Not every company operating in Indonesia is legally required to have its financial statements audited. But many foreign investors assume they are exempt when they are not, and an equal number assume they are obligated when the requirement does not actually apply to them.
The distinction matters because a mandatory audit that is skipped creates compliance exposure that can surface during tax reviews, license renewals, and shareholder reporting. An audit that is unnecessarily commissioned wastes time and budget that a growing company cannot afford. Getting this question right from the outset is part of building a compliant and cost-effective operational structure in Indonesia.
This guide explains the current legal framework governing audit requirements in Indonesia, the specific thresholds that determine whether a statutory audit is mandatory, the categories of companies that are always required to audit regardless of size, and what foreign-owned companies need to prepare well before their financial year closes.
The Legal Framework: Two Separate Obligations
Before assessing whether your company needs an audit, it is important to understand that Indonesia’s audit requirements operate under two distinct legal instruments that serve different purposes.
The first is the statutory audit obligation under Article 68 of Law Number 40 of 2007 on Limited Liability Companies (Undang-Undang Perseroan Terbatas or UU PT). This provision requires certain companies to engage a registered public accountant (Akuntan Publik) to audit their annual financial statements. The obligation is tied to the nature and scale of the company.
The second is the annual financial report submission obligation under Government Regulation Number 24 of 1998 on Annual Company Financial Information (Peraturan Pemerintah Nomor 24 Tahun 1998 or PP 24/1998) and its amendment Government Regulation Number 64 of 1999 (PP 64/1999). This obligation requires certain companies to submit their annual financial statements to the Ministry of Trade through the SIPT portal.
An important regulatory note for 2026: Minister of Trade Regulation Number 25 of 2020 (Permendag 25/2020), which was widely cited as the basis for annual financial reporting obligations, has been formally revoked by Minister of Trade Regulation Number 26 of 2025 (Permendag 26/2025). Any legal guidance or compliance checklist that continues to reference Permendag 25/2020 as an active regulatory basis is outdated and should not be relied upon. The applicable reference for annual financial reporting obligations is now PP 24/1998 as amended by PP 64/1999.
Who Must Have Their Financial Statements Audited
Under Article 68 of Law Number 40 of 2007, the Board of Directors of a limited liability company is required to submit the company’s financial statements to a registered public accountant for audit if any one of the following conditions applies:
- The company’s activities involve collecting or managing public funds, such as banks, insurance companies, multifinance companies, pension funds, and similar entities
- The company issues debt instruments or equity securities to the public, meaning publicly listed companies
- The company has total assets or annual turnover of at least IDR 50,000,000,000 (IDR 50 billion)
- The company is required by a lender, specifically a bank, to submit audited financial statements as a condition of its credit facility
These four conditions are the primary legal triggers for mandatory statutory audit under Indonesian company law. If your company meets any one of them, a statutory audit is not optional.
For foreign-owned companies (Perseroan Terbatas Penanaman Modal Asing or PT PMA), the third condition is the most commonly applicable. A PT PMA with total assets or annual turnover exceeding IDR 50 billion is legally required to have its financial statements audited by a registered Indonesian public accounting firm. Below this threshold, the statutory audit obligation under UU PT does not automatically apply, unless one of the other three conditions is met.
The IDR 50 Billion Threshold: What It Means in Practice
The IDR 50 billion threshold applies to either total assets or annual turnover, whichever is reached first. A company that has not yet generated IDR 50 billion in revenue but holds assets at that level, including fixed assets, inventory, and intercompany receivables, crosses the threshold and becomes subject to mandatory audit.
For PT PMA entities in capital-intensive sectors such as manufacturing, real estate development, hospitality, and energy, the asset threshold is often reached before the revenue threshold. A manufacturing company that has invested IDR 30 billion in machinery and holds IDR 25 billion in inventory and receivables would cross the IDR 50 billion asset threshold regardless of its current revenue level.
For PT PMA entities in service-based sectors such as consulting, technology, and financial services, the revenue threshold is more commonly the trigger. A consulting firm billing IDR 55 billion annually in management fees crosses the threshold on turnover alone.
It is worth noting that many newly established PT PMA entities will not immediately meet the IDR 50 billion threshold. Under BKPM Regulation Number 5 of 2025, the minimum total investment plan for a PT PMA is more than IDR 10 billion per KBLI code. A company at the minimum investment level with limited initial assets will typically fall below the audit threshold in its early years of operation. As the company grows and capital is deployed, the threshold becomes progressively more likely to be met.
Who Must Submit Annual Financial Reports to the Ministry of Trade
Separate from the statutory audit obligation, PP 24/1998 as amended by PP 64/1999 requires certain companies to submit their annual financial reports to the Ministry of Trade. The obligation applies to:
- A limited liability company that meets at least one of the following criteria: total assets of at least IDR 25 billion, or a debtor whose annual financial statements are required by its bank to be audited
- A foreign company that is domiciled in and conducts business in Indonesia, including branch offices, subsidiary offices, representative offices, and agents
This obligation covers all PT PMA entities operating in Indonesia, since a PT PMA is by definition a foreign-owned entity. The submission is made through the SIPT portal operated by the Ministry of Trade, and the financial statements submitted must already have been audited by a registered public accountant and approved at the Annual General Meeting of Shareholders (Rapat Umum Pemegang Saham or RUPS).
The submission deadline is no later than six months after the end of the financial year. For companies with a December 31 financial year end, this means submission by June 30 of the following year.
