What are Accounting Standards and Its Kinds
Navigasi - Financial accounting in Indonesia is prepared by the Financial Accounting Standards Board (DSAK) which is under the auspices of the Indonesian Institute of Accountants (IAI). (Harahap, 2008) in (Yelitasari 2016) Financial accounting standards in Indonesia are guidelines for anyone in preparing financial statements that will be accepted by the public.
|What are Accounting Standards and Its Kinds|
Financial Accounting Standards in Indonesia are prepared by the Financial Accounting Standards Board, namely IAI.
Indonesia also has a Basic Framework for the Preparation and Presentation of Financial Statements which is the concept that underlies the preparation and presentation of financial statements for external users.
There is a conflict between the basic framework and the Financial Accounting Standards, so the provisions of the Financial Accounting Standards must be superior relative to the basic framework.
The basic framework is intended as a reference for the Committee for Preparing Financial Accounting Standards in developing Financial Accounting Standards in the future and in reviewing the applicable Financial Accounting Standards, the number of conflict cases will decrease over time (IAI: 2016).
Based on the explanation above, it can then be understood that financial accounting standards are official announcements issued by authorized bodies.
Financial Accounting Standards contain standard concepts and methods which are stated as general guidelines in corporate accounting practices in certain environments. This standard can be applied as long as it is still relevant to the circumstances of the company concerned.
Various Accounting Standards
Accounting standards that apply in Indonesia consist of four standards, often referred to as the 4 Pillars of Accounting Standards, namely Financial Accounting Standards (SAK), Financial Accounting Standards for Entities Without Public Accountability (SAK ETAP), Islamic Financial Accounting Standards (SAK Syariah), and Accounting Standards Governance (SAP).
Each standard has different characteristics and uses, both in terms of entities, accounting treatment, and how they are used.
This is in accordance with the opinion of Dwi Martani, et al, (2012:16), which states that there are 4 kinds of accounting standards that apply in Indonesia, while the explanation is as follows:
Financial Accounting Standards (SAK)
Financial Accounting Standards (SAK) are used for entities that have public accountability, namely registered entities or in the process of registering in the capital market or fiduciary entities (which use public funds such as insurance, banking, and pension funds). This standard adopts IFRS considering that Indonesia, through IAI, has determined to fully adopt IFRS starting in 2012.
IFRS as an international standard has three main characteristics as follows:
- Principles-Based. Standards that use Principles-Based only regulate the main things in the standard while detailed procedures and policies are left to the user. Meanwhile, the rule-based standard contains detailed accounting recognition provisions.
- Fair Value. Many accounting standards use the concept of fair value (fair value). The use of fair value to increase the relevance of accounting information for decision making.
- Disclosure. Require more disclosure (disclosure) in financial statements. Disclosure is necessary so that users of financial statements can consider relevant and necessary information related to what is included in the financial statements and important events related to these items.
Financial Accounting Standards for Entities Without Public Accountability.
Financial Accounting Standards for Entities Without Public Accountability (SAK ETAP) are used for entities that do not have significant public accountability in the preparation of general purpose financial statements.
Sharia Accounting Standards
Sharia Accounting Standards (SAK Syariah) are standards used for entities that have sharia transactions or sharia-based entities. Sharia accounting standards consist of a conceptual framework for preparing and disclosing reports, standards for studying financial statements, and special standards for sharia transactions such as mudharabah, salam, ijarah, and istishna.
Accounting Standards Government (SAP)
Government Accounting Standards (SAP), namely accounting standards used to compile financial reports of government agencies, both central and regional.
Based on the explanation above, it can then be understood that each company in Indonesia essentially uses the 4 accounting standards above, therefore in each preparation of its financial statements, of course, every company has a different way of presenting it, as well as public companies that have been registered in Indonesia stock exchange.