How to cite:

Linda Lomi Ga, Yohana Febiani Angi, Siprianus G. Tefa (2021).

Implementation Analysis of Isak 35 In Financial Reporting of The

GMIT Church in Indonesia. Journal Eduvest. 1(12): 1573-1578

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2775-3727

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Eduvest – Journal of Universal Studies

Volume 1 Number 12, December 2021

p- ISSN 2775-3735 e-ISSN 2775-3727

IMPLEMENTATION ANALYSIS OF ISAK 35 IN FINANCIAL

REPORTING OF THE GMIT CHURCH IN INDONESIA

Linda Lomi Ga, Yohana Febiani Angi, Siprianus G. Tefa

Nusa Cendana University, Indonesia

E-mail: [email protected], [email protected],

[email protected]

ARTICLE INFO ABSTRACT

Received:

November, 26

2021

Revised:

December, 17

2021

Approved:

December, 19

2021

The church as a non-profit organization also deals with

financial management because it gets resources to carry

out its operations in the form of donations from the

congregation and donors. Therefore, the church needs to

implement good financial management through financial

reporting according to the Interpretation of Financial

Accounting Standards (ISAK) No. 35. in financial

management so as to provide accurate information on

financial position, performance, and cash flows as

material for evaluation and making appropriate decisions.

Through a joint decision with the GMIT Churches in

Indonesia in the annual synod meeting, it has been

recommended to carry out financial reporting according

to applicable standards, but in the realization the

implementation is still in the stage of revamping and

preparing Human Resources as managers and readiness

of financial data information. This study aims to analyze

the implementation of ISAK 35 in financial reporting at the

GMIT church in Indonesia. The method used is qualitative

descriptive analysis. The result of the research is that

GMIT churches in Indonesia have not implemented

financial reporting according to ISAK Standard No. 35

because the church is still in the process of administrative

reform and updating of church asset data and the church

Linda Lomi Ga, Yohana Febiani Angi, Siprianus G. Tefa

Implementation Analysis of Isak 35 In Financial Reporting of The GMIT Church in

Indonesia 1574

has limited human resources for managing church

finances. By conducting training in the form of

socialization and the practice of preparing financial

reports, it will help the church overcome church problems

and obstacles in carrying out financial reporting according

to financial standards.

KEYWORDS

Non-Profit Organizations, Financial Statements, Church, GMIT

Synod, ISAK 35

This work is licensed under a Creative Commons

Attribution-ShareAlike 4.0 International

INTRODUCTION

A not-for-profit organization is an organization whose principal amount is for a

commercial purpose, without any concern for profit-seeking matters (Leff, 2018). The

characteristics of non-profit organizations are different from business organizations. The

main fundamental difference lies in the way non-profit organizations obtain the resources

needed to carry out their various operating activities that do not expect repayment or

economic benefits that are proportional to the amount of resources provided. As a result

of these characteristics, in non-profit organizations certain transactions arise that rarely or

even never occur in business organizations, such as receiving donations (Wibisono &

Setyohadi, 2017). Religious institutions, public school hospitals and organizations that

include volunteer services are examples of non-profit organizations (Yogev, 2021).

The church is a non-profit organization or an organization that was not

established for the purpose of making profit which also deals with financial management

(Shamsutdinova, Tishkina, Galeeva, & Khasanova, 2020). Religious organizations such

as this church get their resources to carry out their operational activities from

contributions from members (congregations) and from other donations and of course not

expect reward (Sulkowski & Ignatowski, 2020). As business organizations pay attention

to their financial statements, so do not-for-profit organizations (Beer & Micheli, 2017).

The church needs to pay attention to its financial statements as accountability so that

users of these financial statements can understand the extent of the financial condition of

the organization.

In general, the purpose of financial statements is to provide information about the

financial position, performance and cash flows that are useful for the majority of users of

financial statements in order to make economic decisions and demonstrate management's

stewardship of the users of the resources entrusted to them. Therefore, the Church also

needs to implement good financial management to produce accurate information (De

Graaf, 2020). Accurate information can be obtained by applying the accounting process

in the processing of church finances. The functions of oversight, planning and decision

making are accounting roles that have a good influence on church financial management

(Appiadu, 2019).

Like companies in general, accountability in non-profit organizations is also very

necessary. Accountability within the church is contained in the ministry by recording

financial statements, reporting and evaluating performance (Rapani & Malim, 2020).

According to Mardiasmo (2004), accountability is defined as the relationship between the

party who controls and regulates the entity and the party who has formal power over the

controlling party (Suriana, 2021). Financial accountability in religious organizations can

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be interpreted as the obligation of the holder of the trust to give accountability to the party

giving the trust (ummah/donor) who has the right to ask for accountability for the use of

these funds. Therefore, it is very important to apply accountability in organizations.

