SAK, the format for providing information uses certain entities and uses direct methods. While the presentation of financial statement information uses IFRS, using standard headings. However, it has a number of limitations in determining its content. 

In the SAK procedure, it has rules regarding the recognition of profits and losses from reports on changes in shareholder equity. The IFRS procedure uses financial statement presentations that recognize gains and losses, but in separate notes.


The next type of accounting standard is SAK – ETAP. This is a reference to entities without public accountability. So it is useful for a company to report finances in general with the aim of external use. 

4.1 Explanation of SAK – ETAP

With the existence of standards for financial reports for entities without Public Accountability, it has a beneficial impact on MSMEs. So that its use can bring convenience to small and medium scale businesses.

SAK ETAP is a financial reporting standard that does not depend on general SAK or it stands alone.

In practice, the historical cost concept is used, the information presentation rules are simple, and have not changed over the years.

In the process of financial reporting, SAK ETAP goes through a number of processes. These stages include establishing balance sheets, profits and losses, changes in equity, cash flows, top notes, and so on.

4.2 Purpose of SAK – ETAP

The use of SAK – ETAP has the main objective of being able to provide easy access to ETA for the process of providing funds by banks. Because this standard stands alone, the concept of rules for presenting financial data is simpler.

This standard without Public Accountability has the objective of presenting general or external financial statements only. So in that way, the reference uses fixed assets, which are intangible acquisition prices.

Another purpose of using SAK – ETAP is to provide convenience in obtaining funds for MSMEs from banks. So, they can develop their business to be better and successful in the future.

4.3 Example of Accounting Book Based on SAK – ETAP

To understand more about SAK – ETAP, you can read a number of references. An example is the book by Syaiful Bahri, SE., MSA entitled ‘ Introduction to Accounting Based on SAK ETAP and IFRS ‘. The discussion is very complete and also clear.

The discussion in this book also includes examples of service, trade, and industrial companies. The purpose of the Syaiful Bahri reference work is to provide an overview of the SAK / Financial Accounting Standards process.

For those of you who are looking for basic reference material, you can use this book. That way, it will understand more about each stage from SAK to the final process in the form of presentation of financial statements.

5. Sharia PSAK

The procedure for making the next financial report is PSAK Syariah. This is a procedure using the basics of presenting industry and business information using sharia principles in Indonesia.

5.1 Explanation of Sharia PSAK

The existence of PSAK Syariah is inseparable from the development of Indonesian companies which are increasingly using Islamic principles. Therefore, Indonesian financial accounting standards related to Islamic Financial Institutions were born in 2002.

The use of PSAK Syariah is able to provide convenience in the formulation of financial reports. The basis for making this standard comes from the Al-Qur’an surah Al-Baqarah verses 282 – 283. It contains financial records according to the principles of fairness, truth and honesty.

Through the use of PSAK Syariah, this has contributed to the development of the Islamic economy increasing. Not only in the progress of the process in Indonesia, but also in the whole world. That way, it is able to create an environment and market on the basis of Islamic law. 

5.2 PSAK Syariah Applied in Indonesia

In Indonesia, the standard for determining financial reporting is the authority of the Sharia Accounting Standards Board (DSAK). This is directly under the auspices of the Indonesian Institute of Accountants (IAI). Its application began when there was the 8th Congress in 1998.

There are a number of types of implementation forms of PSAK Syariah reporting in Indonesia. In that case, the process of presenting financial information uses the basis of the type of transaction which has been made by the DSAK.

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Some of these reporting forms include PSAK 102 Accounting for Murabahah, PSAK 102 Accounting for Salam, PSAK 103 Accounting for Istishna’, PSAK 106 Accounting for Musyarakah, PSAK 107 Accounting for Ijarah, PSAK 108 Accounting for Sharia Insurance Transactions, and PSAK 109 Accounting for Zakat and Infak/Alms.

