Ethics in Auditing

Public confidence as an independent audit of the service users is essential for the development of the public accounting profession.Public confidence will be reduced if there is evidence that the independence of the auditor it turns out is reduced, even public confidence can also be decreased due to the circumstances they are sensible (reasonable) are considered to affect the independence stance. To be independent, the auditor must be intellectually honest, free from any obligations towards its clients and does not have an interest with its clients both a management company or owner of the company. Competence and independence of the auditor in its application will be related to ethics. Accountants have an obligation to maintain the highest standards of ethical behavior to the organization in which they take shelter, their profession, the community and themselves where accountants have the responsibility of being competent and to maintain their integrity and objectivity.

(Nugrahiningsih 2005 in Alim et al 2007).

Auditor's Responsibility to the Public

The accounting profession in the community has a very important role in maintaining the functioning of the business in an orderly manner to assess the fairness of the financial statements presented by the company. Dependence between public accountant with lead responsibility to the interests of the public accountant. In the code of conduct is disclosed, accountants not only have a responsibility to clients who pay, but also has a responsibility as well to the public. The public interest is defined as the interest of the people and institutions that served as a whole. The public will expect accountants to fulfill its responsibilities with integrity, objectivity, thoroughness professionalism, and to serve the public interest. The accountant is expected to provide a quality service, wearing the appropriate rewards services, and offers a variety of services with a high degree of professionalism. On a given public trust is an accountant must continually demonstrate their dedication to achieve the high level of professionalism.

Buger Justice revealed that an independent public accountant to provide a valuation report on the company's financial statements considers that responsibility to the public that goes beyond the relationship between the auditor and the client.Independent public accountants have different functions, not only adhere to the creditors and shareholders, but also serves as "a public watchdog function". In carrying out the functions of an accountant should maintain its independence as a whole at any time and meet loyalty to the public interest. This makes the conflict of interest between the client and the public on loyalty konfil auditor.

It is also disclosed by Baker and Hayes, a certified public accountant that is expected to provide a professional service in a different way to benefit from contractual arragment between public accountants and clients.

When the auditor receives audit assignment against a company, it makes konsequensi to the auditor to be responsible to the public.Assignment to report to the public about the fairness of the financial statements and the description of the operation of the company for a certain time gives "fiduciary responsibility" to the auditor in order to protect the public interest and independent attitude of the client used as a basis for maintaining the trust of the public.

Basic Responsibilities of Auditors

The Auditing Practice Committee, which is the forerunner of theAuditing Practices Board, in the 1980s, giving a summary (summary) of the auditor's responsibilities:

1. Planning, Control and Recording. Auditors need to plan, control and record his work.

2. Accounting System. The auditor should ascertain the system for recording and processing of transactions and assess their adequacy as a basis for preparing the financial statements.

3. Audit Evidence. The auditor would obtain audit evidence that is relevant and reliable to provide a rational conclusion.

4. Internal Control. If the auditors wish to place confidence in the internal controls, should ensure and evaluate the controls and perform compliance tests.

5. Revisited Relevant Financial Statements. Auditors carry out review the relevant financial statements as necessary, in conjunction with the conclusions drawn by other audit evidence obtained, and to provide a rational basis for the opinion on the financial statements.

The auditor's independence

Independence is the foundation of the auditing profession. That means the auditors will be netralterhadap entity, and therefore will be objective. The public can trust the auditor auditkarena functions behave impartially and acknowledges the obligation to bersiikap fair. Entitasadalah client auditor, but the CPA has a greater responsibility to the auditors clear penggunalaporan known. Auditors should not position themselves or under group pertimbangannyadi anything and anyone. Independence, integrity and objectivity of the auditor third mendorongpihak to use the financial statements included in the auditor's report with confidence and trust completely.

Capital Market Regulation and Regulator regarding public accountant independency

On 28 February 2011, the Capital Market Supervisory Agency and Financial Institution (Bapepam-LK) has issued regulations governing the independence of accountants who provide services in the capital market, namely by Regulation No. VIII.A.2 attachment Bapepam Chairman Decree No. Kep-86 / BL / 2011 concerning Independence of Accountant Provide Services in Capital Market.
As published in the Press Release of Bapepam LK on February 28, 2011, Rule No. VIII.A.2 is a refinement of the rules that have been there before and aims to provide convenience for the Office of Public Accountant or Public Accountant in providing appropriate professional services in their respective sectors. Here is his decision:

DECISION OF CHAIRMAN OF CAPITAL MARKET SUPERVISORY AGENCY

NUMBER: KEP-20 / PM / 2002

ABOUT

INDEPENDENCE OF ACCOUNTANT GIVING AUDIT SERVICES

IN CAPITAL MARKET

article 1

Provisions concerning Independence of Accountant Provide Audit Services in Capital Market, set in VIII.A.2 RULE NUMBER: INDEPENDENCE OF THE ACCOUNTANT gives AUDIT SERVICES IN CAPITAL MARKET:

