INTRODUCTION
Fixed asset accounting has been regulated
in the Statement of Government Accounting Standards (PSAP) Number 7 (PSAP 07),
from attachment I Government Regulation Number 71 of 2010 (Indonesia,
2010). PSAP 07 provides guidelines for the
government in recognizing, classifying, measuring, and presenting and
disclosing fixed assets based on events that occur, such as acquiring fixed
assets for the first time, maintaining fixed assets, exchanging fixed assets,
acquiring assets from grants/donations, and depreciation. fixed assets (Mustaqim
& Pardana, 2022).
The Food Crops
Agriculture and Horticulture Service of South Sumatra Province, which is part
of the government, is obliged to follow government policies (Abidin,
2015). And as an accounting entity for government
units, budget users/ goods users, the Agriculture, Food Crops and Horticulture
Service of South Sumatra Province is required to carry out accounting and
prepare financial reports to be reported to reporting entities that are guided
by the Regulation of the Minister of Home Affairs Number 17 of 2007 concerning
Technical Guidelines for Regional Property Management.
South Sumatra is a province where most of its
income comes from agriculture (Efendy
& Hutapea, 2010). The use of Fixed Assets at the Food
Crops Agriculture and Horticulture Service of South Sumatra Province is very
important. Some of the fixed assets here are Agricultural Equipment and
Laboratory Equipment which are used to assist farmers in seeding. Such tools
have a limited useful life. Some of the tools may have expired but they may
still be recorded in the Balance Sheet of the Agriculture, Food Crops and
Horticulture Office of South Sumatra Province. Here the researcher is
interested in conducting research on the accounting treatment of fixed assets
at the Food Crops Agriculture and Horticulture Service of South Sumatra
Province because fixed assets always have several problems in recording,
deleting, depreciating and disclosing, which are in accordance with PP No. 71
of 2010 which is regulated in PSAP No. 07 of 2010 (Ahmad,
2016; Merina et al., 2019). Researchers are interested
in evaluating whether the Food Crops Agriculture and Horticulture Office of South
Sumatra Province is in accordance with PP No. 71 which has been regulated in
PSAP No. 7 of 2010, looking at the number of fixed assets in the Food Crops and
Horticulture Service of South Sumatra Province in 2015 amounting to IDR. 106.939.703.147
Public sector accounting is a technical
mechanism and accounting analysis that is applied to the management of public
funds in high state institutions and their subordinate departments, local
governments, State Owned Enterprise, Municipally Owned Corporation, NGOs, and
social foundations, as well as in public and private sector cooperation
projects (Bastian,
2010; Pebrianti, 2021). From this definition, it
can be concluded that public sector accounting implies a process of collecting,
processing, and communicating information that is useful for decision makers
and for assessing organizational performance. Because the information needs in
the public sector are more varied, information is not limited to financial
information generated from an organization's accounting system (Kawatu,
2019). Non-monetary information such as the size of
community service output must also be considered in making decisions.
Statement of Government Accounting
Standards No. 07 of 2010 states that fixed assets in the government are fixed
assets are tangible assets that have a useful life of more than 12 (twelve)
months to be used or intended to be used in government activities or utilized
by the general public (Masipuang
et al., 2015; Moray et al., 2021).
The accounting policy used in the Food Crops
Agriculture and Horticulture Service of South Sumatra Province is Government
Regulation no. 71 of 2010 in which the Treatment of Fixed Assets is Regulated
in Appendix I, namely PSAP No. 7 of 2010. PSAP No. 7 of 2010 provides
guidelines for the government in recognizing, classifying, measuring, and
disclosing fixed assets based on events that occur, such as acquiring fixed
assets for the first time, maintaining fixed assets, exchanging fixed assets,
acquiring assets from grants/donations, and depreciating assets (Princess
et al., 2016).
Accounting Policies are the specific
principles, foundations, conventions, rules and practices adopted by a
reporting entity in the preparation and presentation of financial statements (Apriyani,
2010). Local Government Accounting Policies are the
principles, foundations, conventions, rules and specific practices selected by
local governments as guidelines in preparing and presenting local government
financial reports to meet the needs of users of financial reports in order to
increase comparability financial reports against the budget, between periods
and between entities (Sulaiman
& Abdullah, 2016).
Classification of Fixed Assets the
Governmental Accounting Standards Committee stated in the Statement of
Governmental Accounting Standards No. 07 (2010) classifies fixed assets as
follows: (a) Land; (b) Equipment and Machinery; (c) Buildings and Structures; (d)
Roads, Irrigation, and Networks; (e) Other Fixed Assets; and (f) Construction
in Progress.
