REPUBLIC OF INDONESIA NEWS

No. 2054, 2016 BPKP. Regional Financial Management. Risk Assessment Of Fraud. Application Strategy.

REGULATION

HEAD OF FINANCIAL OVERSIGHT AND DEVELOPMENT

NUMBER 21 IN 2016

ABOUT

STRATEGY OF APPLYING RISK ASSESSMENT OF FRAUD

IN THE AREA ' S FINANCIAL MANAGEMENT

WITH THE GRACE OF GOD ALMIGHTY

THE HEAD OF THE FINANCIAL AND DEVELOPMENT SUPERVISING AGENCY,

BALANCED: A. that the case of fraud in the form of a criminal offence

corruption and other deviation may occur

at the planning stage, execution, enterprise,

reporting, accountability, and oversight of

management Area finance;

b. that the area's financial management process is not

fully considering the risk aspect of cheating

so that the application of risk assessment application is required

cheating for fraud prevention in

management Area finance from the early hours;

c. that the Financial and Development Oversight Board

as the government intern control system

needs to draft a risk assessment application strategy

cheating in management region finance

as set in Section 59 Regulation

Government Number 60 Years 2008 On System

Government Intern Control;

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d. that based on consideration as

referred to in letters a, letter b, and c, need

set the Oversight Board Regulation

Finance and Development on Application Strategy

Risk Assessment Cheating in the Management

Regional Finance;

Given: 1. Government Regulation No. 60 of 2008 on

Government Intern Control System (Sheet

The State Of The Republic Of Indonesia In 2008 Number 127,

Additional Republic Of Indonesia's Republic Number

4890);

2. President Regulation No. 192 of 2014 on

The Financial and Development Oversight Board

(State Gazette of the Republic of Indonesia 2014

number 400);

DECIDED:

SET: THE RULE OF THE HEAD OF THE OVERSIGHT BODY FINANCE AND

DEVELOPMENT ON APPLICATION STRATEGY

ASSESSMENT OF RISK CHEATING IN MANAGEMENT

FINANCIAL AREA.

Article 1

In the Rule of the Chief of this Agency referred to:

1. Cheating Risk Assessment is a proactive process that

aims to identify and address

organizational vulnerabilities of fraud committed

internal or external parties;

2. Cheating is the work done in

not being honest with the goal of acquiring

benefits or resulting in loss of loss

by decepting, recreating or other ways

others are in violation of the

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3. The risk of cheating is the possibility of occurrence

cheating and potential consequences for the organization

if such a risk occurs;

4. Area Finance Management is a whole

activities that include planning, execution,

targeting, reporting, accountability, and

financial supervision.

Article 2

Regulation of the Chief of the Agency intended as a guide

for local government and internal surveillance apparatus

the government for the application of the risk assessment of cheating

in the management of the area.

Article 3

The strategy application of the assessment risk of cheating in

the financial management of the area is part of

development, development, and hosting of the system

internal control of government in the environment of the instance

government.

Section 4

The Body Heads Regulations are compiled with the purpose for

encouraging the execution of fraudulent risk assessments in

area finance management by local government.

Article 5

Scope the application of the fraud risk assessment

area financial management includes:

a. policy device setup;

b. increased local government awareness of

the importance of risk assessment of fraud;

c. implementation of the fraudulent risk assessment independently

by local governments; and

d. execution of monitoring, evaluation, and licensing

quality.

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Section 6

The strategy of applying for fraud risk assessment in

area finance management is listed in Appendix

which is an inseparable part of the Regulation

This chief.

Section 7

Further provisions of implementation of the Head Regulation

this is about the Cheating Risk Assessment Technical Directive

set further with the Regulation of the Deputy Head of the Agency

Financial Oversight and Construction of Investigation Field.

Article 8

Rules of the Head of the Agency go into effect on the date

promulgled.

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For everyone to know, ordered

The Chief Regulation Officer of the Agency with

its placement in the Republic of Indonesia News.