The churches that will be investigated in this research are the GMIT Churches

which are members of the GMIT SYNOD. GMIT is managed according to the Synodal

Presbyteral system with congregations, Klasis, and synods as its image. The fellowship of

these churches is spread to various regions in Indonesia. is part of the GMIT Synodial

which of course expects good financial management performance. However, there are

some problems that often occur in the management of the church's own finances and

these problems are often not noticed by the responsible parties (Alexander, 2018). In its

financial management, the church has not yet implemented an accounting system for its

financial reporting. This is in line with the treasury rules regulated in the GMIT Basic

Rules in Chapter XII article 5, namely the management and utilization of the GMIT

treasury is carried out in an integrated, open, economical, and accountable manner in

accordance with the GMIT basic regulations and is monitored regularly and regularly by

the GMIT synod. Based on previous research conducted by Selan and Ga (2018), the

financial statements of the GMIT Synod are not accountable and transparent and are

made in accordance with the preparation regulations which are regulated separately by

the synod. However, the recommendations of the XXXIII Synod Session in Lobalain-

Rote Ndao Regency in 2015 recommended that the Synod Assembly establish an

accounting system that refers to PSAK 45, in 2016 starting with the making of SOPs,

socialization and training. Its use took effect in 2018. Meanwhile, PSAK 45 has been

updated to ISAK 35 and its use will be implemented in 2020. The purpose of this study is

to identify and explain the Implementation of ISAK 35 in Financial Reporting at the

GMIT Church in Indonesia.

RESEARCH METHOD

This research approach uses a quantitative descriptive method with a case study

on a church in the GMIT synod. Sources of data in this study are primary data and

secondary data. Primary data in the form of interviews with research informant

questionnaires on the application of financial reports with ISAK 35 standards, secondary

data in the form of church financial reports provided by the Synod. The data collection

techniques used are: (1) in-depth interviews (In dept Interview); (2) Documentation and

(3) Literature Study. Research informants in this study were all treasurers of GMIT

churches in Indonesia. This study uses an interactive model in the analysis of interview

data. The interactive model uses 4 components, namely (1) data collection, (2) data

reduction, (3) data presentation, and (4) conclusion or verification (Miles and Huberman,

1984; Sugiyono, 2007). Data was collected through interviews and documentation.

Interviews were conducted with personal interviews, namely face-to-face interviews with

respondents (Jogiyanto, 2004). The results of the interviews were recorded with a tape

recorder and copied in the form of a transcript. Data reduction was carried out by

codification and axial coding of the interview results. The data obtained from the

interviews were copied in the form of transcripts, analyzed and given a certain code for

each phrase, sentence, or paragraph based on the topic. The coded data is grouped into

certain categories, then the relationship between categories is searched (axial coding).

The data reduction process was carried out continuously during the research. The

presentation of the data is done with a narration to organize the data. The reduced data is

presented in the form of narratives and drafts of the preparation of church financial

reports according to ISAK 35 standards. Through the presentation of data with narratives

Linda Lomi Ga, Yohana Febiani Angi, Siprianus G. Tefa

Implementation Analysis of Isak 35 In Financial Reporting of The GMIT Church in

Indonesia 1576

and drafts of financial statements according to data standards, the data will be organized,

arranged in the form of draft financial statements, so that they are easy to understand.

Conclusion drawing and verification is carried out based on the process of data reduction

and presentation. The collection is supported by valid and consistent evidence throughout

the research process. Conclusions will answer the problem formulation that was set from

the start.

RESULT AND DISCUSSION

One form of accountability for non-profit organizations to stakeholders is related

to financial reports that follow certain standards. This is of course reasonable because

through the financial reports the stakeholders can use it as an instrument to assess the

accountability of the board/management for the tasks, obligations and performance

assigned to them. The Synod of the Evangelical Christian Church in Timor (GMIT

Synod) is the only organization that accommodates Protestant churches within GMIT,

spread over 52 classes as of April 2020 covering the former residency of Timor

(Sumbawa, Flores, Alor, Timor, Rote, methamphetamine - except Sumba). Like other

non-profit organizations, the GMIT Synod in carrying out its organizational wheels is

also inseparable from financial management so that GMIT requires directed and more

measurable guidelines in the preparation and accountability of financial statements to

provide a more directed preparation guideline for non-profit entities in preparing financial

statements as well as distinguishing between the preparation of financial statements with

profit-oriented organizations/entities, the Indonesian Institute of Accountants (IAI) since

1997 has been regulated by the Statement of Financial Accounting Standards (PSAK) 45.