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Sectors That Are Always Required to Audit
Regardless of asset or turnover thresholds, companies operating in regulated sectors are subject to mandatory audit requirements imposed by sector-specific regulators. The primary categories are:
Banking and financial services. All banks, multifinance companies, insurance companies, and other entities supervised by the Financial Services Authority (Otoritas Jasa Keuangan or OJK) are subject to mandatory annual audits under OJK regulations, irrespective of size.
Capital market participants. Publicly listed companies, investment managers, securities companies, and other capital market participants regulated by OJK are required to audit their financial statements under OJK Regulation Number 29/POJK.04/2016 on Annual Reports of Issuers or Public Companies.
Mining and natural resources. Companies holding Production Sharing Contracts (Kontrak Bagi Hasil or KBH) or contracts of work in the oil and gas and mining sectors are subject to mandatory audit requirements under sector-specific regulations.
State-owned enterprise subsidiaries. Companies in which a state-owned enterprise holds shares may be subject to audit requirements imposed by the Supreme Audit Institution (Badan Pemeriksa Keuangan or BPK) in addition to the standard company law obligations.
Foreign investors entering any of these sectors should treat the audit obligation as a structural certainty from the moment of incorporation, rather than as a threshold to be monitored over time.
Who Conducts Audits in Indonesia
A statutory audit in Indonesia must be conducted by a registered public accountant who holds a valid license issued by the Ministry of Finance. The public accountant must be affiliated with a registered public accounting firm (Kantor Akuntan Publik or KAP) that is also licensed by the Ministry of Finance.
Foreign accounting firms cannot conduct statutory audits in Indonesia directly. All statutory audit engagements must be performed by Indonesian-licensed public accounting firms. International firms that operate in Indonesia do so through affiliated Indonesian KAPs, which are separately licensed and independently responsible for the audit opinion issued.
The engagement must produce an independent auditor’s report expressing an opinion on whether the financial statements present a fair view in accordance with Indonesian Financial Accounting Standards (Standar Akuntansi Keuangan or SAK), which incorporate International Financial Reporting Standards with local adaptations.
The Relationship Between Audit and Permenkum 49/2025
A development that directly affects how PT PMA entities manage their audit and financial reporting obligations is the introduction of Minister of Law Regulation Number 49 of 2025 (Peraturan Menteri Hukum Nomor 49 Tahun 2025 or Permenkum 49/2025), which took effect in December 2025.
Under Permenkum 49/2025, every limited liability company must hold an Annual General Meeting of Shareholders within six months of the financial year end, present audited financial statements at that meeting where applicable, and submit the RUPS resolution through the Legal Entity Administration System (Sistem Administrasi Badan Hukum or SABH) within 30 days of the notarial deed being signed.
This creates a direct sequencing dependency between the statutory audit, the RUPS, and the SABH submission. For a company with a December 31 year end, the practical timeline is:
- Financial statements prepared: January to February
- Audit completed: February to April
- RUPS held with audited statements presented: by June 30
- RUPS deed notarised: within the RUPS period
- SABH submission: within 30 days of the notarial deed
Failure to complete the SABH submission within 30 days results in blocked access to the SABH system, which prevents any subsequent corporate changes including director appointments, shareholding updates, and capital increases. For companies undergoing restructuring or planning changes to their management composition, the audit timeline directly affects their ability to execute those changes. The full implications of Permenkum 49/2025 for corporate compliance are covered in XPND’s dedicated regulatory guide on what every PT must know about Permenkum 49/2025.
What Makes a Company Audit-Ready
For PT PMA entities that are approaching the IDR 50 billion threshold or that are already obligated to audit, audit readiness is not a condition that can be assembled in the weeks before an auditor arrives. It is the product of disciplined financial management throughout the year.
The key elements of audit readiness that Indonesian auditors consistently evaluate include:
- Complete and reconciled accounting records maintained under SAK, with monthly close procedures that prevent year-end backlogs
- Documented intercompany transactions including management fees, royalties, and service charges from the parent company, with contracts and benefit evidence that satisfy Indonesia’s transfer pricing documentation requirements under Minister of Finance Regulation Number 172 of 2023
- Consistent revenue recognition aligned with the company’s contractual terms and accounting policies
- Supporting documentation for all significant transactions including capital expenditures, inventory movements, and employee benefit obligations
- BPJS contribution reconciliations ensuring that social security contributions align with payroll records
- Bank reconciliations completed monthly and reconciled to the general ledger
For PT PMA entities with foreign parent companies, auditors also routinely request reconciliations between the Indonesian statutory accounts and the group consolidation, and may request confirmation of intercompany balances from the parent entity.
How XPND Supports Audit Readiness
XPND does not conduct statutory audits, as these must be performed by licensed Indonesian public accounting firms. However, the condition of a company’s accounting records when an auditor arrives is directly determined by the quality of bookkeeping and financial management maintained throughout the year.
XPND’s Accounting and Bookkeeping team maintains financial records for PT PMA clients in accordance with SAK, ensuring that monthly closes are completed, intercompany transactions are properly documented, and year-end financial statements are prepared to the standard required for statutory audit.
XPND’s Tax Compliance team ensures that tax filings are consistent with the financial statements, reducing the risk of discrepancies between the tax return and the audited accounts that can trigger follow-up inquiries from the Directorate General of Taxes (Direktorat Jenderal Pajak or DJP).
XPND’s Corporate Secretary service manages the RUPS documentation and SABH submission process under Permenkum 49/2025, ensuring that the post-audit corporate compliance sequence is completed within the required timelines.
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For foreign investors who want to understand whether their current or planned Indonesian company will be subject to mandatory audit requirements, and what steps to take to ensure compliance, a consultation with XPND’s Regulatory Compliance team provides the assessment needed to plan ahead.
