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Document: Laksmi_DeLange_Myers

Author: Ayu Chairina Laksmi Save Date: 26/09/2012

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Paper:

Continuing Professional Development for the Public Accounting

Profession: Evidence from Indonesia

by:

Ayu Chairina Laksmi*

Paul De Lange

Paul Myers

RMIT University

*Correspondence:

Ayu Chairina Laksmi [email protected]



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1. Background

International Federation of Accountant (IFAC) member bodies need to ensure that their members of

professionals are keeping up-to-date. To achieve that goal, the International Accounting Education

Standard Board (IAESB), as part of IFAC, developed a standard on Continuing Professional

Development (CPD) called International Education Standard (IES) 7 – A Program of Lifelong

Learning and Continuing Development of Professional Competence, which came into effect on 1

January 2006 (Berg, 2007). IES 7 also prescribes requirements for IFAC member bodies in

conducting CPD for the professional accountants. Currently, IFAC is reviewing IES 7 and inviting

comments and feedbacks for IES 7 improvement. This study intends to contribute to IFAC by

feeding its findings regarding CPD for public accountants in a developing country.

CPD is a condition of membership in many professions, including accounting. There has never been

a greater need for professionals, including accountants, to keep themselves up to date (Rothwell &

Herbert, 2007). West (2003) maintained that accounting knowledge is not unique since the

individual elements of accounting expertise are known to others. To meet such challenge,

accountancy’s body of knowledge must adapt to the realities of the marketplace, to the needs of

decision makers and to the future prospects of both, or otherwise accounting’s place in the economy

will decline (Elliott & Jacobson, 2002). This is where CPD plays an important role for the

accounting profession since ‘CPD is a means, if not the means, of maintaining professional

competence’ (Queeney et al., 1990, p.13).

Before CPD was mandatory for IFAC member bodies in 2006, the Indonesian government through

the Ministry of Finance (MoF) Regulation No. 43/KMK.017/1997 mandated that public accountants

must undertake CPD in accordance with the provisions of the Indonesian Institute of Accountants

(IIA). Nonetheless, CPD seemed to have little influence in improving the practice of public

accountants in Indonesia. From 2002 to February 2011, there were fifty six public accountants

whose licenses were suspended by the MoF. Additionally, the data from MoF (2011a) showed that

from eight hundred and thirty three public accountants, one hundred and seventy five of them were

being issued with a warning letter. Whilst there was no information about the reason for warning

letter issuances, the grounds for the suspensions were varied, but most were for non-compliance

with Auditing Standards and violation to Professional Standards of Public Accountants (both

standards were published by the IIA). According to the MoF regulation, during the suspension

period, the public accountants were prohibited from being a leader or a partner at an accounting

firm or a leader of partner at a branch accounting firm, and they were obliged to continue to



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undertake CPD. It may be assumed that the Indonesian government took CPD very seriously by

entrusting it to sustain and develop the public accounting profession.

In spite of the importance of CPD for the public accounting profession in Indonesia, the CPD

schema to support and justify CPD offerings, design, planning, implementation, monitoring and

current offerings is unclear. Furthermore, there is no information available about public

accountants’ need assessment prior to undertake CPD, whereas CPD should recognise the special

attributes and needs of professionals and the determination of learning need is the crucial phase

(Queeney et al., 1990; Burton & Rezaee, 1994; Knowles, et al., 2005).

The definition of public accountants in Indonesia is slightly different from other countries. The

Institute of Public Accountants Australia (2011), for example, defined the term ‘public accountant’

as a globally recognised term for all accountants serving the public, whether in practice, commerce,

industry, government or the education sector. In contrast, a public accountant title in Indonesia is

strictly reserved for accountants who practice and they must establish or became a partner at a

government-registered accounting firm. The Law of the Republic of Indonesian Number 5 of 2011

stated that CPD is obligatory for public accountants, hence, only partners need to undertake CPD.

Contrary to this policy, CPD should aim to all professional accountants, at whatever role or

environment they operate and at whatever level of seniority (Coen, 2004). Consequently, all

professional accountants work in accounting firms should be required to do CPD, although, one size

fits all approach is inappropriate and CPD offerings should be tailored to staff at different levels

within an organisation (De Lange et al., 2010).

2. Research Questions

The broad research questions examined in this study are:

1. What are the regulatory and institutional structures which shaped the accounting profession

and CPD in Indonesia?

2. To what extent do CPD offerings sustain and develop the accounting profession in

Indonesia?



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3. Research Contributions

This study contributes to the body of accounting profession and CPD knowledge by addressing a

visible gap in the literature by investigating CPD schema for accounting profession, especially for

public accountants in Indonesia, unravelling the regulatory and institutional structures which shaped

the accounting profession and CPD, and providing insights into the extent to which CPD offerings

sustain and develop the accounting profession.

Previous studies on CPD for professional accountants are still limited. Most of the studies (Burton

& Rezaee, 1994; Guthrie, 2004; Wessels, 2007; Paisey et al., 2007; Jackling et al., 2007;

Zajkowski, 2007; Rothwell & Herbert, 2007; De Lange et al., 2010; De Lange & Jackling, 2011)

conducted in developed and/or Commonwealth countries such as US, UK, Australia, New Zealand,

Singapore, Malaysia, and Hong Kong; hence, evidences regarding CPD practices from developing

countries like Indonesia are still rare.

Although accounting profession in Indonesia has been examined extensively in the literature

(Enthoven, 1977; Abdoelkadir, 1982; Enthoven, 1983; Briston & Yunus, 1993; Sukoharsono &

Gaffikin, 1993; Diga & Yunus, 1997; Yapa, 2003; Kusuma, 2005; Perera & Baydoun, 2007), CPD

in particular has rarely been systematically investigated. Therefore, this study aims to attend to that

visible gap in the CPD literature.

4. Significance of the Study

Findings from this study can be used in assisting IFAC to improve IES 7 as part of its revision

process and, in turn, will enhance CPD offerings for public accountants. The findings will also aid

the accounting policy regulators in Indonesia as CPD providers to improve the design and delivery

of CPD offerings for public accountants, and in turn, will help to sustain and develop the profession

as a whole. The public accountants as CPD participants will gain benefits from this study since they

are the main stakeholder of CPD. Finally, the findings from this study will benefit the society by

ensuring that CPD offerings can assist the public accountants to become responsible and competent

professionals in delivering their services to the public.



