PwC Indonesia highlights the Importance of Internal Controls Over Financial Reporting (ICOFR) in new regulatory environment

Jakarta, 22 January 2025 – Following the recent introduction of POJK No.15/2024 by the Otoritas Jasa Keuangan (OJK), which enforces strict financial reporting standards for banks, PwC Indonesia has published an in-depth thought leadership piece, “Signifikansi Internal Controls over Financial Reporting (ICOFR) dalam Lingkungan Regulasi di Indonesia” highlighting the essential role of Internal Controls Over Financial Reporting (ICOFR) in maintaining the integrity and accuracy of financial reporting within Indonesia's regulatory framework. With this, Banks must implement thorough financial reporting processes that ensure accuracy, transparency, and adherence to applicable accounting standards.

The thought leadership underscores the historical context and the critical need for robust internal controls. These practices are vital for CFOs to accurately track financial figures and reduce the risk of material misstatement in the financial statements.

PwC Indonesia promotes the adoption of the Committee of Sponsoring Organisations (COSO) framework, globally recognised as a best practice for internal controls. This framework comprises five key components: Control Environment, Risk Assessment, Control Activities, Information & Communication, and Monitoring Activities. Additionally, the thought leadership emphasises the relevance of the COBIT 2019 framework for IT governance and management, which supports ICOFR implementation. It also outlines a comprehensive ICOFR lifecycle, including design, implementation, continuous monitoring, evaluation, remediation, and reporting.

Building a culture of accountability and transparency is essential for ICOFR success. Regular training and awareness programmes are recommended to instill these values throughout the organisation. Integrating robust IT systems is crucial for accurate and reliable financial data management, supporting automated data processing and real-time monitoring.

Yuliana Sudjonno, PwC Indonesia Assurance Partner, stated, “The implementation of robust internal controls over financial reporting is not just a regulatory requirement but a fundamental aspect of good governance. By adopting effective ICOFR practices, organisations can enhance their financial integrity, build investor confidence, protect their assets, ensure accurate financial reporting, drive operational efficiency, and achieve sustainable growth and long-term success. At PwC Indonesia, we are committed to supporting our clients in navigating these regulatory changes and strengthening their internal control frameworks."

Yuliana further added, "In today's complex financial environment, effective internal controls are essential for mitigating risks and ensuring that financial statements truly reflect the company's financial position. ICOFR is a collaborative, organization-wide responsibility involving multiple departments, including operations, IT, risk management, compliance, and internal audit to ensure accurate and reliable financial reporting. Our goal is to help organisations establish and maintain these controls to foster trust and reliability in their financial reporting."