Government Accounting Standard Statement
No. 07 (2010) states that in order to be recognized as a fixed asset, an asset
meets the criteria for being tangible, has a useful life of more than 12
(twelve) months, the cost of acquiring an asset can be measured reliably, is
not intended to be sold in the entity's normal operations, and is acquired or
built for the purpose of being used. A fixed asset will be recognized if future
economic benefits will flow to the entity concerned (Pradana
& Herawati, 2015). In addition, an asset can
be recognized as belonging to an entity if there is evidence that there has
been a transfer of ownership rights supported by legal evidence (Aring
et al., 2020).
Government Accounting Standard Statement
No. 07 (2010) states that the acquisition cost of a fixed asset “the purchase
price or construction, including import duties and any costs directly
attributable in bringing the asset to a working condition for intended use”. Fixed
assets should initially be measured at cost which is a reflection of market
value (Bastian,
2010). The cost of a fixed asset comprises its
purchase price, including import duties and input VAT and any direct
distributable costs of bringing the asset to a working condition for its
intended use.
Measurement of Fixed Assets Statement of
Governmental Accounting Standards No. 07 of 2010 stated that “Fixed assets are
valued at cost. If the valuation of fixed assets using acquisition cost is not
possible, then the value of fixed assets is based on the fair value at the time
of acquisition. If the fixed assets are obtained by way of self-management.
From Measurement of Fixed Assets Statement of Governmental Accounting Standards
No. 07 (2010: 173) it can be stated that "the cost of acquiring fixed
assets includes direct costs for labor, raw materials, and indirect costs
including planning and monitoring costs, equipment, electricity, equipment
rental, and all other costs incurred regarding the construction of fixed
assets.
Fixed Asset Disclosure Effective
financial reporting function, all relevant information must be presented in an
unbiased, understandable and timely manner (Savitri,
2016). In this case, financial reports must provide
the complete information needed by users. Regarding the disclosure of fixed
assets, the Statement of Governmental Accounting Standards (2010) states in
stating that "Financial reports must disclose for each type of fixed asset
as the basis for valuation used to determine the carrying amount (carrying
amount), reconciliation of the carrying amount at the beginning and end of the
period which shows additions, disposals, accumulated depreciation and changes
in value, if any and mutations of other fixed assets. Depreciation information,
including depreciation value, depreciation method used, useful life or
depreciation rate used, gross carrying amount and accumulated depreciation at
the beginning and end of the period.
The objectives to be achieved in this research
are; (1) to evaluate and assess the
accounting treatment of fixed assets at the Food Crops Agriculture and Horticulture
Service of South Sumatra Province, (2) to examine
whether the accounting treatment of the fixed assets of the Agriculture, Food
Crops and Horticulture Service of South Sumatra Province is in accordance with
PSAP No. 7 of 2010
METHOD
This study uses a qualitative approach
method. The research location is at the Food Crops and Horticulture Service of
South Sumatra Province at Jalan Captain Tendean No. 1056, South Sumatra. The
object of research is the scope of this study is limited to the treatment of
fixed assets in the financial reports of the Food Crops and Horticulture
Service of South Sumatra Province according to PSAP No. 7 of 2010. The data
sources used in this study are primary and secondary data. Primary data was
obtained through direct observation, interviews with accounting department
staff in the fixed assets division who have the authority to provide data
relating to the treatment of fixed assets. The data analysis method used in
this research is descriptive qualitative.
RESULTS AND DISCUSSION
Evaluation
of Recognition of Fixed Assets at the Food Crops Agriculture and Horticulture
of South Sumatra Province
Table 1.
Fixed Assets Recognition
Evaluation
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture and
Horticulture of South Sumatra Province
|
Information
|
|
1
|
The
useful life is more than 12 (twelve) months.
|
Recognition
of fixed assets at the Food Crops and Horticulture Service of South Sumatra
Province is recognized if the asset has a useful life of more than 12
(twelve) months
|
Suitable
|
|
2
|
The
cost can be measured reliably
|
Acquisition
costs charged to fixed assets at the Food Crops Agriculture and Horticulture
Service of South Sumatra Province can be measured reliably
|
Suitable
|
|
3
|
Not
intended for sale in the normal course of the entity's operations
|
All
fixed assets of the Food Crops and Horticulture Service of South Sumatra
Province purchased or obtained from grants/donations are used for activities
to fulfill the main tasks and functions of the entity.
|
Suitable
|
|
4
|
Acquired
or built with the intention of being used
|
All
construction buildings built by the Food Crops Agriculture and Horticulture
Service of South Sumatra Province are used for the benefit of the entity
|
Suitable
|
Evaluation
of Measurement of Fixed Assets by the Food Crops Agriculture and Horticulture
of South Sumatra Province
Table 2. Fixed
Assets Measurement Evaluation
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture and
Horticulture of South Sumatra Province
|
Information
|
|
1
|
Fixed assets are valued at cost. If the
valuation of fixed assets at acquisition cost is not possible, then the fixed
assets are based on the fair value at the time of acquisition
|
Fixed assets at the Food Crops and
Horticulture Service of South Sumatra Province are valued and charged
directly when the assets are acquired.
