A PT PMA can become subject to a statutory financial statement audit under Indonesia’s Company Law, while a representative office is not subject to the same Company Law audit framework.
When Must a PT PMA Have Its Financial Statements Audited?
A PT PMA is an Indonesian limited liability company and falls within the financial reporting provisions of Indonesia’s Company Law.
Under Article 68 of the Company Law, a company’s financial statements must be audited by a public accountant when specified conditions apply. These include where the company:
- conducts activities involving the collection or management of public funds;
- issues debt instruments to the public;
- is a publicly listed company;
- is a state-owned company;
- has assets and/or annual business turnover of at least IDR 50 billion (USD 3 million); or
- is otherwise required by legislation to have its financial statements audited.
The IDR 50 billion test is not based solely on the value of the PT PMA’s assets. A company can meet the statutory threshold through its annual business turnover even where its assets remain below IDR 50 billion.
Does a Representative Office Require a Statutory Audit?
A representative office is an extension of its foreign parent rather than a separate Indonesian limited liability company.
A representative office is not subject to the same Article 68 statutory audit requirements as a PT PMA. It can, however, still have financial reporting and recordkeeping obligations in Indonesia based on its activities, tax position, and any sector-specific requirements.
What Financial Records Must a Representative Office Maintain?
A representative office may still need accounting and supporting records for Indonesian tax and regulatory purposes even though it is outside the PT Company Law statutory audit framework.
Operating a representative office in Indonesia? Contact MAP Resources Indonesia at info@mapresourcesindonesia.com to review its accounting and reporting requirements
Its records may need to support expenses and payments incurred in Indonesia, applicable withholding and payroll obligations, and funding received from the foreign parent.
A representative office may also need to produce these records for tax reporting, regulatory submissions, or an examination by the relevant authority.
Can a PT PMA Need an Audit Below IDR 50 Billion?
The IDR 50 billion assets and/or annual business turnover threshold is only one of the statutory audit triggers.
A PT PMA below that threshold may still require audited financial statements if another law or regulation imposes an audit requirement on the company. Sector-specific requirements can apply independently of the general Company Law threshold.
Does your PT PMA fall below the IDR 50 billion threshold but still face an audit requirement? Contact us at info@mapresourcesindonesia.com to determine what applies
An audit can also be required outside the statutory threshold. A shareholder or parent company may require the Indonesian subsidiary to obtain an audit for group reporting or consolidation, while financing agreements or other contracts can require audited accounts.
These requirements are separate from the statutory audit requirement under Article 68.
Does Audit Status Affect Financing?
A lender may request audited financial statements when assessing a PT PMA for financing. Whether an audit is required for the financing depends on the lender, the facility, and the company’s circumstances rather than a general Indonesian requirement applying to every borrower.
Review Audit Requirements with MAP Resources Indonesia
MAP Resources Indonesia helps foreign investors determine whether their Indonesian entities are subject to statutory or other financial statement audit requirements. Contact MAP Resources Indonesia at info@mapresourcesindonesia.com to review the audit requirements applying to your Indonesian operations.