1. Definition of terms in this rule are:

a. Audit Period and Period Professional Designation:

1) Audit Period is the period covering the period of the financial statements audited or reviewed in; and

2) Professional Designation Period is the period of assignment to audit or review the client's financial statements or to prepare a report to Bapepam.

b. Family Member is a wife or husband, parents, children, both within and outside of dependents and siblings.

c. Contingent Fee is a fee that is set for the implementation of a professional service that will only be charged when there is a specific finding, in which the amount of the fee depends on the specific findings or results. Fee considered contingent if established by a court or regulatory body or in terms of taxation, if the basis of the determination is the result of legal settlements or findings of regulatory agencies.

d. People In Public Accounting Firm are:

1) People who are included in the Task Team Audit is sema colleagues, leadership, and professional employees who participated in the audit, review, or assignment attestation of clients, including those who do study further or act as a peer to the two during the Audit Period or assignment attestation on issues of technical or specialized industries, transaction, or important events;

2) People who are included in the chain of executive / command all those who:

a) supervise or have direct management responsibility of the audit;

b) evaluate the performance or recommend compensation for the fellow in the audit assignment; or

c) provide quality control or other oversight over the audit; or

3) Every other colleagues, managers, or other professional employee of a public accounting firm that has provided non-audit services to clients.

e. Key employees ie those persons having authority and responsibility answerablefor planning, directing and controlling the activities of the reporting enterprise, including commissioners, members of the Board of Directors, and managers of the company.

2. Timed Period Professional Designation:

a. Professional Designation period starting from the commencement of field work assignment or signing, whichever occurs first.

b. Professional Designation period ending on the date of the Accountant's report or a written notice by the accountant or the client to Bapepam that penugasa have been completed, whichever is earlier.

3. In providing professional services, especially in giving opinions or judgments, Accountant must always maintain an independent attitude. Accountants are not independent if during the Audit Period and during the Period of Professional Assignment, good accountants, public accounting firm, as well as People In Public Accounting Firm:

a. has a financial interest, directly or indirectly material to clients, such as:

1) investments in the client; or

2) any other financial interest in the client which can cause bentura interests.

b. have an employment relationship with the client, such as:

1) doubles as Key Management Personnel on the client;

2) has a Family Member who worked on the client as Key Management Personnel in the field of accounting and finance;

3) have a former colleague or professional employee of a public accounting firm that works on the client as Key Management Personnel in the field of accounting and finance, but after more than 1 (one) year working at a public accounting firm in question;or

4) has a peer or professional employee of the Public Accountant who previously worked on the client as Key Management Personnel in the field of accounting and finance, except those concerned did not participate in the establishment of the client's audit of the Audit Period.

c. have a business relationship, directly or indirectly, a material with a client, or with key employees who work on the client, or the client's primary shareholder. A business relationship in this item does not include a business relationship in terms of accounting, public accounting firm, or People In Public Accounting Firm provides audit or non-audit services to the client, or the consumer of the goods or services of the client in order to support routine activities.

d. provide non-audit services to clients such as:

1) bookkeeping or other services related to the client's accounting records;

2) or financial statements;

3) financial information systems design and implementation;

4) appraisal or fairness opinion (fairness opinion);

5) actuarial;

6) internal audit;

7) management consulting;

8) human resource consulting;

9) tax consulting;

10) Investment Advisory and finance; or

11) any other services that may pose a conflict of interest

e. provide services or products to clients on the basis of Contingent Fee or commission, or receive a Contingent Fee or commission from the client.

4. Quality Control System

Public Accounting Firm shall have a quality control system with an adequate level of confidence that the public accounting firm or its employees can maintain an independent stance into account the size and nature of the practice of the Office of Public Accountant.

5. Limitation of Audit Assignment

a. Provision services general audit of the client's financial statements can only be done by a public accounting firm longest to five (5) consecutive fiscal year and the longest by an accountant for three (3) consecutive fiscal year.

b. Office of Public Accountants and Accountants can receive audit back to the client after three (3) financial years in a row did not audit the client.

c. Provisions referred to in paragraphs a and b above do not apply to the interim financial statements are audited for the benefit of the Public Offering.

6. Transitional Provisions

a. Public Accounting Firm that has provided audit services common to 5 (five) financial years in a row or more and still have audit engagements general for the financial year subsequent to the financial statements the client, at the time of entry into force of this regulation may only perform the engagement referred to 1 (one ) next fiscal year.

b. Accountant who has provided audit services common to the three (3) financial years in a row or more and still have audit engagements general for the financial year subsequent to the financial statements the client, at the time of entry into force of this regulation may only perform the engagement referred to 1 (one) year The next book.

7. Without prejudice to the criminal provisions in capital market, Bapepam may impose sanctions against any violation of this rule, including the party that caused the violation.