Frequently Asked Questions: #annual-report-contents-audit-requirement

Article 66 of the Company Law (Law No. 40 of 2007) sets the minimum contents. The annual report must include at least:

• The financial statements — balance sheet, income statement, cash-flow statement, statement of changes in equity and the notes, with comparative figures for the previous year, prepared under Indonesian financial accounting standards
• A report on the company’s activities during the year
• A report on the company’s social and environmental responsibility (tanggung jawab sosial dan lingkungan, TJSL) — mandatory for companies operating in the natural-resources sector
• Details of any problems that arose during the year and affected the company’s business
• The Board of Commissioners’ report on its supervision of the company
• The names of the members of the Board of Directors and Board of Commissioners
• The salaries and allowances of the directors and the commissioners for the year

The report is signed by all directors and all commissioners; anyone who declines to sign must state their reasons in writing, and the report says so.

Audit. Under Article 68 the financial statements must be audited by a registered public accountant before the AGMS can approve them if the company:

• Collects or manages funds from the public (banks, insurers, pension funds and the like)
• Has issued debt instruments to the public
• Is a publicly listed company
• Is a state-owned enterprise (Persero)
• Has total assets or annual turnover of at least Rp 50 billion
• Is required to by another law or regulation

For every other company an audit is optional; the AGMS approves unaudited statements. Where an audit is required, the financial statements in the annual report must be the audited version, the SABH filing records the public accountant’s name, licence number and date of licence, and the Ministry’s fee for the notification is the higher of the two bands.

In practice the financial statements are the same ones already prepared for the corporate tax return, and the activity and TJSL sections are short narrative statements — a page each is common for a small trading or services company. The directors’ and commissioners’ remuneration is the item most often left out and most often queried.

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