 The principle of professional competence and due care is a basic ethic for accountants, which requires continuous improvement of knowledge and skills, as well as careful and diligent actions in carrying out tasks. In the context of PT Asuransi Jiwasraya, this principle was seriously violated, resulting in one of the biggest financial scandals in Indonesian history.
a. Lack of Required Knowledge and Skills
Competence requires accountants to have adequate knowledge of accounting principles, financial reporting standards, and a thorough understanding of the industry they are working in.Â
In Jiwasraya, there were indications that accountants involved in preparing the financial statements did not have an adequate understanding of the financial instruments used. For example, the company made high-risk investments, such as stock mutual funds, without conducting an in-depth analysis of the potential losses and associated risks.
b. Neglect of Standards and Best Practices
As part of the principle of competence, accountants are required to comply with accounting standards and best practices in the industry. In the Jiwasraya case, it was found that the financial statements prepared did not comply with applicable accounting standards. For example, there were inaccuracies in revenue recognition and asset measurement. The accountants involved not only ignored best practices but also allowed the financial statements to be filled with misleading information.
c. Deficiencies in Reporting and Communication
Competence also includes the ability to communicate information effectively to stakeholders. In the Jiwasraya case, poor communication between accountants, management, and shareholders led to misunderstandings about the company's financial condition. Accountants should act as a bridge of clear and accurate information, but in this case, the information provided did not reflect the company's true condition.
d. Responsibility in Internal Supervision
As part of their professional obligations, accountants also have a responsibility to ensure that there is a good internal control system. In the context of Jiwasraya, ineffective internal controls have led to manipulative and unethical practices. Accountants must be involved in designing and evaluating internal control systems to prevent deviations that can harm the company.
e. Caution in Decision Making
