Selling Audit Opinions

The headline in the Jakarta Post yelled:

Supreme Auditors Sell Opinions

In all our time we have never seen such a declaration so we put down what we were doing and had a read.

Good news about the govenment’s financial accountability seem questionable now after the revelation last Friday that the Corruption Eradication Commission (KPK) had caught two senior BPK (the Indonesian Supreme Audit Agency) auditors redhanded with big sums of cash suspected to have been bribes to influence the auditors’ opinions on the Villages, Disadvantaged Regions and Transmigration Ministry.

And it looks like it has been suspected for a while:

The KPK move only validated earlier suspicions and rumors that the opinions of BPK auditors — ranging from unqulified opinion (clean bill of health), qualified opinion, adverse opinion and disclaimer — were available for sale to government offices and state-owned companies.

And the impact of such alleged misadventure is best expressed as follows:

We were initially encouraged by the BPK’s unqualified opinion as it showed that significant improvement had been made in the internal control system, which is the first line of defense against corruption and inefficiency and effective internal control is key to an effective risk management system. 

But now, after the arrest of two senior BPK auditors, the whole audit process and integrity of the BPK has been given a big question mark.

We are not so naive to think that this only happens in Indonesia so our bigger question is what processes does your organisation have in place to detect such manipulation of the most important output of an audit?

If you say you are not sure then how can you be certain that your audit opinions haven’t been sold to the highest bidder?

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