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5. Literature Review

5.1 Accounting Profession in Indonesia

Previous studies have shown that many accounting activities in Indonesia, such as provision of

instructor at professional and educational institutions, research for accounting educational purposes,

support from professional bodies, and coordination with university and other higher-education

institutions, have lagged behind (Enthoven, 1977; Abdoelkadir, 1982; Enthoven, 1983; Briston &

Yunus, 1993; Sukoharsono & Gaffikin, 1993; Diga & Yunus, 1997; Yapa, 2003; Kusuma, 2005;

Perera & Baydoun, 2007).

Many advances in the accounting field in Indonesia are supported by the IIA that was founded in

1957 (Diga & Yunus, 1997). The IIA is an IFAC member body and it is a professional accountants

association that has no legal status as a standard-setting body in the country (Kusuma, 2005). In

2007, the public accountant compartment of the IIA became an independent body under the name of

Indonesian Institute of Certified Public Accountants (IICPA). Whilst gaining independence, up to

now IICPA is a member body of the IIA.

5.2 Public Accounting Profession in Indonesia

The public accountant title in Indonesia is protected by the Law of the Republic of Indonesian

Number 5 of 2011 (MoF, 2011b). Despite the controversy around its launch, the law is drawn to

give legal protection to the public accounting profession and to society and it states that only public

accountants holding practice license from the Indonesian government are allowed to provide

assurance services to companies and businesses in Indonesia.

The MoF is the government body that supervises the public accountants by issuing or revoking the

practice license. MoF Regulation No. 17/PMK.01/2008 (MoF, 2008) recognised IICPA as the

professional organisation of public accountants and gave the authorisation to perform public

accountants certification exams, preparing and publishing professional standards and ethics of

public accountants, as well as offering CPD for all public accountants in Indonesia.



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5.3 CPD for Public Accountants in Indonesia

Indonesian accountants, including public accountants, are required to do 120 CPD credit points in

three years time in order to maintain their practice license (IIA, 2008). In one year the accountants

must complete a minimum of 30 credit points where 1 credit point equals to 50 minutes CPD. For

public accountants, the MoF Regulation No. 17/PMK.01/2008 specified that out of 30 credit points,

a minimum of 4 credit points should be related to guidance and supervision of public accountants;

and a minimum of 4 credit points should be related to accounting and auditing. The same regulation

stated that CPD for public accountants can only be held and/or recognised by the Indonesian

Institute of Certified Public Accountants (IICPA) and the MoF.

5.4 The Nature of CPD

CPD is also often called Continuing Professional Education (CPE) or Continuing Education (CE).

Despite different names, the essence of CPD, CPE and CE is the same, ‘although different

profession might use slightly different terms’ (IFAC, 2008, p. 102). The term ‘development’ is

more preferable since ‘life is development and that developing, growing, is life’ (Dewey, 1957, p.

59).

Lowenthal (1981) defined CPD as education and training beyond the basic professional degree of

license. Therefore, a CPD programme should relate to the provision of professional services, exert a

broad and long range effect on the field and improve the individual’s professional competence

(McCormick & Marshall, 1994).

5.5 The Purpose of CPD

The purpose of CPD for professionals has been discussed extensively in the literature. Houle (1980,

p. 75) argued that CPD conveys ‘a complex attitude made up of a readiness to use the best ideas and

techniques of the moment but also to expect that they will be modified or replaced’. Furthermore,

CPD gives an incentive to expand knowledge, sharpen the skill of intellectual inquiry and provides

a regular opportunity for professional exchange of ideas and creates an educational habit (Ogden,

1985). CPD is also ‘a shield to protect the public and the profession from ignorance and

obsolescence’ (Edwards, 1985, p. 31) and it assures the public by protecting them from ‘lazy,

uninterested and egotistical practitioners’ (Lowenthal, 1981, p. 523)

IFAC (2008) prescribed the purposes of CPD as:



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• Keeping up to date

• Improves and broadens knowledge and skills; that is, CPD is intended to support future

professional development

• Develops personal qualities necessary to execute professional and technical duties

CPD is also a fundamental ethical obligation for professional accountants, as defined by IFAC

(2010). Parker (1987) argued that the professional accounting bodies’ code of ethics have a role in

protecting profession’s self-interest. The protectionist role is evident from references to competitive

threats from companies operating outside the accounting profession and from direct

acknowledgements of the professional protection offered by ethics regulations (Parker, 1987, p.

135). Hence, apart from the aforementioned purposes, CPD also aims to protect or sustain the

profession as a whole.

Despite the advantages, CPD is not a cure-all for the profession (Ogden, 1985). Undertaking CPD

alone does not give assurance that all members of professional bodies will provide high quality

service all the time. Nonetheless, it is certain that members who are not up-to-date on current

technical and general knowledge pertinent to their work will not be able to provide professional

services competently, hence, a CPD requirement is vital to maintain public confidence to the

profession (Hong Kong Institute of Certified Public Accountants, 2010).

5.6 CPD in the Accounting Context

CPD is inseparable to accounting profession because it maintains the knowledge base of

professionals and the control over such knowledge is an important criterion for maintaining

professional jurisdiction (Paisey & Paisey, 1996).

Findings from CPD studies in the UK demonstrated that CPD courses must be fitted to professional

accountants’ expertise needs (Burton & Rezaee, 1994); CPD provides a clearer career structure,

improves satisfaction, builds a sense of self-worth and confidence to tackle new tasks, and develops

the extra skills that are necessary for progression (Guthrie, 2004); CPD providers should consider

carefully the cost, time, location of CPD activities and also type of courses (Paisey et al., 2007);

and although the accountants aware of the general benefit of CPD, they did not perceive immediate

rewards in career terms (Rothwell & Herbert, 2007).



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In the US, Wessels (2007) found that CPD was effective for most practitioners but that there were

many barriers that prevented it from being fully effective. Furthermore, she gave evidence that

institutional deterrents, such as the length of courses as well as quality and relevance, are important

predictors of perceived CPD effectiveness.

