Accounting Practice in Indonesia

The Dutch introduced the double-entry bookkeeping to Indonesia in the 17th century.The first accounting regulation enforced in Indonesia was issued by the Dutch Governor General of the East Indies in the year 1642. It introduced the governing regulations of the administration of cash receipts and receivables. Surprisingly, Indonesia was facing several stages of Financial Accounting Standards evolution. Untill 1973, Indonesia was acquiring the Early Dutch Accounting; dutch-based legislation and accounting requirements. In 1973-1984 were the years when IAI (Ikatan Akuntan Indonesia) espoused the U.S GAAP framework. Then, in 1984-1994 it revised to coverage the developments of U.S GAAP. And in September 1994, IAI and IAPI adopting Internationa Accounting Standar (IAS) as the benchmark point of the Indonesian standard that called PSAK ( Pernyataan Standard Akuntansi Keuangan). In June 30, 202, PSAK were improved and refined under the World Bank-sponsored Accountancy Development (ADB). PASK is using principle-based rather than the U.S GAAP. The growth of accounting practice in Indonesia was developed on 2005, where ameliorated the PSAK standard. Indonesia had adopted and adjusted the Accounting and Auditing standard towards the IFRS and ISA framework. Thus, IAI and IAPI as the selfregulated nad standard-setter finds some challenges due to achieve the convergence and the resource constratint the local standard; PSAK with IFRS. Hence, Indonesia needs BAPEPAM-LKs involvement to mitigated the standard adjustment. The challenges are; including development of a standard-setting strategy and implementation plan to enhance practical compliance and enforcement of standards. The improvements of the Indonesian Accounting standard are not only the structure of the Financial Statements. Despite, the ethical or the codes of conduct, Indonesian rules and regulations which related with Accounting framework and the improvement of the standardsetter. Ameliorated of standard-setter are includes of; first, the profession to verify efficiency of the public accountants number and the growth of Indonesian economic. Second, clearer training programs on practical application of the new auditing standard. And third continued development of accountancy curricula and teaching in universities throughout the country. Overall, the recommendation is created due to improve the current system and proposed the implementation the Indonesian accounting standard towards the generating the structure of the rules and regulation of the financial reporting.