Understanding PP 71: The Backbone of Government Accounting in Indonesia

In Indonesia, government financial reporting adheres to a specific Standard, Akuntansi Pemerintahan (SAP) or Government Accounting Standards. PP 71, which stands for Peraturan Pemerintah Nomor 71 Tahun 2010 (Government Regulation Number 71 of 2010), is a crucial piece of legislation establishing these SAP.

What is PP 71?

PP 71 lays the foundation for accrual-based government accounting in Indonesia. This means that government entities record financial transactions considering when they occur, not just when the cash is received or paid. This approach provides a more accurate picture of the government’s economic health.

Critical Components of PP 71

PP 71 consists of two primary parts:

• Kerangka konseptual Akuntansi Pemerintahan (KKAP): This conceptual framework outlines the fundamental principles and concepts underlying government accounting in Indonesia.
• Pernyataan Standar Akuntansi Pemerintahan (PSAP): These individual statements delve deeper into specific accounting treatments for various government transactions. Currently, 12 PSAPs cover a wide range of areas, such as asset management, revenue recognition, and expense reporting.

Benefits of PP 71

The implementation of PP 71 has brought several advantages to government accounting in Indonesia:

• Enhanced Transparency and Accountability: Accrual-based accounting provides a clearer view of the government’s financial position, leading to better transparency and accountability.
• Improved Decision-Making: Government officials can make informed decisions regarding resource allocation and spending with more accurate financial information.
• Facilitates Benchmarking: PP 71 aligns government accounting practices with international standards, enabling comparisons with other countries.