Indonesia report the first case of COVID-19 was in 9 March 2020 and identified 2 persons infected. Afterward it spread widely in 34 provinces across the country. On 20 April 2020, Indonesia reported 6,760 people positively infected. Jakarta is the worst area with 85% of infected located. Therefore, to avoid serious problem in the provinces, City administrator start to enact Large-Scale Social Restriction (semi-lockdown) in Jakarta on 13 April 2020 onward. The restriction demand offices, markets and schools to be close causing business activities very limited or at lowest level. That make difficulties to connect with customers, clients, supplier and business relation. Since Jakarta taking 90% of country’s economy, the social restriction inflicts economic impact nationwide. Therefore, Central Government has issued several policies and rules to anticipate economic downturn more severe.
Tax Measures.
Government agree to postpone deadline the submission of individual income tax return to 30 April 2020 and allow corporates to submit minimum forms. Government reduce tax rate to 22% (previously 25%) for fiscal 2020 and 2021. Furthermore, Government reduce tax rate to 20% on fiscal year 2022. Starting March, classified Companies are allowed not to withhold payroll tax to their employees. This is to help employees to maintain their basic buying power during the restriction period. The ruling will be effective until further notice. Government relaxing the import for numbers of classified business. The relaxation in kind of postponing the import tax (Article 22) which usually paid during importing goods at ports and customs. This policy is to maintain productivity level by giving chance for companies to acquire raw materials for production.
Social Security
Central Government is urging Provincial and Cities Administration to utilize budget to secure locals from the economic impact of the outbreak. The Administration provide Food-Card for low incomers which could be exchanged to staple food at market or convenience stores. Non-government and charity organizations provide free meals for the needy households. Government also issue Pre-Work Card for unemployed workers caused by the restriction or business downturn. The Pre-Work Card is useful to access training and available job information on local area. Pre-Work Card also contain grant in a certain amount from the Government.
Employee and Employers
Companies advise employees to working from home (WFH) although not all kind of working activities could be done from home. However, WFH currently are most effective way to prevent healthy people to be infected. Maintain the healthy employees are also important so company able to keep running with minimum support. Companies provided vitamins, face masks and sanitizer to employees and staffs who still working at office. For staff who are not fit, the Firm provides insurance to bear portion of the hospitalization expenses. Employers select which activities which can be done from home or at office. If working at office are required, staffs must keep social distance at least 1 meter away each other. So, this will require less staffs able to go to offices at the same time. Manufacturers taking same procedures. Workers and labours are instructed to use face mask and keep distance. It means changing layout factory, less working hours, or rearranging the working-shift. This strategy hopefully helpful for companies to deliver goods and services during the restriction.
Business Support
Companies are trying to be more innovative by installing new facility for working remotely. Spending on information technology infrastructures are increasing during the restriction period. Business travel are restricted, and any unessential business trip is temporarily cancelled or rescheduled. Constant communication is essential key at this period. Discussing with clients, investors, bankers and other professionals are necessary to access the situation day-by-day. It is important to share any valuable information to Regularly blasting emails which contain update information of government regulation, policies, procedures, analysis of current situation impact to business and economy. This is just to let clients and business partners that the companies are still on the business and along side with the clients, we are together going through the crisis.
Accounting and Audit
Standard setter advises companies to immediately measures the effect of COVID-19 outbreak to its financial statement. However, companies still require to carefully review whether an adjustment to financial statements are necessary. Several audit procedures, like stock taking, are unable to be performed during the restriction. Auditors advised to use alternative audit procedures Valuation, estimation and disclosure issues become paramount in a financial crisis. Obtaining and assessing enough appropriate evidence to support loan loss provisions, going concern assessments, impairment, onerous contracts provisions, breach of covenants and critical estimates will be difficult. In addition, subsequent event, risks and uncertainties disclosures will in most cases be needed, together with the quantitative disclosures of estimation or assumption uncertainty. We anticipate that many audits and interim reviews will become much more complex and challenging. However, this outbreak presents an opportunity for the audit profession to reflect on the recognition of its public interest’s responsibility, and to demonstrate its independence and resilience to external factors. Auditors should continue to apply the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.Click here to learn more.
