Financial Statement Preparation by Securities Companies

EXTRACT
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 1 /POJK.04/2020
CONCERNING
FINANCIAL STATEMENT PREPARATION BY SECURITIES COMPANIES BY THE GRACE OF THE ALMIGHTY GOD THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering :
a. that it is necessary to improve the quality of transparency, openness, uniformity of preparation, and comparability of financial statements of securities companies; b. that for the interest of investors in obtaining reliable quality information from the financial statements of securities companies;
c. that it is necessary to adjust to changes in financial accounting standards in the program for converging financial accounting standards statements to International Financial Reporting Standards;
d. that based on the considerations as referred to in letters a, b, and c, it is necessary to establish a Financial Services Authority Regulation concerning the Preparation of Financial Statements by Securities Companies; Recalling :

1. Law Number 8 of 1995 concerning Capital Markets (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
   FINANCIAL SERVICES AUTHORITY
   REPUBLIC OF INDONESIA

2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHABILITY REGULATION CONCERNING THE PREPARATION OF FINANCIAL STATEMENTS BY SECURITIES COMPANIES.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined:

1. Securities Company is a party that conducts business activities as an underwriter of securities, securities trading intermediary, and/or investment manager.
2. Financial Accounting Standards, hereinafter abbreviated as SAK, are statements and interpretations issued by the Financial Accounting Standards Board of the Indonesian Accountants Association and the Sharia Financial Accounting Standards Board of the Indonesian Accountants Association, as well as regulations in the field of capital markets for entities conducting activities in the capital market.

CHAPTER II
PREPARATION OF FINANCIAL STATEMENTS BY SECURITIES COMPANIES
Article 2
Financial statements of Securities Companies, whether for submission to the public or to the Financial Services Authority, must be prepared and presented in accordance with regulations in the capital market sector regarding guidelines for accounting by Securities Companies.

Article 3
(1) In the event of changes to SAK and/or new SAK since the implementation of the accounting guidelines for Securities Companies as referred to in Article 2, Securities Companies are required to follow the provisions of the relevant SAK, unless otherwise stated by the Financial Services Authority. (2) Other statements by the Financial Services Authority as referred to in paragraph (1) to fulfill the principle of openness and protect public interest are regulated by a Financial Services Authority Regulation.

Article 4
The preparation and presentation of financial statements of Securities Companies as referred to in Article 2 and Article 3 are for book year periods starting on or after January 1, 2020.

CHAPTER III
ADMINISTRATIVE SANCTIONS
Article 5
(1) Any party that violates the provisions as referred to in Article 2 and Article 3 shall be subject to administrative sanctions.
(2) Sanctions as referred to in paragraph (1) are also imposed on parties causing the violation as referred to in paragraph (1).
(3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority.
(4) Administrative sanctions as referred to in paragraph (1) include:
a. written warning; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business licenses; f. cancellation of approval; and g. cancellation of registration.
(5) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (4) letter a. (6) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed alone or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g. (7) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with applicable regulations.

Article 6
In addition to administrative sanctions as referred to in Article 5 paragraph (4), the Financial Services Authority may take certain actions against any party that commits a violation as referred to in Article 2 and Article 3.

Article 7
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 5 paragraph (4) and certain actions as referred to in Article 6 to the public.

CHAPTER IV
CLOSING PROVISIONS
Article 8
This Financial Services Authority Regulation takes effect on the date of enactment.

This extract is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

For the information of everyone, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on January 3, 2020
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Enacted in Jakarta on January 6, 2020
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 1

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 1 /POJK.04/2020
CONCERNING
FINANCIAL STATEMENT PREPARATION BY SECURITIES COMPANIES

I. GENERAL
Securities Companies play an important role in the transaction mechanism of the capital market, a role reflected in the types of activities that can be conducted by Securities Companies, namely as Underwriters of Securities, Securities Trading Intermediaries, and/or Investment Managers. The importance of the role undertaken by Securities Companies must be accompanied by responsibility and accountability. One form of accountability for management and information openness to stakeholders is the obligation for Securities Companies to prepare and submit financial statements. In 2011, Bapepam and LK issued Regulation Number VIII.G.17 concerning Accounting Guidelines for Securities Companies, which aims to serve as a guide for Securities Companies in preparing financial statements. The provisions contained in the Accounting Guidelines for Securities Companies are formulated based on Financial Accounting Standards Statements and other relevant regulations in effect at the time of drafting the 2011 Accounting Guidelines for Securities Companies.

One of the impacts of the convergence of Financial Accounting Standards Statements to International Financial Reporting Standards is that current Financial Accounting Standards Statements are more transaction-oriented. In 2017, one of the Financial Accounting Standards Statements that served as the basis for drafting the Accounting Guidelines for Securities Companies changed, namely Financial Accounting Standards Statement 71 concerning Financial Instruments, replacing Financial Accounting Standards Statement 55 (revised 2015): Financial Instruments: Recognition and Measurement, which will take effect on January 1, 2020. Additionally, there are 2 other Financial Accounting Standards Statements also ratified in 2017, namely Financial Accounting Standards Statement 72 concerning Revenue from Contracts with Customers and Financial Accounting Standards Statement 73 concerning Leases, which must be applied by all entities (including Securities Companies) on January 1, 2020. With the massive changes in Financial Accounting Standards Statements since the convergence of Financial Accounting Standards Statements to International Financial Reporting Standards stage 2 and having a significant impact on the Accounting Guidelines for Securities Companies, while the provisions in the Accounting Guidelines for Securities Companies still using previous Financial Accounting Standards Statements, the Accounting Guidelines for Securities Companies have become irrelevant and inflexible to the dynamic development of SAK. With this fact, Financial Accounting Standards Statements are general guidelines that must be followed by Securities Companies in preparing financial statements, which has the potential to cause legal certainty issues, investor protection issues, and inefficiency in the cost of preparing financial statements. Given these conditions and to improve comparability and provide a legal basis for Securities Companies in preparing financial statements in accordance with the latest Financial Accounting Standards Statements, it is necessary to regulate provisions regarding the preparation of financial statements by Securities Companies based on the currently applicable SAK.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Regulations in the Capital Market sector regarding Accounting Guidelines for Securities Companies are Regulation Number VIII.G.17, appendix of the Decision of the Chairman of the Capital Market Supervisory Board and Financial Institutions Number KEP 689/BL/2011 concerning Accounting Guidelines for Securities Companies.

Article 3
Paragraph (1)
The SAK referred to in these provisions are Statements and Interpretations issued by the Financial Accounting Standards Board of the Indonesian Accountants Association and the Sharia Financial Accounting Standards Board of the Indonesian Accountants Association. Paragraph (2) Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
Sufficiently clear.

Article 6
The term "certain actions" includes, among others, orders to reissue financial statements.

Article 7
Sufficiently clear.

Article 8
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6452