From New Zealand and Australia, a study by Zajkowski et al. (2007) showed that career-long CPD

engagement is an important and generally accepted attribute of a profession. Furthermore, the

professional accounting bodies in Australia and New Zealand all recognise that they should

continuously seek further development of their professional skills and competence to provide the

level of service and leadership to which they aspire.

In Australia, accounting graduates are focused on CPD and they gave great support for continued

learning (Jackling, et al., 2007); and from Asia Pacific region, the findings demonstrated that

important considerations for choosing CPD activity are cost, location, flexibility, length of time,

mode of delivery (face to face or online), and structure (De Lange et al., 2010).

It can be summarized from the previous studies that although CPD had many benefits and many

considered it as an integral part of the profession, some professional accountants still found barriers

into undertaking CPD. Nonethless, the findings provide invaluable insights into CPD practice in

developed countries. However, they do little for the development of the accounting profession

(CPD) in developing countries like Indonesia.

5.7 Conceptual Schema of CPD

The conceptual schema of this study will borrow a model of regulation of accounting practices

developed by Puxty et al. (1987). They built the model based on evidences from UK, US, Germany

and Sweden. The model has been used in China (Hao, 1999) and Czech Republic (Seal et al., 1996).

Nonetheless, Indonesia is not a country with advanced capitalism, nor a country with a socialist

legacy. Hence, the Puxty et al. (1987) model cannot be applied entirely.

Puxty et al. (1987) developed their model based on critiques of previous model developed by

Streeck and Schmitter (1985). It has been suggested that Streeck and Schmitter’ framework is

useful in disclosing the presence, absence, characteristics and inter-relations of State (hierarchical

control), Market (dispersed competition) and Community (spontaneous solidarity). However, Puxty



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et al. (1985, p. 279) argued that the Streeck and Schmitter framework does not specify the relative

importance of State, Market and Community.

Drawing from the literature and borrowing from Puxty et al. (1987), a conceptual schema of CPD

can be built. Figure 1 below shows conceptual schema for CPD. The schema contains both CPD

drivers and purposes (IFAC, 2008).

Drivers Purpose(s)

Figure 1. Conceptual Schema for CPD

5.7.1 Accounting Policy Regulators’ Requirements

Professions are broadly circumscribed by the state because they owe their existence to a framework

of law which provides the protection for their profession (Dingwall & Fenn, 1987). In addition,

accounting profession in most developing countries is highly unlikely to evolve without strong

government intervention (Perera, 1985, p. 145). State or the principle of hierarchical control

exercises interventions to accounting practice ‘to ensure that basic accounting principles are

Continuing

Professional

Development

Accounting

Policy

Regulators’

Requirements

Keeping up to date

Future professional

development

Develop personal

qualities

Sustainability of the

profession as a

whole

Ethical

Requirements

Specialist Skills

Lifelong learning



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undertaken as a means of reducing the turbulence and uncertainties associated with the erratic

discipline of the market’ (Puxty, et al., 1987, p. 278). They also argued that the authority of

hierarchical control is vested in agreed rules and procedures backed up by the state’s monopoly of

legitimate coercion. The principle of coordination and allocation is characterised by its successful

protection of actors from external threats and its securing of equitable and predictable treatment for

all its citizens.

In this study, the State principle will be represented by the accounting policy regulators. The

accounting policy regulators in Indonesia are the Ministry of Finance (MoF), Bapepam-LK (capital

market and financial institutions supervision agency), Bank of Indonesia (central bank) and the IIA

(Kusuma, 2005). The MoF and Bapepam-LK regulate through the requirements of the stock market.

Bank of Indonesia regulates banks and other financial institutions. The IIA regulates through setting

the accounting standards. Public companies are required to follow the regulations of MoF,

Bapepam-LK, Bank of Indonesia and the IIA. All four of them are also CPD providers. As part of

the objectives of this study, it is necessary to investigate the extent to which CPD offerings enhance

compliance to the accounting policy regulators’ requirements from the point of view of CPD

providers and participants.

5.7.2 Ethical Requirements

Professionals must demonstrate professional competence and due care when delivering their

services (Millerson, 1964; Bucher & Stelling, 1969). This is where ethical requirements or code of

ethics play an important role.

CPD is a fundamental ethical obligation for professional accountants, as defined in the Handbook of

the code of ethics for professional accountants (IFAC, 2010, para. 130.3):

‘The maintenance of professional competence requires a continuing awareness and an

understanding of relevant technical, professional and business developments. Continuing

professional development enables a professional accountant to develop and maintain the

capabilities to perform competently within the professional environment.”

IFAC’s decision to include CPD into the ethical requirements of professional accountants are

somewhat reflects the principle of Community offered by Puxty et al. (1987). They argued that



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Community (spontaneous solidarity) in justifying their monopolistic efforts to restrict the supply of

accounting labour will draw heavily upon the ideals of community-of gentlemanly conduct and

public service. Furthermore, ‘accounting activities may also be defended and reproduced by

practitioners because they offer a valued source of personal satisfaction, collective identity and

social esteem, and not solely because they are of instrumental, material value’ (Puxty et al., 279).

It can be concluded from the abovementioned discussion that ethical requirements are drawn to

offer sustainability and development for the profession. This study will investigate the extent to

which CPD offerings promote improved understanding of ethical requirements as prescribed by

IFAC and Indonesian accounting bodies from the point of view of CPD providers and participants.

5.7.3 Specialist Skills

Being a professional provides real differentiation in the market place (Coen, 2004) and being

accorded professional status involves making claims to competence in particular areas (Bucher &

Stelling, 1969). Competence involves the attributes which individuals bring to the job performance

and includes their knowledge, skills and attitudes which, when integrated, allow them to deal with

practical workplace situations (Dall’Alba & Sandberg, 1993). Segall (1988) defined competence as

an intellectual, emotional and physical capability involving specific knowledge in an area of

practice, a level of skilled performance, efficient management and an ability to identify relevant

issues. Furthermore, competence is not static but continually changing and is difficult to measure

because of the difficulty of establishing standards (Segall, 1988).

Pertaining to specialist skills, IFRS-related skills are quite in demand due to the introduction of

IFRS in the past few years. IFRS adoption in Indonesia in 2012 will undoubtedly bring significant

impacts to businesses and the public accountants. Sinaga (2011), the chairperson of the Indonesian

Accounting Standards Board, explained that IFRS adoption in 2012 will bring a major change to

specialist skills in Indonesia.

