Page 8 - Perpustakaan Lemhannas RI

5. Requirements with respect to accounting records and financial reporting
(principle 22).

• Regulations require that bank financial statements be based on PSAK and
accounting and reporting guidelines for banking (PAPI), and that the annual
financial statements be audited by a public accountant. While appropriate
bank disclosure requirements are broadly in place, there is scope for
improvement.

• The introduction of new accounting standards that are aligned to IAS 32 and
IAS 39 is likely to pose some challenges to the banking system and needs
close watching by Bl.

6. Corrective measures (principle 23).
• Supervisors have a large arsenal of supervisory tools to resolve problem
situations. Bl does not appear hesitant to use its substantial powers to require
swift corrective action by the banks under their supervision under normal
conditions. However, it was not always apparent that proper moderation or
escalation was in use.
• The existing prompt corrective action is largely discretionary and Bl tends to
allowbanks to remain under intensive supervision for several years without
resolving the underlying weaknesses.

7. Supervision on a consolidated basis and international cooperation
(principles 24 and 25).
• Bl performs its oversight through dedicated teams for each commercial bank.
• Regulatory reports are filed on a solo and consolidated basis allowing for
deeper understanding of where the organization is taking risk. On-site
examinations include risk taking in subsidiaries.
• Bl should pay increased attention to the oversight of foreign operations of
Indonesian banks by the banks’ management.
• Both formal and informal arrangements for ongoing information sharing and
coordination with the other supervisors (domestic and foreign) are largely
absent.
• Peer group analysis is not always efficient and useful. A horizontal
examination of a cross section of banks may be useful to make comparisons
and propagate best practices through the industry.
• Bl needs to set up programs to (i) determine whether home country
supervisors of foreign banks in Indonesia are competent and have the
authority to enter into an information sharing agreement; and (ii) make regular
visits to the home supervisors of systemically important foreign banks in
Indonesia.