Set in Jakarta

on November 18, 2016

CHIEF OVERSIGHT AGENCY

FINANCE AND

DEVELOPMENT,

ttd

ARAND ADIINAUGURAL

Reundfiled in Jakarta

on December 28, 2016

DIRECTOR GENERAL

MINISTRY OF LAW AND HUMAN RIGHTS

REPUBLIC OF INDONESIA,

ttd

WIDODO EKATJAHJANA

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ATTACHMENT

GOVERNING BODY REGULATION

FINANCIAL SUPERVISION AND

DEVELOPMENT

NUMBER 21 IN 2016

ABOUT THE APPLICATION STRATEGY

RISK ASSESSMENT OF FRAUD

IN FINANCIAL MANAGEMENT

AREA

STRATEGY APPLICATION ASSESSMENT FRAUD RISK ASSESSMENT

IN AREA FINANCIAL MANAGEMENT

BAB I

PRELUDE

A. Background

The governing Republic of the Republic of Indonesia aims

embodied a fair, prosperous, and prosperous society in accordance with

The opening of the Constitution of the Republic of Indonesia Year of 1945.

To realize that goal the Government designed and

implements a variety of development programs. Development

is a form of planned and programmed effort that

is done constantly in order to be accessible (onwards), self-identity

(self esteem), and freedom (freedom).

To realize such development goals, the Government continues

efforts to manage controlled resources, among others through

State Budget and Revenue Budget instruments (APBN) and Budget

Revenue and Regional shopping (APBD), which is optimal and oriented in

the welfare of the people. The management of the APBN and the APBD, starting from

drafting policies, planning, budgeting, execution,

targeting, reporting, monitoring, and surveillance, as of the cycle

financial management and development set in the Act

Number 25 of 2004 on the National Development Planning System

(SPPN), Law Number 17 of the Year 2003 on State Finance (KN),

as well as the provisions of its implementation laws,

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Government Regulation No. 58 of 2005 on Financial Management

Regions. The controlled resource should be utilized for the size of-

the magnitude of the people's prosperity.

As the regional spending budget, the Local Government

faces a problem related to irregularity in financial management

(korupsi/fraud) and barriers in development agility, such as the description

below:

1) The Case of Indicative Criminal Corruption

In the period of 2012-2016 (sd April 2016) at least was observed

3,215 cases of perversion (criminal corruption) with value

a loss of Rp 15.50 trillion or an average of any perversion event

worth Rp 4.96 billion (LHAI and LHAPKKN 2012-2016 BPKP, processed). From

a case of 3,215 such cases, 2,029 cases occurred in the environment

local government, and some of them occurred at the

planning and/or prior to the planning stage.

2) The Management Cycle Weakness of the Cloud Service. Area Finance

Based on the study and evaluation of the implementation of financial management

and the construction of the area of 2011-2014, the BPKP implemented

with the KPK through coordination activities and prevention supervision

corruption (Korsupgah), found weakness since the policy stage,

Planning, execution, up to monitoring and evaluation.

The planning occurred as much as 293 events in 51 districts/cities.

3) Development Goals in the Regions

In the period 2012-2016 (April), found 133 cases of barriers

development agility in various regions in Indonesia which

resulted in the results of the activity being unable to be sweetened and/or require

further efforts to be utilized.

The risk of cheating is still a threat to the achievement of effectiveness

and development efficiency. BPKP's 2012-2016 audit results

indicate a corruption case in the identified local government as much as

2029 cases, occupying the largest portion of the BUMN, BUMD,

Ministry/Institution and DPRD. In the UKP4 presentation at the event

socialization E-purchasing at the DKI in 2014 stated that 85%

TPK cases involving a minimum of 176 governors/bupati/mayor are

the BJP case (Mendagri on raker DPD RI 2011), 70% The TPK case comes from

BJP (which is derived from capital shopping), and 90% of the BJP ' s deviation case

related to the planning stage. This indicates that corruption (cheating)

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is not an aberration occurring coincidentally or omission, however

is related to the planning process. Repressive eradication,

cracking down on corruption practices after event (ex-post), less effective

eradicating corruption practices for having to deploy more resources

many, longer time and processes Not easy. In addition, the practice

corruption has generated the impact of the country ' s financial losses and

the economy.