|
Suitable
|
|
2
|
The cost of a fixed asset comprises the
purchase price or construction, including import duties and any costs that
are directly attributable
|
Fixed assets at the Food Crops and Horticulture
Service of South Sumatra Province consist of the purchase price plus all
acquisition costs including import duties. Meanwhile, for self-built assets,
the recording is based on all costs incurred in connection with the
construction of the relevant assets until the assets are still ready for use
|
Suitable
|
|
3
|
Fixed assets acquired by donation must be
recorded at fair value at acquisition
|
Fixed assets at the Food Crops and
Horticulture Service of South Sumatra Province obtained from donations or
grants, are recorded using the acquisition value
|
Suitable
|
Expenditure Evaluation After Acquisition of
Fixed Assets at the Food Crops Agriculture and Horticulture of South Sumatra
Province
Table 3. Expenditure
Evaluation After Acquisition of Fixed Assets
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture and
Horticulture of South Sumatra Province
|
Information
|
|
1
|
Expenditure after the initial acquisition of
a fixed asset that extends its useful life in the future in the form of increasing
capacity, increasing work standards, or quality of production is added to the
amount of the related asset
|
Some assets in the form of harvesting
equipment lent to farmer groups by the Food Crops and Horticulture Service of
South Sumatra Province, maintenance costs and costs for increasing production
capacity are borne by the farmer groups so that the entity does not record
expenses after acquisition
|
Not Suitable
|
|
2
|
Expenditures for the repair or maintenance
of fixed assets to maintain the future economic benefits expected of the
original performance standards for an asset, are recognized in profit or loss
as incurred.
|
At the Food Crops Agriculture and
Horticulture Office of the Province of South Sumatra, expenses for routine
maintenance that provide benefits in the current year are recognized directly
as operating expenses in the current year.
|
Suitable
|
Evaluation
of Depreciation of Fixed Assets at the Food Crops Agriculture and Horticulture
of South Sumatra Province
Table 4 Evaluation of
Depreciation of Fixed Assets
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture and
Horticulture of South Sumatra Province
|
Information
|
|
1
|
Each part of fixed assets that has a
significant acquisition cost to the total cost of all fixed assets must be
depreciated separately
|
Each fixed asset in the Agriculture, Food
Crops and Horticulture Service of South Sumatra Province experiences
depreciation by dividing the categories of fixed assets through their useful
lives, so that depreciation will occur separately according to the type of
fixed assets
|
Suitable
|
|
2
|
The depreciable amount of an asset is
allocated systematically over its useful life
|
Depreciation at the Food Crops Agriculture
and Horticulture Service of South Sumatra Province is carried out based on
the useful life of the fixed assets concerned.
|
Suitable
|
|
3
|
Methods of depreciation that are depreciated
systematically over their useful lives include: 1. Straight-line method, 2.
Declining balance method, 3. Total units method
|
The Food Crops Agriculture and Horticulture
Service of South Sumatra Province uses an accounting application set by the
local government to calculate depreciation so they do not know for sure which
depreciation method to use
|
Not Suitable
|
Types
of Fixed Assets and Useful Lifespan Food Crops Agriculture and Horticulture of
South Sumatra Province
Table 5. Types of Fixed Assets
|
No
|
Types of Fixed Assets
|
Usage time
|
|
1
|
Equipment
and Machinery
|
|
|
Huge
tools
|
10 years
|
|
Transportation
tools
|
10 years
|
|
Workshop
tools and measuring tools
|
4 years
|
|
Farming
tools
|
4 years
|
|
Office
and household tools
|
4 years
|
|
Studio
tools and communication
|
4 years
|
|
Medical
tools
|
8 years
|
|
Laboratory
Equipment
|
8 years
|
|
Weapons/
security tools
|
4 years
|
|
2
|
Buildings
|
50 years
|
|
3
|
Roads,
Irrigation and Networks
|
|
|
Road
|
10 years
|
|
Irrigation
|
30 years
|
|
Network
|
30 years
|
|
4
|
Other
fixed assets
|
5 years
|
Evaluation
of Termination and Disposal of Fixed Assets at the Food Crops Agriculture and
Horticulture of South Sumatra Province
Table 6. Evaluation of
Termination and Disposal of Fixed Assets
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture and
Horticulture Office of South Sumatra Province
|
Information
|
|
1
|
A fixed asset is eliminated from the balance
sheet when disposed of or when the asset is permanently retired from use and
no future economic benefits are available
|
Fixed assets that are no longer used in the
operations of the South Sumatra Province Food Crops and Horticulture Service
will be written off on the balance sheet, and physically destroyed
|
Suitable
|
|
2
|
Fixed assets that are permanently retired or
disposed of must be eliminated from the balance sheet and disclosed in the
notes to the financial statements
|
Fixed assets that have passed their useful
life and are no longer used can be disposed of, while the method of disposal
of fixed assets is carried out by the Food Crops and Horticulture Service for
South Sumatra Province, namely by physically destroying them or by auctioning
them.