Using Puxty et al. (1987) model, specialist skills as a CPD driver can be related to the Market

(dispersed competition) principles. Puxty et al. (1987) argued that accountancy practice is regulated

by market principles in a variety of ways. CPD is implemented to improve the competency of

professional accountants and competency requirements are sometimes driven by the market.

Sophisticated and knowledgeable consumers, globalisation, technological innovation, social need

for a service, competition, and consumer organisation are some of the reality in the market place



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that can affect professional power (Birkett & Evans, 2005). Therefore, by acquiring and maintaining

specialist skills needed by the market, the sustainability and development of the profession can be

assured.

To sum up, individual public accountants are required to have specialist skills needed by the current

market. Hence, it is important to investigate the extent to which CPD offerings enhance specialist

skills needed in Indonesia from the point of view of CPD providers and participants.

5.7.4 Lifelong Learning

Lifelong education or lifelong learning has perhaps the most influential label associated with CPD

(IFAC, 2008). What CPD shares with lifelong learning is the emphasis on individuals taking an

active role in determining what they need in order to develop professionally. Lifelong learning is

‘lifelong’ in the sense of it is from cradle to grave and ‘learning’ means giving ownership of

learning to the learner him or herself and not to the teacher and this is a change of emphasis and

power from provider to receiver (Longworth, 2003, p. 11-12). In lifelong learning the learners are

actors in their own learning and the learning encourages people to be active learners rather than

passive participants (Cropley, 1979).

Lifelong learning is also closely related to adult learning (Roper, 1984) and any framework for

continuing professional education must recognise the special attributes and needs of professionals

as adult learners (Queeney et al., 1990). Adult learning is defined as the process of adults gaining

knowledge and expertise and the determination of learning needs is the crucial phase (Knowles, et

al., 2005).

De Lange et al. (2010, p. 34) maintained that ‘member bodies of IFAC need to work towards

shifting the focus of professional accountants from a compliance mentality in relation to CPD to

more fully embracing the ethos of lifelong learning and professional development approach to

CPD’. Accordingly, lifelong learning is one of CPD drivers and it is useful to investigate the extent

to which CPD offerings engender lifelong learning from the point of view of CPD providers and

participants.



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6. Research Methodology

Accounting professions in any country is shaped by the various social, political and economic

pressures that impact on the accounting needs of the jurisdiction (Wallace, in Uche, 2010). This

study employed a qualitative methodology since ontological assumption of the qualitative paradigm

views reality as subjective and multiple. In qualitative research, events and the social world are

viewed through the eyes of the people they study in order to describe and translate the meaning of

them (Van Maanen, 1979; Bryman & Bell, 2007). Furthermore, qualitative research aims to develop

understanding through detailed description, often builds theory but rarely tests it (Cooper &

Schindler, 2011).

This study intended to get some deep insight into regulatory and institutional structures which

shaped accounting profession in Indonesia and to what extent CPD offerings for public accountants

sustain and develop the accounting profession. Through closely describing and documenting the

regulatory and institutional structures which shaped accounting profession; and interpreting CPD

offerings from the point of view of both providers and participants in real life setting, this study

investigated CPD offerings for public accountants in Indonesia and aimed to make a contribution to

the body of literature on CPD.

This study employed documentary research and semi-structured interviews for its data collection

methods. Documentary research involves the collection and examination of written materials

(Feldman, 1981). The materials for this study were mostly found in government releases and

websites, official documents, archives and newspapers. Those documents were beneficial in getting

a broad understanding the regulatory and institutional structures which shaped the accounting

profession in Indonesia.

Qualitative interview attempts to understand the world from the participants’ point of view

(McCracken,1988; Kvale, 1996; Easterby-Smith et al., 2002). Through this type of interview,

researchers can get opportunities to ‘probe deeply to find new clues, open up new dimensions of a

problem and to secure vivid, accurate inclusive accounts that are based on personal experience’

(Burgess, 1982, p. 107). Findings from this study were grouped together according to the interview

themes.

This study chose to employ semi structured interviews, since in a semi-structured interview, ‘a list

of questions on fairly specific topic to be covered is prepared, but the participants have a great deal



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of leeway in how to reply’ (Bryman & Bell, 2007, p. 474). The interview questions in this study

used and extended questions from a similar project in Australia by De Lange and Jackling (2011).

The interview questions were piloted to both the CPD participants and CPD providers and revised

accordingly.

The number of research participants in this study was forty four. The number of participants were

adequate for the purpose of this study. To quote McCracken (1988, p. 17.), ‘it is important to

remember that this group are not chosen to represent some part of the larger world. It offers,

instead, an opportunity to glimpse the complicated character, organization, and logic of culture.’

The participants in this study were classified into two categories, namely CPD providers and CPD

participants. CPD providers consisted of the accounting policy regulators. CPD participants were

Indonesian public accountants that were currently undertaking CPD at the time of the interview.

The table 1 below provides summary of the research participants:

Table 1. Summary of Participants

No. Categories of Participants Number of

Participants

1. Ikatan AkuntanIndonesia/Indonesian Institute

of Accountants/IIA (CPD provider)

1

2. Ikatan Akuntan Publik Indonesia/Indonesian

Institute of Certified Public

Accountants/IICPA (CPD provider)

2

3. Bank Indonesia/Central Bank (CPD provider) 1

4. Bapepam-LK/Capital Market and Financial

Institutions Supervision Agency (CPD

provider)

1

5. PPAJP/Public Accountant and Appraisal

Supervisory Center-MoF (CPD provider)

1

6. Badan Pemeriksa Keuangan/The Audit Board

(CPD provider)

1

7. Indonesian public accountants (CPD 37



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participant)

Total 44

7. Research Finding

Due to the on going nature of this emerging paper, the research findings discussed focuses on

stories from the CPD participants only.

RQ1: What are the regulatory and institutional structures which shaped the accounting

profession and CPD in Indonesia?

To answer the first research question, the participants were asked various questions regarding their

knowledge about regulations on CPD for public accountants in Indonesia, the CPD providers and

how CPD was organised and about their main motivation(s) of undertaking CPD.