The government has set out a range of regulations related to

regional financial management, but existing regulations yet

accommodated the need for risk assessment of fraud. This can be seen in

the following regulations:

a. Government Regulation No. 60 of 2008 on the Control System

Government Intern, establishing the importance of internal control

the government aimed at providing adequate confidence over

the organization's objectives. However, in the 60-year PP, it did not

set specifically for control of the risk of cheating.

b. Interior Minister Rule Number 54 of 2010 on Tata Cara

Local Development and Data Processing Information in

Appendix I listed the T-I.B. 27 Table of Criminality but

did not list Corruption related to corruption.

c. Regional Development Performance Evaluation Guidelines published by

The National Development Planning Agency (Bappenas) both with

ex-ante, on-going methods, and ex-post, not accommodating solutions and

or Identification of corruption problems.

d. Appendix Letter of the Minister of Home Affairs Number: 700 /025/A. 4/IJ

dated January 13, 2016 on the Guidelines of Revivation Documents

The Regional Annual Development and Budget Plan explained

that the scope of the reviu Revives do not include

testing of internal control, control risk assignment,

testing of source documents and testing of response to

request for captions by the way of acquisition of evidence materials

corroborates through inspection, observation, or confirmation, and procedure

Other specific

commonly held in an audit.

There are two approaches to the eradication of cheating:

by creating and maintaining honesty and integrity and

performing the risk assessment. Cheating and building an attitude that

concrete to minimize the risk and eliminate opportunity

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corruption occurred. Assessing the risk of cheating has been applied in the form

fraud risk assessment/ fraud risk assessment (FRA) at fraud control

plan and become the part that should be implemented for its implementation.

The fraud risk assessment can be implemented overall or

in a particular part of the financial development/management process

areas including policy determination, planning and budgeting,

execution development, enterprise, reporting, accountability,

supervision And monitoring. In accordance with the UKP4 statement above,

implementation of the fraud risk assessment will be able to reduce the risk

cheating in the implementation of development in the area.

Given the absence of regulations regarding financial management section

set about fraud risk assessment, and still exist

various corruption cases on regional financial management then government

regions need to apply fraud risk assessments aimed at

identifies the risk of cheating on the area ' s financial management process.

BPKP through the Deputy Field Investigative Affairs in

execution of the financial management fraud risk assessment

area based on the provisions contained in:

a. Regulations of the Government of the Republic of Indonesia No. 60 of 2008 on

Government Intern Control System (SPIP);

In Article 47 it is mentioned that to strengthen and improve

the effectiveness of the Intern Control System is carried out:

1) Internal supervision over the hosting and functions of Instancy

The Government includes the financial accountability of the country; and

2) the coaching of SPIP hosting.

b. Regulation of the President of the Republic of Indonesia No. 192 of 2014 on

Board of Financial and Development Oversight (BPKP);

In the running of the task of hosting government affairs

in the field of financial supervision of the country/region and development

national, BPKP has a function of formulating a national policy

internal oversight of state/regional financial accountability and

national development covering sectoral-sectoral activities and

corruption prevention efforts. To support the task and function of the BPKP

the Deputy Investigations conducted the hosting

internal supervision of the planning and execution of activities that

can inhibit development agility including

Traffic program

sectoral and corruption prevention efforts.

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c. Instruction of the President No. 9 of 2014 dated December 31, 2014 on

The Quality Improvement of Intern Control Systems and Reliability

Hosting Internal Supervision Functions in order To Be Realized

People ' s Welfare, Deputy The field of Investigation develops a system

cheating control that can prevent, detect, and

ward off corruption.

d. Appendix 2 of the President of the Republic of Indonesia No. 2 Year 2015

on the National Long-term Development Plan 2015 -2019,

Item 7.3 Framework of Institutional Framework

Institutional 2015 -2019, Points 2a. Optimizing the existence of the System

Government Intern Control (SPIP) and Intern Supervision Apparatus

Government (APIP), so it can play a role as front line

in the corruption prevention efforts within the Ministry/Institution.

e. Surveillance Implementation Documents published by BPKP (Plan

Strategic, Surveillance Technical Guidelines, and so on) as well as the Standard

Implementation of Surveillance.

B. Intent and Purpose

This Regulation is intended as a guide to the Government

Regional and Intern Supervision Apparatus for the application

risk assessment of fraud in area financial management.

This Regulation compiled with the purpose of encouraging execution

risk assessment of fraud in area financial multiplier by

Local Government.

C. Risk Assessment of Fraud Risk in Area Financial Management

Fraud Risk Assessment is a proactive process that

aims to identify and address organizational vulnerabilities

for fraud committed by the parties internal or external parties.

