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Intangible Assets, State Financial Management Challenge in the Digital Era 4.0

Jakarta, 25/06/2019 MoF - Vice Minister of Finance Mardiasmo who is also Chair of the National Management Board of the Indonesian Accountants Association (IAI) pointed out the dynamics of business model changes in the digital era 4.0 which are no longer able to be captured thoroughly by accounting report standards today.

This was conveyed by the Vice Minister of Finance at the State Financial Management Dialogue with the theme "Increasing Efficiency of State Financial Management in the Digital Era 4.0 Towards Golden Indonesia" at Balai Kartini, Jakarta, Tuesday (25/06).

Business valuations in the digital era currently emphasize the advantages of intangible investment and innovation assets (such as investments in human resources / HR) compared to valuation of tangible assets (eg physical assets such as buildings, machinery).

"The direction of digital era is going to less assets but very has high values. So, there are no longer big factories but if necessary small companies can control the world (digital companies-intangible investments). The era is shifting from tangible to intangible and innovation," he added .

Furthermore, The Vice Minister of Finance stated that the current accounting report standard still measures investment in HR as a burden / liability not as an institutional asset. This can result in mislead information (error reading information) on the valuation of a company's assets.

"Including intangibles is human capital. We have not included human capital to date as asset capitalization. Some are still operating expenses or costs. Even though it clearly contributes to the balance sheet. (However) it does not appear on the balance sheet. We have to fix this together," concluded Vice Minister of Finance. (btr/hpy/nr)