However, starting in 2019, PSAK 45 has been replaced with the Interpretation of

Financial Accounting Standards (ISAK). 35. DSAK IAI observes the opinion and fact

that the development of non-profit-oriented entities in Indonesia requires a review of the

financial statement arrangements for non-profit-oriented entities. Moreover, PSAK 45 has

not been reviewed for a long time, while the presentation of financial statements after

convergence to International Financial Reporting Standards (IFRS) has had significant

changes, for example with the presence of other components of comprehensive income in

the Comprehensive Income Statement. With the issuance of this new regulation, non-

profit organizations prepare their financial statements in accordance with ISAK 35.

However, the emergence of this new regulation makes it difficult for non-profit

organizations including GMIT to apply because many non-profit organizations do not

have an accounting background, making it difficult to implement. The presentation of

financial statements at GMIT is often faced with a dilemma between being more

professional and accountable according to standards or staying afloat by relying on

mutual trust between fellow administrators or managers. Through this research,

interviews were conducted with several informants who were represented from several

GMIT churches (Fraiser et al., 2017). The average education of the informants is a

bachelor's degree and some even master's and doctoral degrees. The interviewed

informants work as church financial managers with the professions of Chairperson of the

Congregational Council (pastor), and deputy secretary, as well as the general treasurer of

the church (Irawan, Mustikasiwi, Djap, Hermawati, & Santosa, 2021). In the GMIT

church financial system, the treasury is carried out only by the general treasurer, the

categorical field of service is only as a money registrar. The financial system is centered

on the general treasury of the church. So that every receipt and expenditure at the rayon

or categorical level is carried out centrally and in one door. Congregations and church

financial managers are aware of the importance of church financial management because

of the form of church accountability as a public organization, and based on church

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treasury regulations regarding church financial management accountability (Akotia,

2019). Transparent and accountable financial reporting will result in the congregation's

confidence in the church's financial management.

The congregation knows and is aware of the importance of church financial

reporting standards in accordance with the standards-based financial reporting

recommendations that apply at the 2015 GMIT XXXIII and XXXIV Synod Assembly in

Kupang (at the Paul Kupang congregation). However, in its implementation, the synodial

party is constrained by human resources and the budget in realizing this in the church

treasury system. This is important because the financial system at the GMIT church refers

to the GMIT church treasury system guidelines. If it has been entered into the church

treasury system, it will be carried out or adopted by all GMIT churches in Indonesia. The

GMIT Synod's rules for financial reporting standards for GMIT churches are referring to

several regulatory guidelines from the synod, namely the 2012 Treasury Fundamental

Regulations, the GMIT Treasury Manual, and periodic internal audits through BP3J.

Some of these guidelines are the reference guidelines for financial management and

financial accountability of each GMIT church. There are several types of church financial

accountability reports, namely reports on expenses and cash income for routine and

development funds on a regular basis (Widiastuti, 2018). For weekly accountability

reports, it is carried out in a simple way through the congregation's news which is carried

out during the main service on Sundays. Meanwhile, financial reports are carried out

periodically in the semi-annual period and annual. In fact, some churches in rural areas do

not even make regular financial reports, this is due to busy services and limited human

resources (Human Resources) in rural areas. Many of the congregations and managers of

GMIT churches are not even aware of the existence of the new ISAK 35 reporting

standard to replace the old PSAK 45 reporting standard so that with the limited

information and human resources conditions, the management really expects information

support from academics. This academic support is expected to be able to synergize with

the GMIT synod so that this application is top-down and recommended by the GMIT

sonode to be applied to every eye of the congregation is comprehensive and generally

applicable. So the analysis obtained from the answers to interviews conducted with

several GMIT church informants concluded that GMIT churches have not implemented

ISAK 35 in church financial reporting because they have not received information related

to financial reporting standards according to ISAK 35 standards from the GMIT synod

because they have not been included. into the church treasury system, so cooperation and

synergy are needed from the academic side and the GMIT Synod. In addition, the limited

human resources for managing church finances are an obstacle in realizing this, because

the church is a religious organization so that the salaries and income of employees and

administrators are not a priority because they are considered as a form of religious service

from individual church managers so that the church has limited human resource

competencies from volunteers who work. there is. This can be minimized by conducting

training on the needs of church financial managers so that they can contribute to the

church.

CONCLUSION

The results of this study conclude several things, as follows: GMIT churches have

not implemented ISAK 35 in the presentation of financial statements, even though it has

been planned in previous years. Barriers to the implementation of ISAK 35 in financial

reporting are due to the condition of inadequate Human Resources and not yet supported

by training and education as well as the busyness of church managers in carrying out

spiritual services. The synod and the church want synergy between universities and the

Linda Lomi Ga, Yohana Febiani Angi, Siprianus G. Tefa

Implementation Analysis of Isak 35 In Financial Reporting of The GMIT Church in

Indonesia 1578

GMIT Synod for the formulation of ISAK 35 standards in financial reporting as contained

in the ecclesiastical treasury guidelines.

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