Professional bodies membership and main motivation(s) for CPD

All of the public accountants interviewed were members of IICPA and the membership is

compulsory to them in order to keep their practice license. All but two of the participants were also

members of IIA. One public accountant at a middle accounting firm said that he did not join IIA

since it was not compulsary for members of IICPA, and joining IIA had nothing to do with his

practice license as a public accountant and it would cost him more money for the IIA membership.

As for the main motivation for CPD, one of the partner at a Big 4 acocunting firm claimed that

undertaking CPD was not adding value for his job as an auditor and he did CPD solely for the credit

points requirements from the government and IICPA:

“.....(motivation) for joining CPD? Nothing, just the credit points to be honest..... For me, what’s the added

value of CPD? For my job it’s not much. I might go there, yes, but it’s just because I have to be there but

maybe my mind (is not there) or I’m even doing something else there. That’s the fact....”

Furthermore, the participant also pointed out that the internal training at his accounting firm is more

adequate than the compulsory CPD organised by IICPA. He criticised the current CPD offerings as

lack of careful planning and design. The other participants, however, thought that CPD helped them

in keeping up to date with the latest developments in accounting and auditing in Indonesia. CPD



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events were also thought to be useful for them since they could meet their friends or colleagues

from other accounting firms so they could share important information and did a bit of networking.

CPD requirements from the government and accounting policy regulators applicable to the

public accountants

Varied answers on CPD requirements from the government and accounting policy regulators

obtained from the participants. This was because different CPD providers have different rules

regarding CPD credit points. Public accountants who were registered with the Capital Market and

Financial Institutions Supervision Agency would have to do an additional 5 credit points. If they

were also registered with the Central Bank, they would have to do 5 credit points more. Hence, if a

public accountant was registered to both Capital Market and Financial Institutions Supervision

Agency and the Central Bank, he or she would have to do 40 credit points of CPD. According to

IIA and IICPA, 1 credit point of CPD equals to 50 minutes CPD. However, there were public

accountants who were just registered with either Capital Market and Financial Institutions

Supervision Agency or the Central Bank, so their obligation was only 35 credit point of CPD; and

there were public accountants who were not registered with both of the financial institutions, so

they only had to do 30 credit points CPD.

CPD providers in Indonesia

All of the participants agreed that IICPA is the sole provider of CPD and IICPA was also supported

by the the Law of the Republic of Indonesian number 5 of 2011 as the only CPD provider in

Indonesia. However, IICPA could join with Capital Market and Financial Institutions Supervision

Agency and the Central Bank to organize CPD on specialized topic such as capital market and

central bank’ regulations. Two of the participants mentioned that they could use the credit points

from other CPD providers or from their internal training, as long as IICPA gave its permission and

willing to recognize some of the credit points as IICPA’s CPD credit points. Nonetheless, the

IICPA regulation regarding other CPD providers’ credit point recognition was also not clear. Some

participants said that IICPA could only accept 15 percents of the credit points from other CPD

providers, while others said they could claim the credit points in full to IICPA.

Concerning other CPD providers, IIA also organized routine CPD for all accountants, not just for

public accountants. Some of the participants admitted that they were very interested in taking CPD

from IIA, however, the reduced CPD credit points somehow deterred them. But some participants



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went to the CPD organized by IIA anyway, since their purpose was to gain knowledge out of the

CPD activities, not just the credit points given.

CPD fulfilment and consequences for not fulfilling

All of the participants agreed that they have to fulfil CPD requirements to maintain their practice

license. They were also aware that if they did not fulfil their CPD requirements, they could get a

warning, a penalty or even had their practice licensed removed by the MoF. One of the participant

from a small accounting firm mentioned that he was fined a quite large sum by the Capital Market

and Financial Institutions Supervision Agency for late submission of CPD report to them. The

participants also needed to report their CPD activities to the Public Accountant and Appraisal

Supervisory Center – MoF. The MoF had the authority to give penalty to the public accountants and

to remove their practice license. However, the regulation regarding the consequences of non-

fulfilment of CPD was not clear.

Monitoring and audit of CPD and system of reward and punishment

The IICPA put their best effort in monitoring and audit CPD. Nevertheless, one participant from a

small accounting firm talked about his disappointment regarding IICPA monitoring and audit of

CPD. His pointed out a case about local government election audit. Public accountants who would

like to be local government election audit must get recommendation letter from IICPA. IICPA

already mentioned that it only gave recommendation to the public accountants who had done CPD

on local government election audit. But apparently this participant found out that one of his

colleagues who never received any trainings or CPD whatsoever regarding local government

election was in fact did an audit for the local government election. When the participant asked to

see the audit report, he noticed some mistakes on that report. Other positive comments were made

regarding the strict CPD staff that was able to recognize the face of each of the public accountants,

make it harder for the public accountants to be present in name only and get the certificate at the

end of the event.

All of the participants aware that they needed to provide a CPD report to the Public Accountant and

Appraisal Supervisory Center - MoF every year on or before 15 January and for those who were

also members of stock exchange auditors, they needed to report their CPD to the Capital Market

and Financial Institutions Supervision Agency as well. Public accountants that were registered as

Central bank auditors did not need to report their CPD to the Central Bank. The Capital Market and



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Financial Institutions Supervision Agency was very strict in imposing penalty to the registered

partners if they were late in submitting their CPD report.

The CPD participants did not need to report their CPD to the IICPA since IICPA kept the public

accountants’ CPD records. IICPA also sent a letter of reminder to all of IICPA members regarding

their current CPD credit points and the deadline to complete all of the compulsory CPD. The

reminders normally sent just before end of the year (December). Nonetheless, varied answered were

gathered from the participants. Two participants stated that they did not have to report to either

IICPA or the Public Accountant and Appraisal Supervisory Center – MoF. One participant

mentioned that he needed to report to IICPA only and not to the Public Accountant and Appraisal

Supervisory Center – MoF. The rest of the participants said that they had to report to the Public

Accountant and Appraisal Supervisory Center – MoF only and not to the IICPA. However, one

participant expressed his disagreement regarding CPD reporting to the MoF:

“IICPA already made a report (regarding CPD), they usually send a letter to us (saying) you’ve got this

credit points of CPD, that’s all. Sometimes the Public Accountant and Appraisal Supervisory Center – MoF

will ask again for it. I think it’s strange, IICPA already had the lists (of my CPD)...”