5.3 Latest PSAK Syariah

The Sharia Accounting Standards Board (DSAK) first issued PSAK using Islamic financial principles in 2002. Then, this continued to experience development and a number of improvements in several types.

In 2007, there were 6 PSAK Syariah with one basic framework, until in 2019 there were 13 PSAK with one framework and 2 ISAK (Interpretation of Financial Accounting Standards). Meanwhile, 2021 has the newest type.

In 2021, there are a number of PSAK that are active per January. This includes presentation of financial statements, cash flow reports, interim financial reports, separate financial reports, operating segments, related party statements, events after reporting, changes in foreign exchange rates, to ISAK and PPSAK.


6. SAP

Presentation of the next financial statements in the form of SAP. This is a form of management and recording of sources of incoming and outgoing funds from the government. Usually it is addressed to related parties, such as BPK, DPR, community, and others.

6.1 SAP Explanation

SAP or Government Accounting Standards is a set of references in compiling and presenting reports relating to government finances. It usually consists of Central Government Financial Statements (LKPP) and Regional Government Financial Statements (LKPD).

In a government, financial reporting is very important in order to get transparency from the flow of these finances. That way, other related parties and the public can find out the accountability of this state accounting administration.

The standard for using SAP is using a statement with a number of points. That starts from the title, number, and the effective date of the reference. 

6.2 SAP Implementation Base

The government in reporting financial flows uses certain principles. This standard was prepared by the independent Government Accounting Standards Committee and went through a number of stages of approval, starting from becoming a Government Regulation to obtaining an opinion from BPK.

The rule that determines the existence of this SAP is Government Regulation Number 24 of 2005 concerning Government Accounting Standards. The contents are in the form of a cash basis in order to provide recognition of revenue transactions, assets, and many others.

Recognition of this basis is still provisional. Now, everything refers to the latest rules, namely Article 9 paragraph (1) Government Regulation 71 of 2010 concerning SAP or Government Accounting Standards.

6.3 Benefits of SAP

The preparation of financial statements using a number of principles certainly has benefits. Of the two types of reporting, namely LKPP and LPPD, are able to provide up-to-date information on financial flows and data regarding the budget.

Besides having the benefit of knowing the latest financial statements, SAP also has uses as a medium to see transparency and accountability of accounting in Indonesia.

Another benefit of government financial reporting is that it enables accounting managers to provide new, more effective strategies. By way of comparison from the next report, it will provide a good method for managing state finances.

6.4 Advantages of SAP

The use of accounting standards is one form of making quality reporting. The advantage of this SAP is that it is able to improve the quality of a country’s financial governance.

Making report presentations with this principle has advantages which the auditor can use to determine whether the presentation of the information is in accordance with the standards or not. Then it will also improve consistency and relevance.

Another advantage is that it can be used as a reference in compiling financial reports according to existing standards. That way, the results have credibility so they can provide government accounting transparency.

6.5 Advantages of Becoming a SAP Expert

The accounting system in the government consists of central and regional. The existence of the principle of presenting financial information is very useful for a country in managing its economy.

Being an accountant expert in government is certainly a career that has good prospects. However, behind all this, you must master a number of important skills to support the financial reporting process.

Becoming a SAP expert who works professionally will provide benefits for the country. Through reporting and according to standards, it can have a good impact so that we are able to manage the economy even better.

6.6 How to Become a SAP Expert

The job of being an accountant always has a lot of enthusiasts every year. You can see this from the selection of Accounting majors which are still busy. This step is the first step to be able to become a SAP expert.

There are many ways to become a professional accountant. After obtaining a bachelor’s degree in Accounting, then get a CA ( Chartered Accountant ) certification. Then, make sure you have good work experience from various fields, such as public, corporate, education, etc.

The verification process to become a public accountant practitioner is at least three (3) years. You can get this for the last 7 years and then you can become a member of the Indonesian Institute of Accountants (IAI).

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