History of Accounting in Indonesia and Its Development

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The ability to understand and apply accounting principles is a valuable skill to have. The history of accounting in Indonesia is intertwined with the history of the country's rise to economic prominence.

A financial management system that uses an accounting system is easy to do because there is already methodical preparation. The following is the history of accounting in Indonesia since it was known by the general public until now.

History of Accounting in Indonesia

Luca Pacioli's work "Summa de Arithmatica, Geometrica Proportioni et Proportionalita" widely introduced the concept of accounting to the world. Luca Pacioli begins to introduce a double book system of debits and credits.

Luca Pacioli's accounting system was first devised to assist the Italian system for documenting traders. Only after the whole community, including Indonesia, became familiar with the accounting system, did the accounting system develop.

The accounting system first appeared in Indonesia starting around 1642. There is an accounting delivery system that has been used by traditional cultures since the beginning. The resulting records are used to determine trade profits and losses.

History of Accounting in Indonesia

In terms of recording merchandise, traditional culture in Indonesia follows the example of many foreign traders in Indonesia. The nations that implemented the recording system for the first time in Indonesia were the Netherlands and Portugal.

The availability of documents dating from 1747 indicates that accounting was used in Indonesia. However, the accounting system that was in effect at that time did not cover everything and was based solely on self-interest.

Subsequent developments in accounting were marked by the establishment of the Indonesian Accounting Association in 1957. The establishment of IAI was intended to provide a platform for and improve knowledge of accounting education in Indonesia.

Higher education contributes to the science of accounting as a scientific discipline. Financial reporting is another area that has seen a growing number of organizations using accounting systems, from small and medium enterprises (SMEs) to large corporations.

Development of Accounting in Indonesia

Each country has a unique accounting system which is achieved by simplicity of record keeping. The accounting system used by the United States is Anglo Saxon, while the Netherlands adheres to continental.

At first, Indonesia adopted a continental system, because at that time it was under the rule of the Dutch government during the colonial period. This continental system assumes that the bookkeeping process is part of the science of accounting.

Many countries have adopted the Anglo-Saxon accounting system due to scientific developments. This is because Anglo-Saxon is considered easier to implement because it is simpler when compared to other systems.

 In the Anglo-Saxon accounting system, there would be recording of various transactions encountered in commerce. This is considered to make it easier for users because it is deemed unnecessary to separate bookkeeping and accounting systems.

The development of the accounting system in Indonesia began with the application of bookkeeping in various organizations. In addition, an inspection system was also built to manage funds which were viewed through the accounting system.

Indonesia is also experiencing changes in the use of the accounting system as a whole by considering the simplicity of use. The following is an overview of the development of the accounting system in Indonesia.

Opening of the Amphioen Societeit Company in 1747

The development of accounting in Indonesia can be traced back to the Dutch colonial era, particularly in 1642. However, it was not until 1747 that a company in Jakarta discovered accounting techniques in Indonesia.

In 1747, the accounting system in Indonesia was highlighted by the invention of the bookkeeping system at the Amphioen Societeit company in Jakarta. The company uses a double entry accounting system created during the Dutch colonial period.

New accounting developed significantly in Indonesia after the mandatory planting regulations were abolished in 1870. This spurred more and more Dutch investors to establish and expand companies in Indonesia.

Only Dutch companies used the full accounting system during the colonial period. Indonesian companies have not had experience with structured accounting systems, although double-entry bookkeeping is becoming more common.

Double entry, or double entry, is an accounting system presented by Luca Pacioli in his book. This recording system involved recording using the debit and credit sides because companies at that time needed it to produce balance sheets and income statements.

Opening of the Amphioen Societeit Company in 1747

Companies that handle payables and receivables use a double entry system to record their transactions. Every transaction in the organization is recorded on the debit and credit sides, so as to form a balance on both.

Double entry accounting uses the basic premise that total assets are the total amount of liabilities plus owner's equity. Expenses and incentives are two outcomes of transactions that are recorded using a double entry system.