(ACFE, 2016). The Cheating Risk Assessment aims to help

the organization identifies things that make it vulnerable to

the occurrence of cheating.

The Risk Assessment of Cheating is executed by the following stage:

a. Identification Of The Risk Of Inherent Cheating (Fraud Risk Inheritance)

Indentification of the risk of cheating is attached to the beginning by collecting

information to get the risk population cheating that can be

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occurs in the organization. In this process it needs a clear consideration

of all types of cheating schemes and scenarios; incentives, pressures, and

opportunities for cheating; and as well as specific risks

related to the risk of information technology on organization.

b. Assessing the Possible and Potential Risk of Fraud Risk

Assessment of relative probability of risk (probability) and potential

a significant impact of the risk of indentification cheating based on

on historical information, known cheating schemes, and

interviews with staff, including risk owners (riks owner).

c. Response to residual risk

Response to possible and signicance risk cheating

depends on management attitude responding to risk of cheating.

The risk of cheating risks should be selective and efficient, as possible

there are various potential controls that may be built. Response

management of the risks could be in the form of avoiding risk,

risk transfer, risk mitigation, or risk accepting.

Assessment of risk cheating in regional financial management will

set further In its own technical guidance.

D. Application of Risk Assessment Risk Assessment in Management

Area Finance

a. Setup of policy tools which may be used as co-references

in a fraud risk assessment effort that includes the Strategy

APPLICATION FRAUD RISK ASSESSMENT AND TECHNICAL GUIDANCE

APPLICATION FOR RISK CHEATING RISK Area Finance.

The policy device is expected to be a joint reference

for the entire Regional Government and APIP in conducting the Assessment

The Risk of Regional Financial Management.

b. Increased awareness of Local Government awareness of the importance

Risk Assessment Cheating Regional Financial Management.

In order to assess the risk of fraudulent regional financial management can

be carried out on the Local Government, required commitment and

the real support of the entire Regional Leadership, Organsation Unit

related to the Regional Financial Management to acquire the source

the power required in Assessment of Fraudulent Management

of the Management

Regional Finance.

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c. Independent Risk Assessment Implementation by

Local Government

Implementation of Fraudulent Risk Assessment is implemented by

The Local Government by engaging the parties with

Management Regional Finance include: Bappeda, Budget Team

Local Government (TAPD) and Regional Device Workforce (Service

Technical/Badan/Office). From this activity will be obtained a list of risks,

a risk status and a map of corruption in the Local Government and information

results of the Execution Assessment results in fraud risk.

d. Implementation of Monitoring, Evaluation, and Quality Assurance

To ensure that risk assessment of fraud in

area financial management has been implemented as

expected then it needs the role of APIP as follows :

1) Provincial/District/City Inspectorate

Inspectorate of Province/County/City doing revivities

execution of risk assessment of financial management fraud

area by the Government of Provins/Kabupaten/City.

2) BPKP

Doing quality looters (quality assurance) for

ensuring that the Provincial Government and the Province Inspectorate

District/City have exercised revivities over Risk Assessment

Cheating Area Financial Management implemented by

The Provincial Government/Kabupaten/City.

E. Expected results

Output of application fraud risk assessment strategy

area finance is the application of risk assessment of fraud in

regional finance management independently by local government.

F. Parties to the (Stakeholders)

1. Output Strategy Risk Assessment in

The Regional Financial Eloct may be utilized by the parties

following:

a. Interior Minister;

b. Minister of State Planning for Nasiona/Head

Bappenas;

c. Local Government;

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d. APIP;

e. BPKP as SPIP Pembina.

2. Application of Risk Assessment Risk Assessment in Management

Regional Finance and Technical Guidelines Assessment Risko Cheating

in Financial Management The area is beneficial for stakeholder

to develop the System Control Control/Fraud Control

Plan.

3. Application of Risk Assessment Risk Assessment in Management

Regional Finance and Technical Guidelines Assessment of Cheating Risks

in Area Financial Management are beneficial for stakeholders

to compile policy provisioning of means, infrastructure, funds,

human resources and methods of execution.

CHIEF SUPERVISING AGENCY

FINANCE AND DEVELOPMENT,

ttd

ARAND ADIPREMI

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