Financial statements for listed companies represent a critical instrument of transparency and accountability in the capital market. Governed by Financial Accounting Standards (SAK) and Regulation VIII.G.7, these reports must ensure both technical accuracy and comprehensive disclosure for investors and regulators. Issuers and public entities, defined by their public ownership and capital structure, are required to present complete financial statements, including key components such as financial position, performance, cash flows, and explanatory notes. The concept of materiality plays a crucial role in determining the relevance and clarity of disclosed information. Compared to private companies, listed entities face stricter disclosure requirements to protect investors and maintain market integrity. Ultimately, financial statements function as a public contract of trust, where credibility and reputation depend heavily on the quality and integrity of reported information.
Issued Financial Statements: Transparency is the Price of Public Status
Entering the capital market is not just a matter of obtaining funds. For companies, status as an issuer or public entity means one thing: transparency without compromise. In Indonesia, transparency standards must not remain ambiguous. It is bound by strict regulations, one of which is Regulation Number KEP-347/BL/2012 or also known as Regulation VIII.G.7 which was previously issued by BAPEPAM-LK and is now under the supervision of the Financial Services Authority (OJK).
This regulation has become the main guideline for presenting and disclosing financial reports for issuers and public entities—documents that are not only read by investors but also become the basis for market trust.
As legendary economist John Maynard Keynes said, “Markets can remain irrational longer than you can remain solvent.” In such situations, transparency of financial statements becomes an anchor of rationality for investors.
Who are called Issuers and Public Entities?
Within the OJK framework, an issuer is a party that makes a public offering of securities to the public. The form is not limited to legal entity companies but can also take the form of other organized entities.
Meanwhile, a public entity is a company with at least 300 shareholders and paid-up capital of at least Rp3 billion, or in accordance with the provisions set by the government. With this status, the entity is no longer only responsible to internal owners, but also to the public.
Two Pillars: SAK and Regulation VIII.G.7
In practice, issuers’ financial reporting stands on two main pillars. First, Financial Accounting Standards (SAK) which regulates recognition and measurement. Second, Regulation VIII.G.7 which regulates presentation and disclosure. This means that the figures in the financial statements must be correct technically according to SAK, and at the same time presented in a transparent and informative manner in accordance with the provisions of the capital market regulator.
The components of financial statements also follow comprehensive standards: statement of financial position, statement of profit or loss and other comprehensive income, statement of changes in equity, statement of cash flows, notes to the financial statements, and comparative statement of financial position if necessary.
Materiality: Defining Boundaries or Threshold
One important aspect emphasized in Regulation VIII.G.7 is the concept of materiality—the threshold that determines whether information needs to be disclosed separately or combined.
This regulation provides relatively strict thresholds, including:
- 5% of total assets for asset items,
- 5% of total liabilities for liabilities items,
- 5% of total equity for equity items,
- 10% of revenue for items in the statement of comprehensive income or loss, or
- 10% of profit before tax for the impact of a transaction or event.
These numbers are important. It is a practical guide to ensure that the financial statements are not too detailed to the point of being confusing, but also not too concise to the point of being misleading. Based on the experience of auditors from KAP Suharli, Sugiharto & Partners while accompanying clients through the initial public offering (IPO) process or auditing financial statements of listed companies, this materiality is one of the differentiators in professional assessment. In the IPO process, regulatory technical reviewers often test the auditor’s determination of materiality.
Report Structure: More Than Just Format
Regulation VIII.G.7 not only regulates “what” must be presented, but also “how” to present it. The statement of financial position, for example, should classify assets and liabilities into current and non-current categories. However, for certain industries, a liquidity-based approach is permitted if deemed more relevant.
The statement of profit or loss and other comprehensive income must reflect all revenue and expenses in one period. The statement of changes in equity explains the dynamics of capital, including comprehensive income and transactions with owners.
Meanwhile, the statement of cash flows breaks down cash movements based on three main activities: operating, investing, and financing. For investors, this report is often the most honest indicator of an entity’s ability to generate cash.
Notes to the Financial Statements: Behind the Numbers
If the main report is the face, then the notes to the financial statements are the story behind it. This is where the entity discloses accounting policies, related party transactions, financial risks, as well as commitments and contingencies. Information like this is often the key in reading the “intention” behind the numbers.
For institutional investors, this section is not a supplement—it is a primary source of analysis.
Transparency as a Public Contract
Compared to private entities, presentation and disclosure standards for issuers are stricter and much more detailed. The goal is clear: to protect investors and maintain the integrity of capital markets. In this context, financial statements are no longer just a regulatory obligation. It is a contract of trust between the entity and the public.
As world investment figure Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it.” In the capital market, reputation is largely determined by the quality and integrity of financial statements. Ultimately, to become a public entity means being ready to live in the spotlight. And under that spotlight, financial statements have become the main tool to prove that an entity is worthy of trust.