Double entry recording will be used as a basis for preparing financial reports on an ongoing basis for one period. Every transaction within the company will be documented in the general ledger, trial balance, and income statement at the end of the accounting period.

Because of the various benefits obtained for company accounting, double entry was chosen as the recording system at that time. The double entry system will assist the company in recording the company's financial transactions in full.

The benefit of using the double entry system in Dutch companies is to find errors. Financial calculations using a double entry recording system will produce reliable results.

History of Auditing in Indonesia in 1907

The subsequent history of the development of accounting in Indonesia is the existence of auditing procedures in 1907. Indonesia began to recognize the auditing system, or examination of financial accounts, as well as being used as a means of control.

In 1907, as soon as Van Schagen, a member of the NIVA, arrived in Indonesia, this accounting auditing role was created. The arrival of Van Schagen was also the beginning of the establishment of state accounting services in 1915.

The first formal establishment of a public accounting firm in Indonesia was in 1918 by Frese & Hogeweg. In order to maintain control over the Indonesian financial system, Dutch companies were given access to these public accounting services.

Although introduced in 1907, audit accounting in Indonesia could not be used by Indonesians until the end of colonialism. At first, the accounting system in Indonesia was in accordance with the bookkeeping used by the Dutch government at that time.

The continental system used by the Dutch at that time was not involved in accounting but only record keeping. Because accounting is a more comprehensive and methodical science of study, the recording of financial transactions is more regular.

Development of Accounting in Indonesia

Bookkeeping and accounting have essential differences that need to be recognized so that errors do not occur in their use. Accounting has a wide reach, but bookkeeping is only one aspect of the scientific approach.

The job of a bookkeeper is to track and classify all the company's financial transactions to provide reports. Bookkeeping activities are included in the accounting method because the recording is based on company data according to actual events.

The definition of accounting itself is more basic, namely analyzing and interpreting information based on data that actually happened. The results of the data analysis will be used for future purposes, not just in summarizing efforts.

Indonesia began to experience a shortage of accountants during the Japanese colonial period, because previously the post was almost solely occupied by the Dutch. This inspired Mr. Slamet's suggestion to create an accounting course to replace the vacant post.

History of the Anglo Saxon System in Indonesia

Continental-based bookkeeping systems began to be abandoned along with the development of accounting science in Indonesia. Many organizations started using an Anglo-Saxon based accounting system borrowed from America for many reasons.

The initial element that prompted the adoption of the Anglo-Saxon accounting system was the West Irian clash in 1957. This incident prompted all students studying in the Netherlands to be transferred back to Indonesia.

Except for the Netherlands, students who have been expelled have the option of continuing their education in various other countries, including the United States. One area of expertise received by students studying in America is accounting.

Students who have completed their education in America returned to Indonesia to start promoting an Anglo-Saxon based accounting system. This accounting system began to be adopted in Indonesia until it finally dominated.

The use of the Anglo-Saxon accounting system which began to dominate began to cause the abandonment of continental accounting. Anglo-Saxon is considered a more thorough system, so that the internal demands of the organization can still be met.

The second thing that drove the development of the Anglo-Saxon system was the beneficial effect of foreign investment. These foreigners who spent their money created companies in Indonesia which experienced growth, so the Anglo-Saxon system was very important.

History of Auditing in Indonesia in 1907

In addition, the development of Indonesian accounting continues to grow rapidly, as shown by the many stakeholders who pay attention. Businesses around the world pay close attention to accounting for the power of its interpretation in making financial choices.

Accounting information is even used as a basis for current decision making. In addition, accounting data is useful for gaining insight into current issues for various parties. Financial reports based on accounting systems have the potential to be used internationally.

Development of Accounting Education in Indonesia

Since the end of Dutch colonial rule in Indonesia, accounting has gained traction as a science of study. Opportunities for local accountants to occupy jobs began to open around 1942-1925. One of those who got the opportunity was Prof.

