The Development of Accounting in Indonesia

The development of accounting in Indonesia was relatively slow, starting during the Dutch colonial period. During the Dutch colonial period, Indonesia was already using accounting standards but using Dutch accounting standards which is Sound Business Practices. In 1955, Indonesia did not have regulations or laws that dealing with financial standards. Finally, in 1973, just before the establishment of active capital in Indonesia, IAI began to form a committee for the collection of materials and structures for GAAP and GAAS. Besides that, the Indonesian accounting principles committee (PAI committee) was formed, which was in charge of compiling financial standards, since then a book entitled Indonesian Accounting Principles (PAI) was published.

In 1984, PAI was established as the Indonesian accounting standard and revised accounting standards in more basic way and applied it to a book entitled Indonesian Accounting Principles 1984. At the end of 1984, PAI followed standards sourced from the IASC (International Accounting Standards Committee).

In 1994, PAI was committed to follow IASC / IFRS, began adapting international accounting standards, and revised PAI 1984. Since then IAI issued Financial Accounting Standards (SAK) on October 1, 1994. Until now, Financial Accounting Standards (SAK) are set as accounting standard in Indonesia. In 1994 to 1998 the name of the PAI committee was changed to the financial accounting standards committee (SAK committee), then at the VIII congress, to be precise on 23-24 September 1998 in Jakarta, the SAK committee was changed to the Financial Accounting Standards Board for the term of 1998 – 2000 and given the task to prepare and ratify PSAK. In 2008 SAK refers to IFRS. In 2012, IFRS began to be formalized and implemented in Indonesia. Currently the accounting standards that apply in Indonesia are PSAK IFRS, PSAK ETAP, PSAK Syariah, PSAK EMKM, and SAP.