Financial Crime World

Indonesia Requires Companies to Submit Annual Financial Statements

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In Indonesia, all registered companies are required by law to submit their annual financial statements to comply with legal requirements. These financial statements provide a comprehensive report of a company’s financial activities over a 12-month period, which can be either a calendar year or a fiscal year chosen by the company.

Indonesia lacks a single unified regulation on auditing and compliance, instead referring to various laws and bylaws to specify requirements for auditing, accounting, and financial reporting. Companies are required to file annual financial statements as it is a legal requirement.

Importance of Financial Statements

Financial statements provide valuable information about a company’s financial well-being to shareholders and the public. Potential investors use this information to assess the security of their investments in the company. Additionally, financial statements must be made available to authorities who request access to them.

Accountability

Financial statements also help ensure accountability in the use of a company’s finances. A company’s management must provide evidence of how capital has been used and for what reasons. An in-depth analysis of the exact calculations and figures contained within the financial statement can also be used to assess a company’s growth and identify areas that need improvement.

Components of Annual Financial Statements

The Indonesian Financial Accounting Standards (SAK) recommends that an annual financial statement include several key components, including:

  • Balance sheet
  • Profit and loss statement
  • Cash flow report
  • Statement of changes in company equity
  • Notes to the financial report

All accounting records and financial statements must be written in the Indonesian language (Bahasa Indonesia), although permission to use a different language may be obtained from the Ministry of Finance.

Benefits of Submitting Annual Financial Statements

By submitting annual financial statements, companies can ensure compliance with legal requirements and provide valuable information to stakeholders. This helps to build trust with shareholders and the public, and also provides an opportunity for investors to make informed decisions about their investments.

In summary, Indonesia requires all registered companies to submit annual financial statements as a legal requirement. These financial statements are essential in providing transparency and accountability in the use of a company’s finances, and help ensure compliance with legal requirements.