Abutari. At that time, efforts to nationalize Dutch-owned Indonesian companies were increasing. This led to a decline in the accounting staff in Indonesia, especially when many Dutch citizens returned to their country in 1958.

Finally, the American Anglo-Saxon system was imported by students and used in the Indonesian financial accounting system. Anglo-Saxon was easy to implement because the Netherlands didn't have to make many changes to its continental system.

Finally, accounting became a science taught in a number of colleges and universities. When the University of Indonesia opened an accounting department in 1952, it was the first of many.

When accounting majors were first created at the University of North Sumatra, Padjadjaran University, and Airlangga University in 1960, there were only three in all schools. Four years later, Gadjah Mada University established an accounting department.

In 1990, a specialist college was established, entitled the Institute of Finance at the State College of Accountancy, or better known as STAN. Since then, many universities have developed accounting majors with different curricula.

Indonesian accountants will benefit from expanding accounting majors across higher education institutions in the country. This is due to the fact that, as businesses grow and society becomes more aware of developing a sound financial system, the need for accountants in Indonesia is increasing.

In addition, there are severe problems with the application of accounting knowledge in Indonesia. This led to the formation of special provisions in accounting so that financial reports can be accounted for. Several accounting scandals have attracted the attention of various individuals.

Events in 1990 were the first sign of problems with Indonesian accounting and financial reporting. This causes investor behavior to shift due to the amount of trust that was influential at that time.

Financial reporting problems put administration under pressure. This means the government must work quickly to improve the quality of financial reports. Investor confidence will recover, and their money will be reinvested as a result of the change.

Development of Accounting Education in Indonesia

The next issue that sparked the protests was the Bank Ambassador affair. It wasn't until 1990 that Bank Duta became well-known in Indonesia, although the cases he was involved in at the time were somewhat disturbing. At that time, Bank Duta was deemed to have neglected to publish its loss report.

During the audit process, Bank Duta's dishonesty was exposed, and word quickly spread. Bank Duta failed to fully disclose to the auditor all of its financial facts relating to the loss it suffered.

Due to the problems that arose at Bank Duta, the auditors were forced to provide an unqualified opinion on the company. This caused the government to start ordering to improve financial reports.

The aim of improving the financial statements is to maintain the stability of long-term investment flows. This demands extra caution, especially amidst the depreciation of the rupiah. In 1997-1998, when the value of the rupiah declined, various financial difficulties sought solutions.

Furthermore, the Indonesian government was forced to vigorously improve the quality of financial reporting amid the collapse of the rupiah in 1998. That year also saw a breakdown in the financial system, numerous bankruptcies in many corporate sectors, soaring inflation, and unemployment.

The Indonesian government chose to engage with the IMF to address these financial issues. As is happening now, difficulties in financial reporting still arise due to inadequate implementation of the accounting system and the low quality of report transparency.

The emergence of various financial reporting challenges has prompted the adoption of several laws related to accounting information systems. The first rule enforced in Indonesia was the introduction of Financial Accounting Standards in 1994.

The Accounting Development Project is a joint effort between the government and the World Bank. The goal of this development project is to teach accountants and legislate. The Limited Liability Company Act was amended in 1995 to incorporate a number of new accounting standards.

In 1995, the government also integrated accounting and financial reporting restrictions into the Capital Markets Act. Depending on the nature of their operations, various organizations may use these different accounting rules.


Below is an example of a question and answer sentence regarding the history of accounting in Indonesia, as follows:

Who popularized the double accounting system and what was his opinion?

The double accounting system was introduced by Luca Pacioli, this system was first used by him. A Franciscan friar, mathematician, and educator, Fra Luca Bartolomeo de Pacioli (1445-1517) was an Italian.


In 1494, accountancy first recognized as a legitimate field of study. Lucas Pacioli, a mathematician, was the first to introduce accounting to the world.

Where Lucas was able to use the pair accounting model at that time to record financial transactions in a more systematic way.

Thus the article about the history of accounting in Indonesia, I hope the article above can be helpful and useful for all of you.

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