Performance Budgeting (Rights and Obligations of State)

Here we will discuss about the present government sector accounting in Indonesia. Among them are the rights and obligations of the state.

Rights Country:

1. Have the right to receive a share of profits of State-Owned Enterprises. In the Act of 1945 Article 33 paragraph 2 states that "branches of production that are important for the State and of importance to the State and who dominate the life of the people controlled by the State". So that all the business or related field of people's lives will be managed by the government and the government have the right to such benefits.
2. Getting tuition
3. Doing loans. The government has the right to make loans on the condition does not lead to any intervention management in the field of management. Better government borrows from its own people ie the people who prosper by issuing bonds of the Republic of Indonesia as it had done the year - previous year which is usually played in the secondary market.
4. Issue bonds or debentures
5. Obtaining Resource Economics of the goods seized, but not all items can be owned by the government's seizure of prohibited goods including goods smuggling cocaine, drug, then by the government of illicit goods will be destroyed.

All rights of government outlined in the State Budget on the revenue.

State obligations:

State obligations consist of the obligation can be measured in money that can not be measured in money.

Obligations that can be measured in money:

1. Pay salaries for Civil Servants, Police, Armed Forces of the Republic of Indonesia
2. Build the infrastructure upon priorities and resource availability to build or manage economi.
3. Providing subsidies to sectors concerning the livelihood of many people such as education and health according to the scale of priorities.

While the obligation of government that can not be measured in units of money is with providing protection and prosperity to the people.

State obligations outlined in the State Budget on the expenditure side.

Government as Economic Entities there are two, namely:

•  Accounting Entity 

Looking at the broader aspect, or more generally held the treasury function. Ie, receive, store and spend money based on the Decree of Authorisation but it also has a responsibility to take care of the State financial budget in the Budget and Expenditure Expenditure which is then submitted to the Legislature. Budget control is a tool that can describe the indicators and public policy as a basis for performance benchmarks. To view the budgeting indicators can be seen in the Work Plan. Budgeting is a major factor that must balance between revenue, expenditure and financing. The task of accounting entity also is a need to provide precise and accurate reporting and useful.

• Reporting Entity

It is an obligation to account for legal reporting and transparency that reflects the balance between generations. 

What is a Dividend Policy?

Perhaps for those who engaged in the business world much less an investor would have to know what's on dividend policy.

Dividend policy is a policy to determine how much profit should paid (dividend) to shareholders and how much should be reinvested in the company (retained earnings).

Devidend Payout Ratio (DPR) is divided by the annual cash dividend per share (EPS). This ratio shows the percentage of companies that paid to the holders of common shares of the company in the form of cash dividends. If the company's earnings currently detained in large numbers, means profits as a dividend to be paid less.

Dividend income for shareholders are paid each end of the period in accordance with the percentage.

Thus, dividend policy is an integral part of corporate spending decisions.

Various Kinds Dividend Policy:

1. Dividend policy is flexible, is the magnitude of each year that are tailored to the financial position and financial policies of the companies concerned are a stable dividend policy, dividend per share is the amount paid every year fixed for a certain period even if income per share per year fluctuates.
2. Dividend Policy with the establishment of a minimum dividend amount plus a certain extra amount. Is a policy that determines the amount of rupiah per share dividend at least annually if better corporate profits will pay extra dividends
3. Dividend Policy with the establishment of a constant dividend payout ratio, the dividend policy that gives the amount of which follow the profits earned by the company.

Factors influencing dividend policy:

As for some of the factors that actually happened & should be analyzed in relation to dividend policy

• Needs Fund Company, is a factor that must be considered in determining the dividend policy will be taken, namely the expected corporate cash flow, future capital expenditures are expected to come, additional needs of receivables and inventories.
• Liquidity. Liquidity is very large companies influence on  corporate investment and policy needs for the company dana.deviden a cash outflow, the greater the company's cash position and liquidity.
• Needs Debt Repayment. If companies take debt to finance expansion or to replace other types of financing, the company faced two choices, namely to finance debt at maturity or replaced with other types of securities.
• Assets Expansion level, is the faster a company grows, the greater its need to finance the expansion of its assets.
• Earnings stability, which is a company that has a stable income can often estimate how much income in the future, in this case the company tends to pay the "dividend payout ratio", from the company that its earnings fluctuate, lower dividends will be easier to paid if earnings decline in the future.

Budgeting Based Performance in Indonesia

Basically, performance accountability is the obligation of an embodiment of the organizers of government to account (success / failure) execution of the mission of the organization in achieving its objectives and targets periodically measured by a set of performance indicators.