Two participants also mentioned that the Indonesian government, represented by the Public

Accountant and Appraisal Supervisory Center – MoF, did random visits to accounting firms. The

staff from the Public Accountant and Appraisal Supervisory Center – MoF would come

unannounced to the accounting firms, asked to see working papers, list of clients, audit reports and

also CPD reports.

Knowledge and specialist skills fulfilment of CPD

All of the participants agreed that the current CPD offerings were appropriate in terms of providing

knowledge and specialist skills, especially with the IFRS adoption in 2012. However, two of the

participants added that doing CPD alone would not make them experts in certain area instantly.

CPD was needed for introducing any new topics or developments in accounting and auditing in

Indonesia. It was difficult to rely on a couple of hours of CPD seminar in order to master certain

topics as this participant added:

“(For) skills, I don’t think so, there’s still a lot to cover so…, yes maybe you can see it yourself, the IAS 1,

we open it, this column (for example). (Discussing) that column alone can be all day. How do you get the



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numbers? Not necessarily (we) can solve them. I've tried it myself. That’s if we want to explore. It's not

imaginable. Why are (the figure) sometimes not here? Why they’re here? It’s impossible (to discuss it) if only

for a brief period.”

One senior partner at a small accounting firm talked about the importance of CPD in terms of

helping senior public accountants keeping up with latest developments in accounting and auditing.

According to him, CPD was particularly useful for elder public accountants to keep the pace with

younger public accountants. Accounting was used to be how to record and how to report and now it

has changed with the introduction of IFRS in Indonesia.

Nonetheless, one of partner at a Big 4 accounting firm admitted that most of his training needs for

knowledge and specialist skills were already fulfilled by internal trainings at his firm. The Big 4

firms are well-known for rigorous internal trainings and examinations, hence, he could not

comment much about whether or not CPD alone could fulfil his knowledge and specialist skills

needs.

One other partner at a Big 4 firm revealed that the internal trainings in his firm were more advanced

to the CPD delivered by the IICPA. On one occasion he was even asked to leave the CPD event

since he already had more trainings than the others participants:

“..... I went there (a CPD event), I was asked to leave. I mean they did not ask me to leave per se, (but they

said) you don’t have to join sir, we don’t have enough chairs, you already had a lot of trainings in your

office (anyway).”

Accounting firms’ needs and individuals’ needs in determining CPD activities

Six of the participants thought that the current CPD offerings only focused on partners and did not

accommodate other auditors from different level of organisations. They would like to see more

CPD that focuses on their staff.

One partner from a Big 4 accounting firm stated that it was comprehensible if IICPA and the

Indonesian government would like to focus on public accountants’ individual needs for the time

being due to the many changes in regulations and accounting standards, however, in the future the

accounting firms’ needs such as office management and human resource development should get an

attention as well.



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One partner from a Big 4 firm and one partner from a medium sized accounting firm commented

that accounting firms’ needs should get more priority. The reason is accounting firms in Indonesia

were ranged from very small firms to Big 4 firms. The Big 4 firms are relatively stable and did not

have many issues in office management, getting clients, and such. The smaller accounting firms

need more knowledge regarding accounting firm management and quality control.

One partner from a small accounting firm pointed out that audit was not a work of one person; it

became a business and an industry. Hence, the partners needed the ability to manage the office and

the human resources. Nonetheless, public accountants’ needs must be prioritised in determining

CPD activities since it was important to maintain professionalism and to keep up to date with latest

development.

Main obstacles in undertaking CPD

Difficulty in arranging work schedule to fit CPD activities was the main obstacle for most of the

participants. Especially, CPD sometimes were held during peak season of audit engagements.

However, accounting firms might have different period of peak season and off-peak season. One

partner from a middle sized accounting firm explained that his peak season would be from October

to April. Meanwhile, other partner from a smaller accounting firm stated that his peak season was

from January to April.

The high cost of CPD came second as the obstacle for participants, especially for those from

medium sized and smaller accounting firm. One partner from a small accounting firm in

Yogyakarta complained about the high cost of CPD. If he would like to attend CPD in Jakarta, he

would need to spend his own money for return flight tickets, accommodation and CPD registration.

Currently, CPD are held in big cities in Java Island, such as Jakarta, Surabaya, Bandung or

Semarang. Hence, public accountants from other islands and other cities must make their own

arrangement to get to the CPD venue.

On the other hand, Big 4 partners did not feel that high CPD cost is an obstacle since their CPD

registration fee would be paid by their firms. Also, they would not need to travel to other cities

since all of the Big 4 firms were located in Jakarta and only one Big 4 firm had a branch in

Surabaya.



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Systematic staff reviews that align CPD planning and action, to improved skills, to salary review

and to career progression

Most of the participants agreed that CPD offerings by IICPA were not aligned to improved skills,

salary review and career progression. According to participants from the Big 4 firms, their own

internal training were attributed to improved skills, salary review and career progression. For

example in one Big 4 firm, there were two types of training, mandatory and non-mandatory. For

auditors at the lower level, training would be mandatory and technical. From assistant manager and

manager level onwards, soft skill trainings such as seven habits of highly effective people,

negotiation, and active listening were added into the internal trainings received. The internal

training for lower level auditors were already booked by the firm at the beginning of staff

acceptance, hence, the auditors had to join the trainings. Trainings would be one of their jobs during

the off peak audit season. If somehow, the auditors did not join the internal trainings, they could

join a catch up program. The Big 4 firm also had a coaching system in place. The coaches were

staff with higher rank; they would monitor staff from lower rank assigned to them. For partners, the

internal trainings designed for them contained more soft skills rather than technical skills, the global

office would review the partners in every 3 year, and hence, if the partners did not meet the

minimum requirements of training, quality and practice, they could be downgraded by the firm.

One partner at a small accounting firm commented that when he had staff with good skills, that staff

would go to a bigger accounting firm or other companies. Therefore, it would be difficult to build a

systematic review that was aligned with CPD. Other partner from another small accounting firm

mentioned that CPD contributed very little to improved skills of his staff. According to him, field

assignment, quality control and review by senior auditors were more useful for the auditors in

improving their audit skills. When their audit skills were improved, salary review and career

progression would follow automatically.

