Whistleblowing Systems in Enterprise Risk Management of Indonesian Public Companies

Abstract

The purpose of this paper is to analyze compliance of Indonesian public companies in conformity with the requirement to disclose whistleblowing systems. The first part of this research is a comparison of the good corporate governance process, enterprise risk management systems, a regulation about fraud, a regulation about whistleblowing systems and regulation about disclosure in Indonesia. Financial Service Authority (Indonesia) require public companies to disclose some factors, including whistleblowing systems in their annual reports. The method used in this research is a hypotheticodeductive method, and secondary data are collected from companies’ annual reports. This study aims to describe whistleblowing systems of companies in the sample. The sample of this research is annual reports of Indonesian public companies in the financial sector. Period of this research is 2012-2014. The results of the research are that: (1) monitoring component of the enterprise risk management is the most important component in reducing fraud risk, (2) there are public companies without whistleblowing systems disclosure in their annual reports, (3) declining of whistleblowing systems disclosure from the period 2013 to 2014.