Discourse on the Draft Regulation Regarding the Obligation of Annual Legal Audit by Legal Auditors

As stated by Lawrence M. Friedman, a law professor from the United States, the effectiveness and success of law enforcement are influenced by three important components, namely legal structure, legal substance, and legal culture. This serves as the basis for the government, which is currently working on a Draft Presidential Regulation related to Legal Compliance in the Formation of Laws and Regulations, and Law Implementation.

In Article 9 of the Draft Presidential Regulation, it is stated that in order to increase the effectiveness of Law Implementation, an assessment is carried out on:

1. legal substance, legal structure, and legal culture; and
2. awareness and compliance of law enforcement.

The grand design of the Draft Presidential Regulation includes 3 (three) important points, namely:

1. Compliance with the establishment of regulation;
2. Compliance with law enforcement; and
3. Supervision of the legal profession and services.

Regarding the First Point, Compliance with the Formation of Regulations, the leaders of ministries/institutions and local governments are required to sign an integrity pact as a form of commitment to ensuring compliance with legal provisions and procedures for the formation of laws and regulations. In this context, the Minister of Law and Human Rights is given the authority to set relevant policies and conduct monitoring and evaluation of ministries/institutions and local governments.

The results of the monitoring and evaluation are outlined in the form of opinions and recommendations related to the formation of laws and regulations in their respective ministries/institutions and local governments. The monitoring and evaluation is carried out in relation to the following aspects referring to 4 (four) objects and objectives of monitoring and evaluation, namely:

1. The process of forming laws and regulations (aims to ensure that the formation process is in accordance with the applicable formal procedures and that relevant issues have been adequately identified).
2. Achievement of the realization of the formation of laws and regulations (aiming to ensure that the targets and plans for the formation of the established laws and regulations have been achieved).
3. Dissemination of legal documents and information, as well as community participation (aiming to ensure that the public can access relevant legal documents and information, as well as be involved in the formation process).
4. Implementation of integrity pacts by the leaders of ministries/agencies and local governments (aiming to ensure that ministries/agencies and relevant local governments comply with and enforce the applicable laws and regulations as well as ethical standards in the formation of laws and regulations).

Regarding the Second Point, Compliance with Law Enforcement, the object of assessment of the effectiveness of law enforcement is the responsibility of the Minister of Law and Human Rights by involving monitoring and evaluation measures. The results of these actions will be in the form of opinions and recommendations that must be followed up by the relevant bodies. Furthermore, the monitoring and evaluation must ensure that the object of the assessment is in line with the state philosophy of Pancasila, the 1945 Constitution of the Republic of Indonesia, and all applicable legal principles.

Assessment of the level of awareness and legal compliance of business entities, legal entities, and public agency is carried out through legal audits (namely: activities to identify, examine, analyse legal, assess, and provide opinions based on requests and assignments from the Auditee or from authorized officials carried out by certified Legal Auditors on the legal acts of Business Entities, Legal Entities, and Public Entities to assess the validity (legality) of legal acts and compliance of Business Entities, Legal Entities, and Public Entities with laws and/or Regulations, as well as the principles of good governance, vide Article 1 Paragraph 7 of the Draft Presidential Regulation) is mandatory annually, which will be implemented by the Auditor in identification of the purpose of the assignment of the Legal Audit;

1. planning of Legal Audits;
2. confirmation of the planning of the Legal Audit;
3. data and information collection;
4. assessment and analysis of data and information;
5. preparation of the report on the results of the Legal Audit; and
6. submission of the results of the Legal Audit.

In the event that a business entity or legal entity does not carry out an audit, the Minister of Law and Human Rights is authorized to assign an Auditor to conduct an audit of the business entity or legal entity concerned. Please note that any Agency that does not participate in the legal awareness and compliance program, and/or does not follow up and/or submit the completed Audit along with its Audit Result Report, will be subject to sanctions in accordance with the applicable laws and regulations.

Regarding the Third Point, Supervision of the Legal Profession and Services, this Draft Presidential Regulation gives the authority to the Minister of Law and Human Rights to supervise Auditors and paralegals (i.e. a person who does not work as an advocate who has a paralegal certificate). Furthermore, the Minister of Law and Human Rights is authorized to carry out the following activities related to the two legal professions:

1. Establish regulations and/or policies that regulate the improvement of professional competence through training, education, or other activities;
2. Establish regulations and/or policies that regulate the implementation of the duties and functions of the legal profession;
3. Assess the suitability and feasibility of the service standards provided in accordance with the laws and/or policies set.

Specifically related to Auditors, in this Draft Presidential Regulation it is stated that the assessment of Auditor service standards is carried out through certain activities, while the results of the assessment are given based on the submission of an application to the Minister of Law and Human Rights. The assessment of the standards will be carried out in relation to the following aspects:

1. Registration and Accreditation of Legal Auditor Education/Training Institutions;
2. Registration and Certification of Legal Auditors;
3. Registration and Accreditation of the Office of the Legal Auditor;
4. operational permit of the Legal Auditor’s office;
5. legal auditor professional practice license; and/or
6. recommendations for the establishment of a Legal Auditor professional certification institution.

It is important to note that this Draft Presidential Regulation is still in the discussion and harmonization stage to avoid any overlap of authority and/or other legal issues related to the parties involved in this draft Presidential Regulation.

For legal assistance from SW Counselors at Law, please contact:

  Fanny

  T. (+6221) 2222-0200

  E. [email protected]

  Bella

  T. (+6221) 2222-0200

  E. [email protected]