The convergence period (2007-present)

         As the development of Indonesian accounting standards since 1994 has followed the progress of the international accounting standard setting, the international convergence of IFRS inevitably affects the DSAK’s strategy in formulating Indonesian accounting standards. Since the publication of the 2007 codified Indonesian accounting standards pronouncement, the IAIhas stated its support to the IASB convergence programme. However, it was not until 23 December 2008 did the IAI announce its formal statement that Indonesian accounting standards would fully converge with IFRS with the expected completion date by 1 January 2012 (Deloitte Touche Tohmatsu, 2009). This marked the beginning of a period of transition to IFRS, a process that still continues until presently. In this convergence period, an ultimate goal to achieve full convergence between Indonesian national standards and IFRS has directed the sequence of events in the Indonesian accounting standard setting agenda. Accordingly, the Indonesian accounting standards have moved significantly closer to IFRS compared to the previous period.

The advancement of Indonesian accounting standards (1990-2007)

          The second period in the Indonesian accounting standard development started in the early-1990s, fuelled by a significant progress in the development of Indonesian capital market during the time. By the early 1990s, more than 200 firms traded their shares in the Jakarta Stock Exchange, a substantial increase from 24 companies in the mid-1980s (Rosser, 1999; ADB, 2003). The IAI responded to this growth by making major changes in the accounting standard setting process (Rosser, 1999; ADB, 2003).

Development of Accounting Standards in Indonesia

          The authority to set accounting standards in Indonesia in the present day is mainly held by the Indonesian Financial Accounting Standards Board (DSAK), an accounting standard setting body within the IAI. Members of the DSAK come from various sectors within the Indonesian accounting environment, including the public accounting profession, the capital market authority, the central bank, accounting academics, and industries. In conducting its duties, the DSAK is advised by the Indonesian Financial Accounting Standards Advisory Council (DKSAK), a consultative body that is also under the IAI. Although the IAI does not have a legal status as a standard-setting body (Kusuma, 2005, p.356), the regulatory framework in Indonesia requires companies to prepare financial statements based on accounting standards set by the accounting professional organisation which is approved by the government.