This study was undertaken to shed light on certain key issues affecting the Indonesian petroleum industry, namely (1) the role of Production Sharing Agreements(PSAs) in developing the Indonesian up-stream petroleum sector over the last 30 years; (2) the use of accounting-based control mechanisms by the Indonesian government in managing the up-stream petroleum activities over the last 30 years; (3)the need for introducing an accountability-based framework in up-stream petroleum activities to achieve the objectives of the industry's stakeholders; and (4) the need for standard management accounting practices in the Indonesian petroleum industry. Depending heavily on Burrell and Morgan's framework (1979), the researcher approaches this study predominantly from within the bounds of the functionalist paradigm, although some elements from the interpretative paradigm are also included.An accountability-based theoretical framework developed by Laughlin (1996) was adopted in this research, while the method employed to gather information to answer the research questions was a triangulation of questionnaires, semi-structuredinterviews and a longitudinal analysis. The empirical findings that emerged from the study suggest that there is a perceived need to restructure and reform the 'old' industry structure by introducing a 'new' accountability framework in the Indonesian petroleum industry. The existing accountability structure in the host country - FOCs relationship needs to be restructured and reformed on two levels: macro-and micromanagementlevels. At the macro-management level, the most important finding was the need for FOC direct accountability to the host country in order to eliminate corruption, collusion and nepotism. Consequently, the dual but conflicting roles of theNOC, Pertamina, as both regulator and manager of the industry, needs to be abolished. Another important finding is the view that, to a certain degree, a role needs to be given to regional governments in managing the petroleum industry. At the micro-management level, real problems were identified in the structure and substance of the existing production sharing agreement itself The role of Pertamina in regulating and micro-managing the industry has been seen by the FOCs as too cumbersome and bureaucratic, and as a result, has become a major source of inefficiency in the industry. In addition, ambiguity and grey areas in accountingtreatment, especially for expenditure, have become the source of dispute between the FOCs and the host country when determining cost recovery. Overall, there was a strong view among respondents that these micro-management issues need to be tackled by introducing some sort of best industry practice covering the issues of accounting, auditing, finance, procurement and personnel. Standard Oil Accounting Procedures (SOAPs), similar to those established by the UKOOA, could be used as a reference point. However, the adoption of an accountability theoretical basis in this study is not without problems. The 'narrow' view of accountability used in the study for establishing and analysing the empirics permits an indepth focus of economic andmanagerial issues but constraints consideration of wider societal issues such as social, ethical and environmental concerns.