Preferences for CPD activities

Three participants from the Big 4 firms preferred to do CPD online, because they had been

accustomed to do internal trainings and examination online at their firms. Online CPD will also

save a lot of their time and put them in control over the time spent for doing CPD activities.

Unfortunately, the current CPD offerings available were face to face seminar only. Nonetheless, a

participant strongly rejected the idea of having online CPD, claiming that online interaction was not

good enough for practitioners. Most of the participants agreed that face to face seminar was still the



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best CPD activity for them since they needed to meet and interact with other public accountants for

lively discussions, for networking and even for a reunion

One participant mentioned that he preferred to have a case study as a CPD activity. He would like

to have a case study that discussed how to solve a problem concerning a specific accounting

standard. He argued that IICPA did not have much case study as a CPD activity. Rather, IICPA put

too much emphasized on theory or accounting standards. Limited question and answer session was

also a problem for the CPD participants.

Similarly, a participant expressed his disappointment with the current CPD offerings. He argued

that the current CPD format of seminar did not cater for an interactive discussion. In most cases, the

speaker dominated the entire seminar and did not give adequate time for the CPD participants to ask

questions. Although the CPD participants could provide feedbacks at the end of the event by filling

in a feedback form, he did not think the CPD organizer took the CPD participants’ opinion very

seriously since all CPD seminars still had the same format, without any improvements, year after

year.

CPD activities in the last 12 months

During the last 12 months most of the participants had already done their compulsory CPD. One

senior partner at a Big 4 firm admitted that he needed to catch more credit points before the CPD

year end on 15 January. Meanwhile one partner at a medium sized firm stated that the already did

80 credit points of CPD since he found a lot of CPD seminars’ topic were interesting to him.

The participants took various CPD seminars, some of them were introduction to the new law, the

Law of the Republic of Indonesian number 5 of 2011, ethics for public accountants, introduction to

IFRS, standards for entities without public accountability (ETAP). One participant from a small

accounting firm mentioned that he joined CPD seminar regarding local government election.

Satisfaction with the current CPD offerings

One participant argued that he was neither satisfied nor dissatisfied with the current CPD offerings.

In particular, he was not that enthusiastic regarding CPD on IFRS adoption in Indonesia. He

criticised the decision made by the Indonesian government to adopt IFRS as a standard for financial

reporting since the academics and the companies were not ready for it. Teaching fair value and



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professional judgment to undergraduate accounting students would be quite a challenge for the

academics. Furthermore, he regretted that the Indonesian government was too investor-oriented

without thinking about the infrastructures’ readiness to support the IFRS adoption. He also pointed

out that most of his audit clients were too reliant to the auditors, however, based on the new

regulation auditors were not permitted to do book keeping or accounting services for their audit

clients. Auditors must only provide a review on financial report. Therefore, the unpreparedness of

the companies in Indonesia regarding IFRS adoption would only cause problems in the future.

A participant from a small accounting firm in a small city was displeased with the high cost of CPD

and the extra cost he needed to spend for flight tickets and accommodation. Another participant

mentioned that he did not get much knowledge from CPD and was also unhappy about the seminar

format of CPD that catered for large number of participants since the large number only created

noise and distraction for him. A senior partner from a small accounting firm complained that CPD

should permit more time to cover difficult topic such as shariah accounting. The shariah accounting

topic was relatively new for public accountants in Indonesia, hence, IICPA should contemplate

about better design for its delivery.

RQ2: To what extent do CPD offerings sustain and develop the accounting profession in

Indonesia?

CPD drivers:

CPD offerings enhance compliance to the accounting policy regulators’ requirements

All of the participants agreed that CPD offerings enhance their compliance to the accounting policy

regulators’ requirements. In order to keep their practice license and to avoid any penalties, they

needed to comply with requirements from the Public Accountant and Appraisal Supervisory Center

– MoF. In addition to that, if they were auditors for the Indonesia stock exchange and the Central

bank, they needed to comply with certain requirements from the Capital Market and Financial

Institutions Supervision Agency and the Central Bank.

CPD offerings promote improved understanding of ethical requirements

One senior partner at a small accounting firm stated that CPD indeed encouraged better

understanding of ethical requirements since ethics was one of the topics for CPD. Meanwhile, a



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participant pointed out that understanding of ethical requirements could not be promoted by CPD,

rather, it would be promoted by the accounting firms where the public accountants work.

CPD offerings enhance specialist skills

Most of the participants agreed that CPD enhanced their specialist skills. One of the participants

mentioned that he specialised in plantation, agriculture, and media industry. He found that CPD

offerings on his specialisation areas were sufficient and helped him in performing his audit jobs.

CPD offerings engender lifelong learning

One participant argued that on the job trainings were more useful in engendering lifelong learning

than the current CPD offerings. He worked in a Big 4 accounting firm with coaching system,

whereas 70% of learning would come from on the job training, 20% would come from peers and

10% from CPD. He explained that current CPD offerings on IFRS was not useful for him in

performing his audit duties, but his experiences during his secondment at a Big 4 firm headquarter

in London helped him in mastering IFRS. After he returned from London, he still had regular

contact with London to have monthly discussion and to write papers together; and all of that

constituted lifelong learning for him.

CPD purposes:

CPD offerings help keeping up to date

A partner at a Big 4 firm argued that although CPD was meant to help public accountants to keep

up to date with latest developments in accounting and auditing, not all of CPD offerings were

effective. For example, CPD offerings regarding accounting standards would be effective if the

speakers were members of accounting standard boards so that the CPD participants could get first

hand information and they could have a debate on the accounting standards. Moreover, he explained

that adoption of IFRS in Indonesia could not be separated from the global Big 4 accounting firms’

influences. He pointed out a case regarding FRS treatment on land asset in Indonesia. In that case,

the global office of Big 4 firms must decide together whether land asset should be recorded as an

operating lease or financed lease.



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CPD offerings improve and broaden knowledge and skills; that is, CPD is intended to support

future professional development

A participant argued that CPD offerings only helped a little in improving and broadening

knowledge and skills and to support professional development. He relied heavily on the job training

and self-learning to improve his own knowledge and skills to support his future professional

development.

