In 2012, the G20 leaders declared their support to working towards the convergence of a single set of high quality accounting standards. The need for a global standard is due to the fact that:
The International Financial Reporting Standard (IFRS), issued by International Accounting Standard Board (IASB), provides a set of common rules so that financial statement can be consistent, transparent and comparable around the world. As of 2018 , IFRS has been used at least in 140 jurisdiction around the world, including those in European Union (EU) and many in Asia and South America , but the United States of America uses Generally Accepted Accounting Principles (US GAAP).
The Financial Reporting environment In Indonesia has experienced significant and unprecedented changes due to the commitment of the Indonesian Financial Accounting Standard Board (DSAK) to fully adopt IFRS. The decision was made in 2008 and the approach that was taken was a gradual transition approach rather than a big bang approach. The reason for this is mainly to be able to address the interpretation and implementation issues.
The first phase of the IFRS convergence project has now completed, and the Indonesian Financial Accounting Standard (PSAK) as per 1 January 2012 has been substantially in line with IFRS as per 1 January 2009. In other words, there is a 3 years gap between PSAK and IFRS.
The Indonesian Financial Accounting Standard Board (DSAK) is currently progressing with the second phase of IFRS convergence with the objective of minimizing the gap between PSAK and IFRS from 3 years to 1 year. As a result, PSAK has been changing continually for the past 3 years and will be continue in the years to come.
This changes on the PSAK has created new challenge for businesses, not only on how to maintain compliance with the standard but also, the adjustments to the accounting information system, the impact to expected earnings and financial ratios, adequacy of knowledgeable resources and linkage to the taxation.
The following are some practical guidance to anticipate or minimize the impact: