BASED ON THE ASSESSMENT PROCEDURE RELATED TO CORPORATE FOREIGN DEBT
A report on the Implementation of Prudential Principles (KPPK) based on the Attestation Procedure must be submitted no later than June 30, 2022. This deadline applies to entities using a financial year from January 1 to December 31, 2021. This deadline is following the Bank’s Circular Letter Indonesia No.17/3/DSta dated March 6, 2015, concerning Reporting on Activities of Prudential Principles in the Management of External Debt of Non-Bank Corporations. KPPK reporting obligations apply to non-bank PMA corporations and domestic entities.
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The reported KPPK report must go through an Attestation Procedure which includes information and/or information that is the result of an assessment by an independent public accountant and has been corrected based on the Attestation Procedure. Bank Indonesia stipulates the Attestation Procedure referred to under the Agreed-Upon Procedures (AUP) attached to the regulation, which is carried out by an independent public accountant against the Quarter IV KPPK Report previously submitted (March 31, 2022).
Evolution of KPPK Reporting Obligations
KPPK reporting obligations began with the issuance of Bank Indonesia Regulation (PBI) No.16/21/PBI/2014 concerning the Application of Prudential Principles in the Management of External Debt of Non-Bank Corporations. Subsequently, on December 30, 2014, the implementing provisions in the form of BI Circular Letter (SE) No.16/24/DKEM concerning the Application of Prudential Principles in the Management of External Debt of Non-Bank Corporations were stipulated. Finally, the SE was changed to SE-BI No.18/6/DKEM dated April 22, 2016. The purpose of this regulation is to encourage non-bank corporations to exercise prudence in managing exchange rate risk, liquidity risk and excessive debt risk (overleverage) on External Debt (ULN).
Bank Indonesia’s Verification Process
Bank Indonesia may conduct check on the veracity of reports and/or corrections to reports submitted by the Reporting Entity. In conducting such research, Bank Indonesia may request explanations, evidence, notes, and/or supporting documents, with or without involving the relevant agencies. Bank Indonesia may also conduct a direct examination of the Entity’s management or request an explanation from the public accounting firm for the KPPK Report that has gone through the Attestation Procedure, and/or appoint another party to conduct research for Bank Indonesia.
Consequences of Non-Compliance
Management of the Entity must provide evidence of books, records, documents, and explanations needed in the context of checking the truth of the report no later than 15 (fifteen) days from the date of issuance of the request letter. If the Entity does not provide evidence of books, records, documents and explanations within that period, then the report submitted is declared incorrect.
Contents of KPPK Report
KPPK report based on the Attestation Procedure includes Foreign Currency Assets and Foreign Currency Liabilities, as well as the difference between the two. In addition, the report is equipped with information on the fulfillment of the Minimum Hedging Ratio and the Compliance of the Minimum Liquidity Ratio which are determined according to the template provided by Bank Indonesia as a reporting tool.
Details on Foreign Currency Assets and Liabilities
Foreign Exchange Asset Information contains On Balance Sheet and Off-Balance Sheet information. The balance in foreign currency On Balance Sheet is taken from the balance of cash and cash equivalents, trade receivables, other receivables, inventories and marketable securities as attached to the audited Financial Statements. Meanwhile, the balance of foreign currency
Off-Balance Sheet is taken from transactions with banks inside and outside Indonesia including bills for forwarding, Swap and Options transactions.
Information on Foreign Currency Liabilities
Information on Foreign Exchange Liability contains On Balance Sheet information, namely the balance of current liabilities in the audited annual statement of financial position such as loans, debt securities, trade payables, and other current liabilities. Meanwhile, the Off-Balance Sheet information on obligations is taken from forwarding, Swap and Option transaction obligations which have a period of up to a maximum of 6 months.
Accredited Public Accounting Firm for KPPK Reports
SW Indonesia through the Public Accounting Firm of Suharli, Sugiharto & Partners has 10 independent public accountants who meet the requirements of Bank Indonesia to conduct an assessment of the KPPK Report based on the Attestation Procedure. SW Indonesia provides AUP services for KPPK Reports based on Attestation Procedures for both its audit clients and entities audited by other public accounting firms. In previous years, SW Indonesia succeeded in completing the AUP assignment before the time limit determined annually by Bank Indonesia.
At SW Indonesia, we are dedicated to providing comprehensive assistance and expertise in KPPK reporting for corporate foreign debt. With our team of experienced independent public accountants, we have a proven track record of successfully completing the Attestation Procedure and delivering high-quality results. Whether you are an audit client or an entity audited by another firm, we offer AUP services tailored to your specific needs. Contact us today at +62 2993 2132 or email us at [email protected] to ensure a smooth and compliant KPPK reporting process. Our team is ready to assist you every step of the way.