The accountability system has at least four phases, namely:

1. The preparation or planning of a strategic plan

2. Performance measurement

3. Reporting performance

4. Utilization of information for continuous performance improvement

Annual performance plan is a further elaboration process and covers the period from the annual strategic plan, which has been prepared. Therefore, the elaboration of the strategic objectives, policies, programs and activities to be implemented by government agencies should be formulated in a performance plan document that contains information about:

a. Target to be achieved at a certain period

b. Group performance indicators are expected from an activity

c. The expected level of performance can be achieved at a certain period

d. Indicators of success or level of expected performance is

e. Plan the acquisition of data sources expected performance indicators

Performance plan has been prepared as a basis for government agencies to develop and apply performance-based budgeting. The budget system is a budgeting system that would link the performance of government work units with a budget allocation that will be implemented. It also guided by a framework that includes several budgeting periods (the so-called Medium Term Budgeting) in accordance with the principles of sustainable financing.

In the public sector, budgeting is a process of allocating financial resources limited state (revenue and deficit financing) to be used as spending on each unit - a unit of government. In general, the functions of budgeting are:

a. Financial control of the input

b. Management of ongoing activities

c. Planning 

d. Determination of priorities

e. Accountability

While the functions of government budget in the environment has an influence on accounting and financial reporting, because:

1. The budget is a statement of public policy

2. The budget is the fiscal targets that describe the balance between expenditure, revenue and  financing

3. The budget becomes the basis of control that has legal consequences

4. Budgets provide the basis of government performance assessment

5. The results of the implementation of the budget set forth in the government's financial report as a statement of government accountable to the public

Income Tax

Income tax is a tax imposed on income tax payers either entity or individual.

Income Tax collection is set in Act No. 7 of 1983 amended income tax tentan by Act No. 10 of 1994 and the last is adjusted in 2000. 

 

Subjects Taxes peghasilan namely:

1. An individual

2. Legacy that has not terbag in one

3. Institution

4. Permanent Establishment

 

Tax Subjects were divided into:

1. The subject of Domestic Taxes, namely

a. An individual residing in Indonesia or Indonesia are less than 183 days within a period of 12 months or an individual who dalam1 tax year in Indonesia, and intends to remain in Indonesia.

b. Business entity established and domiciled in Indonesia

c. Undivided inheritance in a single entity the right to replace

2. Foreign Tax Subjects

a. Person not residing in Indonesia or Indonesia are less than 183 days within a period of 12 months or entity not established and domiciled in Indonesia, but doing business in Indonesia through permanent establishments

b. An individual not residing in Indonesia or Indonesia are less than 183 days within a period of 12 months or entity not established and domiciled in Indonesia but earn income in Indonesia instead of running the business

 All taxes potentially subject to a taxpayer if it is in accordance with predefined rules.

Differences subject to tax of the Interior and Foreign Affairs subject to tax

1. The subject of Domestic Taxes

a. Imposed on income received both from within and from the Foreign Affairs

b. Net income imposed under the common tariff

c. Shall deliver the Notice as a means of determining the tax payable on the epidemic of tax

2. Subjects Foreign Tax

a. Imposed only on income derived from Indonesia

b. Imposed on gross income at the rate commensurate

c. Not required because the tax liability is filled with the tax cuts are final.

While that does not include the subject of tax is:

1. Foreign State Representative Body

2. Official representatives of foreign countries and consulates of foreign countries and people who had been to them on condition that not a citizen of Indonesia and do not receive other income from outside the office and the State concerned to impose tinbal behind.

3. International organizations are set by the finance minister on condition that Indonesia became a member of that organization.

4. Officials of international organizations established by the Minister of Finance on condition rather than an Indonesian citizen and no other income outside the office.

Tax Basics

 Judging from history, this tax has existed since time immemorial, but the ancient remains voluntary nature of the people to his king. Further development of it turned into a tribute to the nature of administration imposed Dalma sense that the administration was "mandatory" and is set unilaterally by the State. In other words, that "tax" which was originally a gift turns into charges. This is reasonable because the state will need greater funding in order to maintain the interest of the State of the State to maintain da protect citizens from enemy attack or to carry out the development. Thus the history of tax collection has made changes to the development of society and the State both in the economic, social and state affairs. 

The definition of tax according to Prof.. Dr. Rochmat Soemitro, SH is people's contribution to the state treasury (the transition of wealth from sector to sector partikellir government) under the Act (can be enforced) with the service received no lead (tegen prestatie) directly appointed and are used to finance public expenditures (publieke uitgaven).

 

Elements of Tax:

a. Society dues to the State

b. Under the Act (which can be enforced) in the sense that although the State has the right to levy taxes, but its implementation must obtain the consent of its people is through legislation.

c. Without the services of lead (achievement) of the State which can be directly designated in the sense that the counter-performance provided by the State to its people can not be linked directly with the amount of tax.

d. To finance its general governmental purposes.

