29 October 2026 | Remidian and Partners
As companies prepare their annual General Meeting of Shareholders (GMS/RUPS), one question frequently arises: must the financial statements be audited before shareholders approve them?
The answer depends on the company’s circumstances. Indonesian company law does not require every private limited liability company to undergo an external financial audit.
When is an audit mandatory?
Article 68 of Law No. 40 of 2007 on Limited Liability Companies requires an audit by a public accountant where a company:
- Collects and/or manages public funds;
- Issues debt acknowledgment instruments to the public;
- Is a publicly listed company;
- Is a state-owned company in the form of a Persero;
- Has assets and/or business turnover of at least IDR 50 billion; or
- Is required to undergo an audit under other applicable legislation.
Meeting either the asset threshold or the turnover threshold can trigger the requirement. A company should therefore review both figures, together with its business activities and sector-specific obligations.
What does this mean for the annual GMS?
Where an audit is legally required but has not been completed, Article 68 states that the financial statements cannot be ratified by the GMS. The public accountant’s audit report must be submitted in writing to the GMS through the directors.
An audit should therefore be incorporated into the company’s annual reporting timetable before shareholders are asked to ratify the financial statements.
How does this affect corporate tax reporting?
There is also a separate tax filing consequence. Under Article 4(4b) of the General Provisions and Tax Procedures Law, where financial statements have been audited by a public accountant but are not attached to the annual tax return, the return is treated as incomplete and unclear and consequently deemed not submitted.
Companies should coordinate their audit, annual GMS, and tax filing schedules to ensure the required documents are available for each process.
What should your company do now?
Review the applicable audit criteria, check any additional sector rules or requirements in the articles of association, and coordinate early with your accountant, public accountant, and legal adviser.
Need assistance reviewing your annual GMS and corporate compliance requirements?
Contact Remidian and Partners to discuss the legal requirements applicable to your company.
Email: info@remidian-bahureksa.com
Website: www.remidian-bahureksa.com
This article explains existing legal requirements; it does not announce a new audit threshold. It provides general information and does not constitute legal or tax advice for any particular company.