JAKARTA (TheInsiderStories) - The Financial Services Authority (OJK) is seeking clarification form PUblic Accountant Purwantono, Sungkoro & Surja, Indonesian partner of Ernst & Young, over fined that has been imposed by the US Public Company Accounting Oversight Board (PCAOB) to its Indonesian operation.
The Head of OJK for Capital Market Supervision Nurhaida said OJK will seek explanation from EY Indonesia. The clarification will be used as consideration before imposing penalty to the public accountant firm. “From this clarification, OJK will make a decision,” Nurhaida was quoted by Kontan daily as saying.
The United State’s Public Company Accounting Oversight Board (PCAOB) has imposed a $1 million civil penalty on KAP Purwantono, Suherman & Surja, the Indonesian member firm of the Ernst & Young global network, for audit failure, noncooperation, and violations of the Board’s quality control standards.
In addition, the former professional practice director for the EY network’s Asia-Pacific region and a former EY Indonesia engagement partner were sanctioned for their roles in the audit failure. The former engagement partner also was sanctioned for noncooperation with a Board inspection and investigation.
“Reliable audits are critical to providing investors a basis for confidence to participate in U.S. public capital markets.PCAOB standards and oversight are key protections for investors in U.S. securities. Wherever located, all audit firms that elect to register with the PCAOB must ensure that they and their personnel comply and cooperate with PCAOB inspections and investigations,” said James R. Doty, PCAOB chairman.
The case involved the 2011 audit of an Indonesian telecommunications company. A U.S.-based EY partner performing a review required by PCAOB standards informed the engagement partner that he believed the company failed to provide sufficient evidence to support the accounting for more than 4,000 leases for spaces on cellular towers, owned by PT Indosat Tbk (IDX:ISAT). In response, the engagement partner contacted the regional professional practice director who, despite the review partner’s concerns, authorized the engagement partner to release the audit report.
Separately, President Director of Indonesian Stock Exchange (IDX) Tito Sulistio said the exchange has sent letter to EY Indonesia local partner to seek clarification over the matter. Group Head Corporate Communicaitons of ISAT Deva Rachman said Indosat has evaluated and restated the company’s 2011 financial report. (*)