Besides collecting taxes, the government also still perform a variety of other charges such as levies, donations, an excise bead.

Tax Function:

Tax serves as a source of state finance (budgetair) but the tax actually has a broader function of the function set (regulerend) in the sense that the tax could be used as a tool to manage or implement the State policy in the economic and social field. With taxes set function is used as a tool to achieve certain goals which were located outside the financial field and function set, many directed against the private sector. 

Terms Withholding Tax:

a. Withholding tax must be fair

b. Tax collection should be based on the Law

c. Not disrupt the economy

d. Efficient tax collection must

e. Tax collection system should be simple

Type of Tax Rates:

1. Proportional Tax Rate

2. Declining Tax Rates 

3. Permanent Tax Tariff

4. Progressive Tax Tariff

Status of Tax Law

Judging from the environment, tax law is part of Public Law, specifically the child part of the State Administrative Law. But there is also the opinion that the Tax Law is an independent science that regardless of the State Administrative Law.

Taxes consist of two types namely:

1. Direct taxes and indirect taxes

2. Local taxes and the tax center.

Corporate Control System

Internal control within the company is very important to control the activities of the company is running well or not and to avoid risks that could hurt the company. 

The company was divided into trading companies, manufactur companies and service companies.

 According to Shillinglaw and McGahran (1993:749) there are three different forms of control are: 

1. Personal controls

The control imposed on the attitudes and motivations of people involved in the organization, such as assessment of employees and organizational culture. This form of control is a set of unwritten rules. 

2. Action controls

The control associated with the implementation of the work and tasks assigned to employees. 

3. Result controls

The control imposed on the results of operations employees. 

Within the company there called manufactur namely to control the flow of goods supplies goods ordered by the customer if there stocknya or not and to calculate income. System Pengedalian in manufactur company is called Internal Check is matched with the item numbers or notes to each other. For example: trading company calculates its income based on the amount of goods sold.

In a service company to replace the name suggests the flow of goods then there is the so-called Quasi Flow replacement of the current flow of goods which aims to nenghitung income. System control in a service company called the Internal Correlation of matching or record linkage with each other. For example: Company Autobis calculate earnings based on the number of tickets sold, a doctor calculates earnings or calculate the cost of treatment based on patient's level of difficulty.

For companies with similar goods manufactur Vendor.

Basic Concepts of Cost Accounting

Cost accounting is the process of recording, classifying, summary and presenting  cost of manufacture and sale of products or services in a way - in a certain way and interpretation to it. Object cost is the cost accounting activities.

Cost accounting is used in all the organizations of manufacturing companies (manufacturing), trade, and services. For example: government, universities and businesses both for-profit or not. There are four usage information of Cost Accounting:

1. Job evaluation

2. Decision making

3. Financial reporting

4. Tax Reporting

 If the cost is used in organizations by managers to evaluate the performance of the operation or personnel or as a basis for decision making, we say the cost - the cost is used for the purpose of management accounting.

Meanwhile, if the cost is used by outsiders, such as shareholders / creditors to evaluate the performance of top management and decision making of our organization said the cost was used for the purposes of Financial Accounting.

Cost is the sacrifice of economic resources that have a specific goal, has been, is and will be carried out or calculated in units of money.

Cost consists of Outlay Cost and Opportunity  Cost:

Outlay cost is all costs incurred while the Opportunity Cost is the cost incurred due to reach a particular occasion.

Profit also consists of Operating Income and Net Income.

Operating profit is the profit derived from the difference of positive operating income to operating expenses. Operating profit is used by internal parties. While Net Income is operating income minus income tax, profit is used by external parties.

Conceptual Framework for Government Accounting Standards

The government also called senior State executives is chaired by the President. In addition to the executive, there are also legislators who have an interest or responsibility for the interests of the people.

Conceptual Framework of the Government Accounting Standards are built by several assumptions, which include:

a. Independence Entities.

This means that the entity is capable of managing the finances of State with the legal responsibility. As a form of accountability is the existence of the financial statements as a form of accountability and performance monitoring. This dibatsi Seara closely by the State management, especially in terms of budgeting. In Indonesia, the budgeting system is performance-based budgeting system outlined in the Government Accounting Standards.

b. Measurable in Finance.

Government Accounting Standards interpreted as a sign the procedure. The corridor is related to the mechanism of action and be bound by the format - the format of reporting. In Government Accounting, every transaction there is recording of transactions and budget approval.

The difference between the conceptual framework of Business Entities with the Entity governments.
Business Entities:
a. Singular
b. Profit orientation
c. Accounting equation is Assets = Liabilities + Owners' Equity

Government Entities:
a. Plural (Multiple)
b. Not-for-profit (community welfare)

c. Accounting equation is Assets = Liabilities + Equity or it could be Assets = Liabilities + Fund Balance (general or basic concepts). This means that owners are not recognized individually.

