Page 37 - SUSTAINABILITY ISSUES & COVID-19

Several state-owned assets are used by the government as the underlying asset for the Government Islamic Securities,
to help finance The State Budget. Commission XI from The House of Representatives held a meeting with the Ministry
of Finance in May 2016. The Meeting decision is that there was a request from The House of Representatives to the
Ministry of Finance to carry out a revaluation program on state-owned assets, especially on the underlying asset of
the Government Islamic Securities. Based on Government Regulation Number 71 of 2010, GAS 07 explains that the
policies applied in government accounting for fixed assets are historical cost, fixed assets are recorded based on their
acquisition or exchange costs. GAS do not permit the state-owned asset revaluation except with national regulations.
The government expects to present the state-owned assets according to its fair value in the Finansial Report of Central
Government (FRCG). The consideration that there is a difference between the fair value of state-owned assets and the
value recorded on the balance sheet. Presidential Regulation Number 75 of 2017 was issued to provide legal protection
for the implementation of the state-owned asset’s revaluation.

Ivannikov (2020) explained that the revaluation of infrastructure assets in government has many problems, most of
them arise because well-developed commercial accounting principles cannot be applied due to the uniqueness of the
characteristics of public sector infrastructure assets. For example, these assets are old and sometimes live uncertainly,
there is no market to sell these assets, and most local government assets do not operate for profit. However, the
revaluation model provides more benefits than the cost model in solving cash shortages, reflects the fair value or market
price of fixed assets in the financial statements, and offers relevant financial information to stakeholders. Eventhough,
the revaluation model incurs higher costs (Zakaria, Edwards, & Holt, 2014). The results of asset valuation form the basis
for calculating depreciation and also affect the financing ratio through the effect of equity value (Barnes & Lord, 2017).
The implementation of the state-owned asset revaluation is very costly and has various problems. However, the state-
owned asset revaluation will benefit the government as the owner of the assets. The results of the state-owned asset
revaluation that form the new fair value, useful life, and depreciation value can be optimized to provide financing for
The State Budget.

Based on Audit Board’s Audit Report on the Revaluation Report, the results of the state-owned asset revaluation were
not accepted by the Audit Board because there were still many problems. The government finally decided that the
results of the state-owned asset revaluation were not presented in the FRCG (2017 and 2018) and only disclosed in
the Notes of the Financial Statements. The Ministry of Finance made further improvements in 2019. The target for
completion of repairs is at the end of 2020. Correctly done asset revaluation will ensure the credibility of accounting
information that can support decision making by interested parties. Accounting standards need to be more detailed
in terms of concepts and types of value, each with more technical guidance than is currently available (Deaconu &
Nistor, 2014). According to Audit Report Number 119 of 2018, one of the problems that arise in implementing the
state-owned asset revaluation is related to the inadequacy of the assessment methodology used. The government
determines the valuation methodology based on existing valuation standards in Indonesia because there are no
detailed arrangements in GAS. Apart from these problems, there are still more problems stated in the Audit Report. It
can lead to reduced credibility of the accounting information generated.

In the last ten years, several studies have discussed asset revaluation. Most discussions were about the revaluation of
fixed assets by companies. There are still few studies that are concerned about asset revaluation in the public sector.
Deaconu & Nistor, (2014) discusses fair value accounting with a focus on the convergence between the International
Valuation Standard (IVS) and the International Public Sector Accounting Standard (IPSAS). Ivannikov (2018) examines
the asset revaluation carried out by local governments in Australia. Australia already has accounting standards that
govern the revaluation of public sector assets. This study aims to determine the suitability between the implementation
of asset revaluation by local governments and the Australian Accounting Standard (AAS). Sangadji (2018) concluded
that there is an effect of the quality of inventory implementation on legal auditing and asset valuation in asset
management. The study discusses matters related to how asset revaluation in the public sector is carried out but only
sees the benefits of implementing asset valuation. To find the relation and influence of inventory on asset valuation
and management, as well as asset revaluation that follow accounting standards. This research does not directly find out
in-depth about the main problems that occur in the implementation of asset revaluation.

36 International Conference on Sustainability
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