Key Updates on Audit and Compliance for Indonesian Businesses

What Businesses Need to Know About Audit and Compliance in Indonesia

  • InCorp Editorial Team
  • 28 January 2025
  • 6 minutes reading time

Navigating the complicated landscape of audit and compliance is important for businesses aiming to sustain growth and meet regulatory standards. With 2025 fast approaching, Indonesia’s businesses face significant legal and financial framework updates.

In this article, we will explain what audit and compliance will look like in 2025 and provide an overview of businesses operating within Indonesia.

What is the First Step to Ensure Business Compliance in Indonesia?

To effectively ensure compliance, businesses must take proactive steps to understand and adhere to Indonesian regulations. Here are some practical tips:

Company Registration

A company must register with the Ministry of Law and Human Rights (Kemenkumham) before starting its operations. Depending on the nature of the business, the necessary licenses and permits must be secured.

Working with local legal experts makes the process easier and helps businesses avoid complex issues.

Industry-Specific Permits

Operational licenses are specific to other industries. For example, an environmental-allied business must get environmental permits. This ensures a business avoids likely closure or fines.

Staying Updated

Indonesian regulations evolve frequently as the government enhances business conditions. To ensure ongoing compliance, one must keep up-to-date with legal changes through subscriptions to legal updates or by employing legal consultants like InCorp.

What are the Regulatory Compliances in Indonesia?

Indonesia implements several regulatory frameworks to ensure business enterprises conduct operations responsibly and transparently. The key regulations that relate to corporate activities are set out below:

Capital Market Law

The Capital Market Law governs the listing of companies on the Indonesia Stock Exchange (IDX). To be listed on the main board, a company must have at least 1,000 shareholders with securities accounts, all of whom must be stock exchange members.

Companies listed on development boards must meet a minimum of 500 shareholders under similar criteria. Additionally, public companies in Indonesia must establish specific internal structures, including:

  • A corporate secretary.
  • An audit committee.
  • An internal audit unit.

Trademark and Geographical Indication Laws

Domestic and international brands are recognized under the Indonesian trademarks and geographical indications law. These laws ensure that the genuine business and its products are not copied or imitated. Some important factors of these laws are:

  • The conditions for the registration of trademarks.
  • Laws governing the appropriate utilization of trademarks in the commercial field.
  • Recent amendments have introduced tougher punishments against organizations that are found misusing famous and renowned trademarks without prior licensing.

Investment Law

This law governs the registration and practice of foreign investment in Indonesia. It sets the terms, conditions, and procedures for establishing a foreign company in Indonesia. Investment Law ensures foreign companies operate within the set regulations to allow investments while securing national interests.

Indonesian Company Law

This comprehensive legislation is essential for corporate regulatory compliance in Indonesia. It outlines the processes and procedures that all businesses must adhere to and incorporates provisions from other laws, such as the Capital Market and Investment Law.

This framework allows the government to monitor corporate activities effectively and ensures businesses operate within legal boundaries.

What’s New for Audit and Compliance in 2025?

Key Updates on Audit and Compliance for Indonesian Businesses

In 2025, the Indonesian audit and compliance landscape will continue to see significant changes. These revisions will help bring domestic regulations closer to globally accepted standards and improve corporate governance. The following are some of the key updates that businesses should be geared up for:

Starting in 2025, every entity whose revenue, asset, or employee threshold exceeds the limit the related regulation sets is subject to obligatory legal audits. This allows companies to show transparency in their operations while maintaining financial reporting integrity.

Global Internal Audit Standards

Indonesia is adopting global best practices for internal auditing. Businesses must align their internal audit processes with these standards, focusing on risk assessment, fraud prevention, and operational efficiency.

Enhanced Compliance Framework

A renewed compliance framework is all about risk management and proactive reporting. This would, in turn, require the company to trace and minimize risks before they become unmanageable for a resilient operational structure.

Integrated Risk-Based Audits

The Supreme Audit Agency (BPK) will implement integrated, risk-based audits for public and private sectors. These audits will prioritize areas of high risk, streamlining resources and focusing on critical compliance aspects.

Focus on ESG Compliance

Environmental, Social, and Governance (ESG) factors will be prominent in regulatory compliance. Companies will need to:

  • Monitor and report their environmental impact.
  • Adopt ethical labor practices.
  • Enhance governance structures to meet investor and societal expectations.

Digital Transformation in Compliance

Technology will play a vital role in audit and compliance practices. Businesses will have to:

  • Implement automated systems for real-time reporting.
  • Use artificial intelligence for risk analysis and fraud detection.
  • Ensure data security in compliance with privacy regulations.

Adapting to these regulatory changes can be challenging for a business. Mandatory audits, risk-based frameworks, and ESG compliance require expertise that is not easy to find.

This is where professional audit services come into play, providing the tools and insight to help organizations easily navigate such challenges.

How Can Professional Audit Services Benefit Businesses?

Professional audit services provide expert guidance and actionable strategies that achieve compliance while pursuing operational efficiency. Key benefits accruing from such a service will include:

Enhanced Financial Reporting

Auditors independently evaluate an entity’s financial statements for accuracy and compliance with regulatory standards. This improves the confidence of stakeholders, including investors, lenders, and customers.

Improved Internal Controls

Through this in-depth analysis, auditors identify internal processes’ weaknesses and suggest areas for improvement. This decreases the chances of fraud, misstatement, and misappropriation of resources, thus enhancing organizational efficiency.

Compliance with Regulatory Requirements

Auditing services ensure that business activities comply with the relevant laws and regulations of the industry, helping the entity avoid costly fines, penalties, and legal complications. Compliance also helps to preserve an organization’s good reputation in the market.

Fraud Detection and Prevention

By analyzing financial information, auditors can track fraudulent activities such as unauthorized transactions or embezzlement and protect the company’s assets from financial loss.

Operational Efficiency

Auditors pinpoint areas for enhancement, such as streamlining processes and optimizing resource allocation. This results in cost savings and boosted productivity, allowing businesses to remain competitive and achieve their goals.

Build Stakeholder Confidence

An independent assessment of financial operations reassures stakeholders that the business is well-managed and financially sound, aiding in attracting investment, securing financing, and maintaining strong customer relationships.

Stay Ahead of Regulatory Changes with InCorp

Businesses must prioritize legal integrity, financial accuracy, and operational efficiency to keep up with Indonesia’s changing audit and compliance landscape.

Staying up-to-date on compliance requirements and seeking professional audit services for accuracy and transparency is important. Professional auditors offer insightful analyses that add to operational excellence in mitigating risks.

InCorp (an Ascentium Company) can help your businesses manage these updates effectively. We offer:

  • Audit & Review Services: Ensure compliance with financial regulations, enhance reporting accuracy, and identify operational improvements.
  • Legal Consultation: Stay informed about evolving laws and regulations with expert legal guidance tailored to your business needs.

Fill out the form below to future-proof your business against the challenges of 2025 and beyond.

Daris Salam

COO Indonesia at InCorp Indonesia

With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships.

Get in touch with us.

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Frequent Asked Questions

Cekindo’s financial audit service in Indonesia is a one-stop service that handles presentable administration (Perapihan administrasi) financial accounting standards review (Tinjauan standar akutansi Keuangan), audit report of financial statement and others.

You should provide both your expense and revenue data. All of these documents must be collected and analyzed to determine your company's financial flow and development and to prevent unpleasant results of governmental checks.