Owner's equity in the Government Accounting does not get anywhere, there are no reports profit / loss and no recognition of private ownership. 

Government Entities in the accounting equation which is equity, this equity is party unity and intellectual property rights of third parties. Party unity is the people, but not all people have the right of ownership and therefore the extent of its equity owned by the individual in question of ownership. Equity in net wealth in the form of government accounting results of operations. The report contains revenue and operating expenses coupled with the transfer and revenue sharing.

We see the difference between the Government Regulation Government Regulation No. 24 of 2005 and Government Regulation No. 71 Year 2010.

Government Regulation No. 24 of 2005, concerning the Financial Statements.

1. Realization Budget Report

2. Balance Sheet

3. Statements of Cash Flows

4. Notes to Financial Statements

Government entities when required to prepare Statements of Changes in Equity.

Government Regulation No. 71 Year 2010, on the Components of Financial Statements.

1. Budget Realization Report

2. Statement of Changes in Balance Budget

3. Balance Sheet

4. Statements of Cash Flows

5. Operations Report

6. Statement of Changes in Equity

7. Notes to Financial Statements

Partnership

According to the Uniform Partnership Act is An association of two or more persons to carry on as co-owners a business for profit.

The types of business entities in Indonesia

1. Individual business entities (Proprietorship)

Business entity owned by one individual person only. Example: UD, CV, PD, and so on

2. Legal Entity (Partnership)

Dimilliki business entity by two or more persons. For example: Firm, Foundation, Cartel and so on.

3. Company Business Entity (Corporation)

Business entities through stock ownership. Examples: Limited Liability Company, Corp., Ltd. and so on.

The Differences Partnership and Limited Company:

 

	Partnership	Corporation
Business Entity	There is no separation	Separation
Legal Responsibility	Joint	No
Term Time	Limited	Not limited
Debt Responsibility	Ally guarantee personal assets	Limited to the share capital
Asset Ownership	Ally belong together	The Corporation
Profit or loss	Ally affect the capital account balance	Affect the retained earnings account
Legality	Registration Court	Permit approval KUM minister and Human Rights

FORMATION

Marked with the investment or transfer of funds from each - their allies in the fellowship.

Example: A, B and C agreed to establish communion with the name of the firm Trend. Investment data respectively - each appears in the following table:

Types of assets are handed over in	Fair Value of Assets (U $)
	A	B	C
Cash	U$ 35,000	U$ 30,000
Land (Book Value              U$ 50,000)	U$ 40,000
Building (Book Value              U$ 45,000)	U$ 30,000
Machine (Book Value              U$ 25,000)			U$ 15,000
Total	U$ 10,5000	U$ 30,000	U$ 15,000

 

Journal	Debit	Credit
Cash Land Building Machine Allied Capital A Allied Capital B Allied Capital C	U$ 65,000 U$ 40,000 U$ 30,000 U$ 15,000	U$ 10,5000 U$   30,000 U$   15,000
Allied Capital carried at Fair Value or Market Value of each - each investment in accordance with the agreement submitted in accordance.

 

Recording capital ally not based on the fair value of investments transferred.

a. Method Bonus

For example, A and B agreed to recognize capital C machines are recognized at U $ 20,000 that was initially recognized at U $ 15,000, mean C earn a bonus of $ 5000. Bonus C by reducing the capital A and B.

Journal Bonus:

          Allied Capital A U $ 2,500

          Allied Capital B U $ 2,500

                            Allied Capital C U $ 5,000

b. Goodwill Method

Suppose that A and B agreed to assess the capital C initially recognized at U $ 15,000 U $ 25,000 because of the role of C is important for fellowship.

The excess is recorded as goodwill and amortized over 10 years.

Journal of Goodwill

        Goodwill U $ 10,000

                      Allied Capital C U $ 10,000

Journal of the transaction in the corporate community as a proprietorship or a journal of transactions the company.

• Sales transactions

• Transaction purchase

• Transaction cash receipts

• Transactions of cash

• Adjustment

DISTRIBUTION OF PROFIT AND LOSS COMPANY

• The procedure for distribution of profit or risk of loss should be agreed jointly by the allies at the time of the establishment of fellowship and described in the Deed.

• Salaries for allies who work in partnershi, bonuses, interest on investments is an account that should not be recognized as Operating Expenses in the Income Statement. But recorded as a deduction from net income before shared with the partners in accordance with an agreed ratio.

METHOD OF DISTRIBUTION OF PROFIT AND LOSS

• Shared flat (equally) to all allies

• Divided by a fixed composition of each year.

• Divided by the ratio of the beginning balance of capital ally the establishment

• Divided by the ratio of the final balance allied capital end of each accounting period

• Divided by average capital balance for each period allies