PRESS RELEASE

Jakarta, Thursday, (30 July 2020) - The Audit Board of the Republic of Indonesia (BPK) handed the financial audit report Fiscal Year 2019 to the Ministry of Defense at the ministry office in Jakarta, today.

BPK Board Member I, Hendra Susanto, Director General of Audit I, Novy Gregory Antonius Pelenkahu, Minister of Defense, Prabowo Subianto; Deputy Minister of Defense, Sakti Wahyu Trenggono, Indonesia National Armed Force Commander, Army Chief of Staff, Navy Chief of Staff, Air Force Chief of Staff, and other invited officials and auditors attended the meeting.

The BPK appreciated the Minister of Defense, Deputy Minister of Defense, National Armed Force Commander, Chiefs of Staff, and all related officials showing their commitments in carrying out transparent and accountable state financial management.

The BPK gave an unqualified opinion on the financial statements of the Ministry of Defense Fiscal Year 2019 with some highlighted matters. First, the technical arrangements for the recognition and reporting of the receipt and the use of Foreign Military Finance (FMF) Grants needed to be regulated further by the Ministry of Defense and the Ministry of Finance. Second, the regulation of the non-tax revenue management at the Ministry of Defense needed to be harmonized with the applicable law. Third, the mechanism of management and reporting of the reimbursement funds needed to be regulated further by the Indonesia National Armed Force, the Ministry of Defense, and the Ministry of Finance.

"On this occasion, we congratulate Minister of Defense, Deputy Minister of Defense, Commander of the Indonesia National Armed Force, Chiefs of Staff, and the entire officials for their commitments and efforts that this year, they have succeeded to obtain the unqualified opinion, while reminding them to continue to work hard to maintain the opinion in the years to come. The unqualified opinion gained this year is not a guarantee to get the same opinion for the upcoming year," the Board Member said.

The unqualified opinion did not necessarily reflect that the ministry was free of problems. In this regards, the BPK still found weaknesses in the internal control system and compliances with laws and regulations. Weaknesses of the internal control system included the improper administration and presentation of assets, debt and expenditures funded from domestic and foreign loans; the inadequate financial management of the procurement of defense equipment under the Foreign Military Sales (FMS) scheme; problems in the administration of fixed assets as recorded on the application of Management and Accounting Information Systems of State Assets (SIMAK BMN); the use of bank accounts that had not yet been reported and/or permitted by the Minister of Finance.

The BPK also found problems of non-compliances with laws and regulations, namely the realization of goods expenditures that was not in accordance with laws and regulations resulting in potential state losses, waste of state finance, and goods procured that could not be utilized; official travel expenditures that have not yet been accounted according to regulations resulting in potential state losses and overpayment; capital expenditures that have not yet been accorded with applicable regulations resulting in potential state losses, waste of state finance, and delays in state revenues.

On the same occasion, the BPK handed the report of the special-purposed audits conducted in 2019, namely the audit report on the compliance of fuel and lubricants (BMP) management in 2017, 2018, and 2019 at the Indonesian Army and Navy.

In addition, the BPK also delivered the compliance audit report pertaining the procurement of defense equipment carried out and/or received from 2018 until September 30, 2019 at the Indonesian Air Force. Based on the audit, the BPK concluded that planning and implementation of the procurement were not fully carried out in accordance with the applicable regulations.

The BPK expected that those weaknesses would receive attention from the ministry and be immediately followed up according to laws and regulations. The objective was that the opinion could be maintained for the upcoming year so as to promote the accountability in all aspects.

Public Relations and International Cooperation Bureau