Compensation Fund in Foundations: Indonesia’s Foundation Laws and Auditor Perspectives

Abstract

Foundations play a pivotal role in advancing social causes and managing donations for the betterment of society. In Indonesia, foundation faces significant challenges that undermine their integrity and accountability. This study delves into the multifaceted issues surrounding foundation management and legal compliance in Indonesia. One thing that needs to be noted in the management of Foundations is the strict prohibition in the Foundation Law that Founders and Foundation Organs are prohibited from receiving salaries, wages, or honorariums (compensation fund), and this prohibition is even threatened with criminal penalties. In their activities, Foundations that receive donations or certain asset amounts are required to have their financial statements audited, and some Foundations have done so. There are differences in assessing the violation from the perspective of enforcing the Foundation Law and from the perspective of auditors. To address these pressing issues, this study adopts a qualitative research approach with content analysis techniques. By systematically analyzing textual data sourced from legal documents, financial reports, and relevant literature, the study aims to shed light on the challenges faced by foundations in Indonesia and identify strategies for enhancing transparency, accountability, and effectiveness within the sector