Application Of The Principle Of Openness Of Public Companies (study Of Double Financial Statements)

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Application of the Principle of Openness of Public Companies: Study of Multiple Financial Statements

In the capital market, public companies that want to make an initial stock offer (IPO) are required to meet a number of requirements set by the Financial Services Authority (OJK). One of the crucial requirements is Financial information disclosure. This disclosure of financial information aims to make investors who plan to buy the company's shares understand in detail the company's financial condition and the prospects of their profits. Transparent and accurate information provides a strong foundation for investors to make the right investment decisions.

The Importance of Financial Information Disclosure

The disclosure of financial information of public companies is a critical aspect of maintaining investor confidence and capital market stability. In Indonesia, public companies are required to disclose their financial information in accordance with the regulations set by the OJK. This includes the preparation of financial statements, which are examined and audited by authorized public accountants. The goal of this examination is to ensure that the financial statements accurately reflect the company's financial condition and are presented in a transparent and clear manner.

Research Objectives

This research aims to examine the legal aspects related to the disclosure of financial information of public companies in Indonesia, including:

  • How is the legal regulation regarding the transparency of public company financial information?
  • What is the procedure for checking the financial statements of public companies before the IPO on the Indonesia Stock Exchange (BEI)?
  • What is the legal responsibility of public company if there is a double financial statement that is detrimental to investors on the IDX?

Methodology

This study uses a normative legal method with an analytical descriptive approach. Data is collected through literature studies and analyzed qualitatively. The research aims to provide an in-depth understanding of the legal regulations and procedures related to the disclosure of financial information of public companies in Indonesia.

Openness of Public Company Financial Information

Regulations regarding transparency of financial information public companies in Indonesia are contained in various regulations, including:

  • Law Number 8 of 1995 concerning Capital Market: Article 1 number 7 and number 25, Article 73, Article 75, Article 78, and Article 90 regulate the obligations of public companies to provide accurate, transparent, and information natural to the public.
  • Minister of Finance Regulation No. 17 of 2008 concerning Public Accountant Services: Article 75 regulates the role of public accountants in the examination and audit of public company financial statements.
  • Regulation of the Minister of Finance of the Republic of Indonesia Number 154/PMK.01/2017: Regulates reporting of important and relevant information or facts related to events or events that can affect the company's financial condition.

Procedure for Examining Financial Statements before IPO

Before conducting an IPO, the issuer's financial statements (companies that will conduct IPOs) must be examined by the authorized capital market public accountant. This examination aims to ensure that financial statements have been prepared in accordance with generally accepted accounting principles and reflecting the company's financial condition accurately.

This inspection procedure is regulated in:

  • Law No. 8 of 1995 concerning Capital Market
  • Minister of Finance Regulation No. 17 of 2008 concerning Public Accountant Services
  • Regulation of the Minister of Finance of the Republic of Indonesia Number 154/PMK.01/2017
  • Financial Services Authority Regulation Number 29/POJK.04/2016 concerning Annual Report of Issuers or Public Companies

Public Company Legal Responsibility for Dual Financial Statements

Public companies have a great legal responsibility to ensure the accuracy and clarity of financial statements. If a double financial statement occurs that is detrimental to investors, public companies can face serious legal sanctions, including:

  • Administrative Sanctions: Reprimands, fines, and revocation of business licenses.
  • Criminal Sanctions: Prison and Fine Penalty.
  • Civil lawsuit: Investors can sue public companies to compensate for losses experienced by double financial statements.

Conclusion

The application of the principle of financial information disclosure of public companies is an important pillar in maintaining investor confidence and capital market stability. Strict regulations and effective supervision are needed to ensure that public companies carry out their transparency and accountability obligations. The events of double financial statements can damage investor confidence and have a negative impact on the economy. Therefore, public companies must be committed to carrying out good corporate governance principles, including transparency and accountability in financial reporting.

Recommendations

Based on the findings of this research, the following recommendations are made:

  • Public companies should ensure that their financial statements are accurate, transparent, and clear.
  • Public accountants should play a more active role in examining and auditing financial statements.
  • The OJK should strengthen its supervision and enforcement of financial regulations.
  • Investors should be more vigilant in monitoring the financial performance of public companies.

By implementing these recommendations, public companies can ensure that their financial information is disclosed in a transparent and accurate manner, which can help to maintain investor confidence and capital market stability.
Frequently Asked Questions (FAQs) on the Application of the Principle of Openness of Public Companies: Study of Multiple Financial Statements

In this article, we will address some of the most frequently asked questions related to the application of the principle of openness of public companies, including the study of multiple financial statements.

Q: What is the principle of openness of public companies?

A: The principle of openness of public companies refers to the requirement that public companies disclose their financial information in a transparent and accurate manner. This includes the preparation of financial statements, which are examined and audited by authorized public accountants.

Q: Why is financial information disclosure important for public companies?

A: Financial information disclosure is important for public companies because it helps to maintain investor confidence and capital market stability. By disclosing their financial information, public companies can provide investors with a clear understanding of their financial condition and prospects, which can help to make informed investment decisions.

Q: What are the legal regulations related to financial information disclosure of public companies in Indonesia?

A: The legal regulations related to financial information disclosure of public companies in Indonesia are contained in various regulations, including Law Number 8 of 1995 concerning Capital Market, Minister of Finance Regulation No. 17 of 2008 concerning Public Accountant Services, and Regulation of the Minister of Finance of the Republic of Indonesia Number 154/PMK.01/2017.

Q: What is the procedure for examining financial statements before IPO?

A: The procedure for examining financial statements before IPO involves the examination of the issuer's financial statements by the authorized capital market public accountant. This examination aims to ensure that financial statements have been prepared in accordance with generally accepted accounting principles and reflecting the company's financial condition accurately.

Q: What are the consequences of a double financial statement that is detrimental to investors?

A: If a double financial statement occurs that is detrimental to investors, public companies can face serious legal sanctions, including administrative sanctions, criminal sanctions, and civil lawsuits.

Q: What is the role of public accountants in examining and auditing financial statements?

A: Public accountants play a crucial role in examining and auditing financial statements. They are responsible for ensuring that financial statements are accurate, transparent, and clear, and that they reflect the company's financial condition accurately.

Q: How can investors protect themselves from the risks associated with double financial statements?

A: Investors can protect themselves from the risks associated with double financial statements by being more vigilant in monitoring the financial performance of public companies. They should also ensure that they have access to accurate and transparent financial information, and that they understand the risks associated with investing in public companies.

Q: What are the recommendations for public companies to ensure that their financial information is disclosed in a transparent and accurate manner?

A: The recommendations for public companies to ensure that their financial information is disclosed in a transparent and accurate manner include:

  • Ensuring that financial statements are accurate, transparent, and clear
  • Ensuring that financial statements are prepared in accordance with generally accepted accounting principles
  • Ensuring that financial statements reflect the company's financial condition accurately
  • Ensuring that public accountants play a more active role in examining and auditing financial statements
  • Ensuring that the OJK strengthens its supervision and enforcement of financial regulations

By following these recommendations, public companies can ensure that their financial information is disclosed in a transparent and accurate manner, which can help to maintain investor confidence and capital market stability.