CPD offerings develop personal qualities necessary to execute professional and technical duties

A partner at a medium sized firm mentioned that CPD offerings indeed helped public accountants to

shape their personal quality since auditors were expected to sell their services well to their clients.

Without good personal qualities, it would be difficult to gain trust from the clients.

CPD offerings assist in sustainability of the profession as a whole

A participant strongly agreed that doing CPD would help sustain the profession as a whole.

Auditors needed to know what they were doing, to perform their duties to the best and to maintain

good professional judgment. If auditors possessed all the necessary qualities, their stakeholders

would be satisfied and that would ensure sustainability of the profession. CPD offerings could help

public accountants in acquiring all of the necessary qualities.

Another participant added that all of the public accountants must commit to do their best in

performing their duties as auditors. It was important to maintain their image as a trustworthy

profession in the society in order to sustain the profession as a whole.

Similar to the above participant, a participant argued that without CPD, the development of the

profession as a whole would be decelerated and as a result, the profession would be disappeared.

Eventually, people would have to learn by themselves, with or without CPD. However, CPD was

better than self-learning in terms of systematic learning and updates on new issues or developments

in accounting and auditing.



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8. Discussion

Results of this study demonstrated that keeping abreast of the latest developments and changes in

accounting and auditing was the public accountants’ main motivation in undertaking CPD.

Nonetheless, there was a slight confusion among the CPD participants regarding the accounting

policy regulators’ requirements on CPD credit points. Some of the CPD participants also felt that

there was a subtle monopoly by the IICPA in organizing CPD, by not recognising credit points from

other CPD providers in full. The consequences forced by the accounting policy regulators for not

fulfilling CPD requirements were also not well-communicated to the public accountants.

Furthermore, the CPD participants were aware of the consequences or punishment such as penalty

and fine, however, they did not know when they will be subject to penalty and fines. Therefore, the

accounting policy regulators should take note on that and make all the necessary efforts in order to

help the public accountants aware of their obligation on CPD.

CPD monitoring and audit appeared to be unorganized and weak. The partners needed to report

their CPD in the last 12 months to the Public Accountant and Appraisal Supervisory Center-MoF,

however, not all of the partners knew to whom they needed to report. The CPD participants who

were also registered with the Indonesian Stock Exchange needed to undertake 5 credit points of

CPD concerning stock exchange rules and regulations and they would also need to report their CPD

to the Capital Market and Financial Institutions Supervision Agency. At the time of the interview,

there were four hundred and twelve public accountants listed as auditors in the Indonesian Stock

Exchange. The Agency was also very strict in imposing fine if the partners did not comply with its

regulation regarding CPD and CPD reporting. Furthermore, there were three hundred and ninety

seven public accountants listed as auditors in the Central Bank. The Central Bank did not impose

CPD reporting, however, the public accountants listed must undertake 5 credit points of CPD

regarding financial report for banking and banking regulations. The multi regulations and reporting

of CPD to different government institutions could potentially cause confusion and add more burden

to the CPD participants.

Regarding the main obstacles in undertaking CPD, time and cost seemed to be the main constraints

for the participants. Most of the participants felt fitting in their work schedule and CPD was quiet

difficult. For the CPD cost, all of the participants from local accounting firms found it very

expensive to attend CPD events that were normally organised in big cities like Jakarta and

Surabaya. On the other hand, the CPD partners from the Big 4 and middle-sized accounting firms

did not feel cost was the main obstacle in undertaking CPD since their offices would pay the fees in



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full for them. Nevertheless, the CPD providers would need to consider those main obstacles in

organizing CPD to help the participants in completing their CPD requirements.

The CPD for public accountants were held in seminar format. The CPD participants found the

seminar format was not that useful in accommodating the participants’ needs. The large seminar

format with up to 100 participants seemed to hinder the participants to reap the benefits of CPD

offerings. The IICPA should think about new CPD format that can allow interactive participations

and lively discussions. CPD should also accommodate the discrepancies of trainings given by the

Big 4 firms and non Big 4 firms. The partners from non Big 4 did not have extensive internal

trainings like their counterpart in the Big 4. CPD offerings should also target different levels of staff

in accounting firms. All of the CPD participants ageed that they did not need too much technical

skills anymore. CPD offerings on technical skills should be given to their staff instead. The partners

felt that update on accounting and auditing development and regulations, and soft skills were more

useful to them as leaders in accounting firms. Therefore, CPD events can be arranged according to

the level of needs of the participants. Nonetheless, CPD seemed to be helping senior partners to

keep up with the younger partners in updating their knowledge and skills.

As regards to systematic staff reviews that align CPD planning and action to improved skills, to

salary review and to career progression, all of the participants agreed that the current CPD offerings

were not aligned to systematic staff review in their accounting firms. However, all of the partners

from Big 4 firms agreed that their own internal trainings were indeed aligned with systematic staff

review for improved skills, salary review and career progression. On the contrary, the majority of

middle-sized and small accounting firms did not align their internal trainings with improved skills,

salary review and career progression.

For preferences for CPD activities, some of the partners from Big 4 firms would like to have an

online CPD to be flexible and to help them fitting in CPD with their tight working schedules.

Nevertheless, other participants from Big 4 and non Big 4 woud still like to have face-to-face

seminars for their CPD in order to meet with CPD providers and other public accountants. Although

face-to-face seminars were preferable, the CPD participants would like to have lively and

interactive discussions as well in that seminars, not just one way lecturing from the instructors.

Limited time might cause interactive discussions were difficult during the CPD seminar, however,

IICPA must accommodate the participants’ aspiration considering the efforts they had to put in

attending CPD seminars.



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On the subject of CPD activities, all of the participants took CPD seminars on IFRS and

introduction of the new law regarding public accountants in Indonesia. The CPD participants chose

CPD topic according to their specialisation. Their specialisations were financial institutions,

taxation, media, energy and mining, shariah accounting, and non profit organisations. Some also

took soft skills such as 7 habits, leadership, negotiation, office management and so on.

Satisfaction?

9. Limitations of Study

This study is limited by location, which is Indonesia; limited by time, which is the time of the

interviews (approximately 2011-2012); and limited by event, which are CPD offerings for public

accountants. Also, the findings can not be generalised to other countries due to the unique

characteristics of accounting profession and law and regulations in Indonesia.



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