BPK Finds Irregularities in Subsidy Distribution of Rp461 billion
JAKARTA, BPK Public Relations – The Audit Board of the Republic of Indonesia (BPK) found a total correction value of Rp1.8 trillion across 15 state-owned enterprises (BUMN) during its audit on the subsidy, compensation, and public service obligation (PSO) programs for fiscal year 2023 in the first semester of 2024.
BPK’s audit found irregularities in the management of subsidies in ten BUMN, totalling Rp461.63 billion, which violated existing laws and regulations. Fertilizer subsidies of Rp338.52 billion were a contributing factor to the correction.
Board Member VII of BPK, Slamet Edy Purnomo, explained that the correction factors included non-compliance with allowable and non-allowable cost provisions, inflated subsidy calculations, and a lack of production efficiency measures. These issues resulted in higher production costs and raised concerns about moral hazard when calculating subsidies.
"In addition, subsidy distribution has not been effectively targeted due to inaccurate, unintegrated data on subsidy recipients and weak monitoring functions in subsidy calculation and distribution," Board Member VII of BPK said when submitting the audit report on the financial statement of Budget Section BA.999.07 on subsidy and PSO expenditures at BPK head office in Jakarta on Thursday (7/11).
"This situation reflects weak governance and internal control systems in subsidy calculation and distribution mechanisms, ultimately reducing fiscal space to support other government programs," he added.
Following the audit results, Board Member VII emphasized that BPK recommended the BUMN Board of Commissioners enhance supervision over the board of directors in providing subsidized goods. This includes improving monitoring of cost component calculations to prevent moral hazards and minimize production cost leaks that affect the overall cost of goods sold.
"To the board of directors of BUMN to improve the systems and mechanisms for distributing and calculating subsidies, enhancing supervision of implementers to ensure greater accuracy and diligence in preparing subsidy calculation reports," he said.
BPK also further recommended that internal supervisory units take a more rigorous approach when reviewing the subsidy reports. Additionally, BUMNs are expected to improve the data quality and integration as well as work closely with technical ministries and the Ministry of Finance to address subsidy payment discrepancies in 2023.
The audit report presentation was also attended by Director General of Audit VII B. Dwita Pradana, BUMN Chief Commissioners, BUMN President Directors, and officials from the Directorate General of Audit VII.