If a PT PMA is legally required to have its annual financial statements audited but does not complete the audit, those financial statements cannot be approved by the General Meeting of Shareholders (GMS).
When Is an Audit Mandatory?
An Indonesian limited liability company, including a PT PMA, must have its annual financial statements audited when one of the statutory audit requirements applies.
One trigger is having total assets and/or annual business turnover of at least IDR 50 billion (USD 2.8 million). Other statutory audit requirements can apply even when both figures remain below that amount.
Confirm whether your PT PMA requires an audit with MAP Resources Indonesia: info@mapresourcesindonesia.com
How the threshold is calculated is covered in MAP Resources Indonesia’s guide to audit thresholds and how revenue and assets are calculated.
What Happens If a Mandatory Audit Is Missed?
Where an audit is mandatory, the company must submit its financial statements to a public accountant for audit. If it fails to do so, the financial statements cannot be approved by the GMS.
The Company Law does not set out a specific automatic monetary fine under Article 68 solely for failing to obtain the required audit. Separate consequences may apply where an audit is also required under sector rules, a financing agreement, or a parent company’s reporting requirements.
Can a Company Complete the Audit Late?
Missing the original reporting timetable does not necessarily prevent the company from having the relevant financial statements audited later. The auditor will still need sufficient accounting records and supporting documents to examine the financial statements for that period.
Have an overdue audit? MAP Resources Indonesia can help you complete it. Email info@mapresourcesindonesia.com
If the accounts have already been properly prepared and supporting documents remain available, the outstanding audit may be easier to complete than where the company’s bookkeeping is incomplete.
What Happens to the Annual Report and GMS Approval?
Under the current corporate reporting framework, companies must submit the notarial deed recording GMS approval of the annual report, together with the annual report, electronically through the Legal Entity Administration System (SABH). The submission must be made within 30 days after the notarial deed is signed.
A missing mandatory audit prevents the financial statements from being approved by the GMS and can consequently prevent the company from completing this annual reporting process for the relevant financial year.
Does a Missing Audit Affect the Corporate Income Tax Return?
Indonesian corporate taxpayers must attach financial statements to their annual corporate income tax return. Where a company is legally required to have its financial statements audited, the audit report must also be attached to the annual return. Companies that are not subject to a mandatory audit can instead attach their internal unaudited financial statements.
A missing mandatory audit can leave the company without an audit report required for its annual corporate income tax filing.
Missing an audit before your annual tax filing? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com
A corporate income tax return that does not include required information or documents can be treated as not filed under Indonesia’s tax-return rules.
Can a Missing Audit Affect Financing or Group Reporting?
A foreign parent may require audited financial statements from its Indonesian subsidiary for group reporting or consolidation. An outstanding Indonesian audit can delay that process where the parent cannot finalize its reporting without the subsidiary’s audited figures.
A lender may also request audited financial statements when assessing a PT PMA for financing. Whether this creates a financing problem depends on the lender and the facility rather than a general Indonesian rule requiring audited accounts for every loan.
What If the Accounting Records Are Not Ready for Audit?
A company cannot resolve a missed audit simply by appointing an auditor if the underlying accounts are incomplete. The financial statements and supporting records must first be in a condition that allows the auditor to perform the required work.
Missing invoices, unreconciled bank accounts, unsupported balances, incomplete fixed-asset records, or unresolved intercompany transactions can delay the audit. The company may need to correct or reconstruct parts of its bookkeeping before the audit can proceed.
Complete an Outstanding Audit with MAP Resources Indonesia
MAP Resources Indonesia assists foreign-owned companies with outstanding statutory audits and the financial records needed to complete them. Contact MAP Resources Indonesia at info@mapresourcesindonesia.com to review your company’s audit position.
