What is SAK and Functions of SAK

In a business entity, institution, or agency that has a finance department, of course they must carry out a good accounting process. Well, SAK is a financial accounting standard that they should be able to use as a guide in carrying out accounting activities.

Well, on this occasion, we have summarized various things related to SAK specifically for you. For that, read the article about SAK below to the end.


1 What is SAK?
2 Functions of SAK
2.1 1. Shareholders
2.2 2. Investors
2.3 3. Creditors
2.4 4. Suppliers
2.5 5. Government
3 Conclusion

What is the definition of SAK?

Widely used as a guide in making financial reports, Financial Accounting Standards or SAK is a method and also a standard format in presenting financial statement information from a company’s business activities.

In Indonesia, there are at least 4 types of SAK that are made by following the development of the business world. SAK will regulate various things, from creating, and compiling, to the recording process and presenting various accounting data.

This must be done so that all financial reports in all companies can be uniform and can be more easily understood by any party, even by external parties. In Indonesia, the SAK maker is the accounting standards board from the Indonesian Institute of Accountants (IAI).

At first, IAI was initiated by IAI in 1973. A procedure or standard was finally created as the Indonesian Accounting Principles. This principle was created after IAI because it saw the rapid developments in the Indonesian capital market.

Along with the times, this principle has undergone many renewals and name changes, until it was finally established as a Financial Accounting Standard on October 1, 1994. Until 2012, SAK continued to undergo renewal and adjustment of its content standards.

SAK function

The main function of SAK is to facilitate and assist auditors and readers to understand each financial statement entity.

In addition, the function of SAK is to be able to uniform financial accounting standards in all financial reports in all countries. So, it’s not only in our country, because some types of business will definitely develop throughout the country.

In essence, each company accountant is not allowed to make financial reports based on their own tastes.

In addition, SAK also functions for several parties, such as:

1. Shareholder

For shareholders, the function of SAK is to be known clearly. By knowing the information contained in the SAK, they can monitor the development and financial condition of the company. In addition, SAK can also be used as a tool to determine the company’s ability to pay dividends.

2. Investors

Furthermore, the function of SAK is to be clearly known by investors. In this case, the function of SAK is to be able to know and recognize the level of risk and financial condition in a company.

By knowing the SAK in a company, investors will decide whether to invest in the company or not.

3. Creditors

In addition to shareholders and investors, the function of SAK in a company can also be clearly identified by creditors of financial institutions.

In this case, the function of SAK is to be able to measure the company’s ability, especially in repaying loans or repaying debts according to maturity.

In addition, for business capital loan activities, SAK will also be very useful for financial institutions such as banks because it can be used as an important guideline. Moreover, SAK is also very important for them in deciding whether to provide loans to the company or not.

4. Suppliers

SAK is also very much needed by suppliers. Why? Because with the SAK, each supplier can assess whether their sales can be paid correctly according to the due date by the company or not.

At a minimum, SAK can be used as a guideline or illustration for suppliers to assess the credibility of the company to pay its loans.

5. Government

SAK applied by companies is also very useful for the government. Why? Because SAK can be used as a guide for the government to determine policies, the amount of tax collection, and statistics on national income. For that, the state can know which companies have the greatest wealth to the largest debt.

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