|
Suitable
|
Evaluation of Presentation and Disclosure of
Fixed Assets by the Food Crops Agriculture and Horticulture of South Sumatra
Province
Table 7. Evaluation of
Presentation and Disclosure of Fixed Assets
|
No
|
PSAP No. 07 of 2010
|
Food Crops Agriculture
and Horticulture Office of South Sumatra Province
|
Information
|
|
1
|
The financial statements must disclose the
valuation basis used to determine the carrying amount
|
Presentation of Fixed Assets at the Food
Crops Agriculture and Horticulture Service of South Sumatra Province is
stated at book value, namely the acquisition cost minus accumulated
depreciation.
|
Suitable
|
|
2
|
Any type of fixed assets such as land;
buildings and buildings; equipment and machines; roads and irrigation; as
well as other fixed assets must be stated in a separate or detailed balance
sheet in the notes to the financial statements
|
The Food Crops Agriculture and Horticulture
Office of South Sumatra Province records details of each type of fixed asset
using the Goods Inventory Card
|
Suitable
|
|
3
|
Reconciliation of the carrying amount at the
beginning and end of the period showing the addition of disposals, and
impairment if there is a mutation of fixed assets
|
Calculations are made at the end of the year
which are included in the Recapitulation Report of Goods to the Balance Sheet
by the Food Crops Agriculture and Horticulture Service of South Sumatra
Province
|
Suitable
|
|
4
|
Depreciation information discloses: 1.
Depreciation value; 2 Depreciation method used; 3. The useful life or
depreciation rate used; 4. Gross carrying amount and accumulated depreciation
at the beginning and end of the period
|
The Food Crops Agriculture and Horticulture
Service of South Sumatra Province uses an application that directly
calculates the depreciation of fixed assets, but does not explain what method
is used to depreciate these fixed assets.
|
Not Suitable
|
CONCLUSION
Based on the results of the
research and discussion that have been put forward it can conclude that: (1) the
recognition of fixed assets at the Food Crops Agriculture and Horticulture
Service of South Sumatra Province is in accordance with PSAP No. 07 of 2010,
(2) the measurement of fixed assets by the Food Crops Agriculture and
Horticulture Service of South Sumatra Province is in accordance with PSAP No.
07 of 2010, (3) expenditures after the acquisition of fixed assets by the Food
Crops and Horticulture Service of South Sumatra Province as a whole are almost
in accordance with PSAP No. 07 of 2010. The inappropriate treatment of spending
on fixed assets is on fixed assets whose user authority is given to farmer
groups as borrowers. The Food Crops and Horticulture Service of South Sumatra
Province does not record expenses related to fixed assets lent by farmer
groups, whereas if farmer groups incur costs to increase production capacity,
they should be recorded by the Food Crops and Horticulture Service of South
Sumatra Province as the owner of the assets. Because these costs are directly
related to these fixed assets, this is not in accordance with PSAP No. 07 of
2010, (4) the depreciation of fixed assets in the Agriculture, Food Crops and Horticulture
Service of South Sumatra Province is almost in accordance with PSAP No. 07 of
2010. What makes the treatment of fixed assets incompatible with the Food Crops
and Horticulture Service of South Sumatra Province due to the depreciation
method in the Food Crops and Horticulture Service of South Sumatra Province
uses an application that has been determined by the Regional Government, the
application does not describe what method is used to calculate the depreciation
of its fixed assets which has been recommended by PSAP No. 07 of 2010, (5) termination
and disposal of fixed assets at the Food Crops Agriculture and Horticulture
Service of South Sumatra Province is in accordance with PSAP No. 07 of 2010,
and (6) the presentation and disclosure of fixed assets at the Food Crops
Agriculture and Horticulture Service of South Sumatra Province is almost in
accordance with PSAP No. 07 of 2010. It's just that there is incomplete
information about the method of depreciation which makes the treatment of fixed
assets at the Food Crops Agriculture and Horticulture Service of South Sumatra
Province not fully in accordance with PSAP No.07 of 2010.
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Accounting
Treatment Evaluation of Fixed Assets under PSAP No.7 at Ministry of Food Crops
and Horticulture