OJK Mandates Accounting Certification in the PPDP Sector

The Financial Services Authority (“OJK”) will require the standardization of competencies and accounting certification in the preparation of financial statements in the Insurance, Guarantee, and Pension Fund (Perasuransian, Penjaminan, dan Dana Pensiun - “PPDP”) sector. This provision is set out in Draft Regulation of OJK (“RPOJK”) on the Integrity of PPDP Financial Reporting, as part of efforts to strengthen governance following the implementation of Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“P2SK Law”).

“Financial reporting integrity is not merely an administrative obligation, but a key instrument in maintaining the trust of policyholders, pension fund participants, and the wider public in the non-bank financial services industry,” said Friderica Widyasari Dewi, Chair of the Board of Commissioners of OJK.

In contrast to previous regulations, which were more general in nature, this RPOJK will require PPDP entities to have at least one financial report preparer who holds a professional accounting certification (such as a Professional Accountant, Public Accountant, or Management Accountant).

The RPOJK also prohibits members of the Board of Directors, Board of Commissioners, Controlling Shareholders (PSP), and employees from intentionally engaging in manipulation that causes financial statements to fail to reflect the actual condition of the entity. Such prohibited conduct includes, among others, concealing claim expenses to artificially improve solvency ratios, or recording fictitious investments to inflate asset values for the purpose of obtaining a more favorable assessment of financial soundness.