SAK EP: The New Accounting Standard Now Mandatory for Private Businesses

For years, SAK ETAP (the Financial Accounting Standard for Entities without Public Accountability) was the go-to reference for MSMEs and private companies because of its simplicity. But the Financial Accounting Standards Board of the Indonesian Institute of Accountants (DSAK IAI) ratified its replacement back on June 30, 2021: SAK Entitas Privat (SAK EP), an adaptation of IFRS for SMEs tailored to Indonesian conditions. After a long preparation period, SAK EP has been effective since January 1, 2025 — meaning financial statements for fiscal year 2025 onward must be prepared under this standard, not SAK ETAP.

Who's required to use SAK EP?

SAK EP is intended for entities without public accountability that issue general-purpose financial statements for external users — covering most privately held limited companies, partnerships, general partnerships, and cooperatives that aren't public companies or financial institutions with public accountability. Entities that do have public accountability (e.g., listed issuers) may still use SAK EP only if the relevant authority specifically permits it.

What actually changed from SAK ETAP

SAK EP isn't just a rebrand. It adds several concepts that were significant departures from ETAP:

• Fair value for investment property and biological assets. ETAP generally used the cost model; SAK EP requires the fair value model as the single policy, unless applying it would require undue cost or effort — in which case the cost model applies as an alternative.
• Other comprehensive income (OCI). A concept previously unknown under ETAP, now part of financial performance reporting.
• Consolidated and separate financial statements are regulated in far more detail — including control criteria and inter-entity transaction elimination procedures within a business group.
• Business combinations and goodwill receive more explicit treatment than before.
• Financial assets and liabilities are regulated in greater detail, including classification and measurement.
• Deferred tax. This is the area most often overlooked — SAK EP requires recognizing deferred tax on temporary differences between accounting and tax values, something rarely practiced rigorously under ETAP.
• Employee benefits, especially post-employment benefits, now have more complex definitions and recognition/measurement requirements — including post-employment benefit reserve calculations that were often missed before.

On the other hand, SAK EP still simplifies things compared to full IFRS-based SAK: topics irrelevant to private entities — earnings per share, interim financial reporting, and segment reporting — are removed entirely. Accounting policies are also simplified into a single option for most transactions, with more concise disclosures and simpler language than full IFRS-based SAK.

Transition period: mandatory retrospective application

For entities applying SAK EP for the first time, the standard requires retrospective application — as if SAK EP had been in effect from the start, so comparative-period financial statements need to be restated for comparability.

• The transition date is the beginning of the earliest period for which the entity presents full comparative information under SAK EP in its first financial statements.
• If errors from the prior SAK ETAP period are discovered during transition, SAK EP requires a reconciliation that separates error corrections from accounting policy changes — the two must not be conflated in reporting.
• Entities must disclose how the transition from SAK ETAP to SAK EP affected reported financial position and financial performance.
• If making a particular adjustment at the transition date is impractical, the adjustment is applied at the earliest period practicable, with disclosure of the amount not yet restated.
• Adjustments arising from differences between old and new accounting policies are recognized directly in retained earnings, not in current-period profit or loss.

Practical implications for your business

1. Comparative financial statements need to be reworked if you haven't already applied SAK EP early — not simply carrying over the old format with a new label.
2. Deferred tax calculation becomes routine, no longer optional. This requires consistently mapping temporary differences between commercial and tax bookkeeping every period.
3. If your business owns investment property (e.g., a shophouse or warehouse leased out, not used for own operations), prepare a fair value assessment from an independent appraiser or a justification for using the cost model instead.
4. If you have multiple entities in one business group, evaluate whether consolidated financial statements are now required under the new control criteria.
5. Document your chosen accounting policies in writing — SAK EP expects consistent single policies, not choices that shift from period to period.

An accounting standard transition like this rarely feels urgent — until financial statements are suddenly needed for a loan application, investor due diligence, or a tax refund requirement (including the clean audit opinion now required by various tax facilities). Preparing early is far cheaper than a rushed rebuild later.

Disclaimer: This article was prepared as general information as of July 6, 2026 and does not constitute tax advice for any specific case. Tax regulations are subject to change. For guidance on your specific business situation, please consult the Sentary Consulting team or a registered tax consultant.