JAKARTA (TheInsiderStories) – Indonesia’ Financial Service Authority (FSA) and Ministry of Finance have evaluated financial statement of PT Garuda Indonesia Tbk (IDX: GIAA) per December 2018. From the evaluation, they imposed several sanctions on the airline and its directors, said the regulators on a press conference on Friday (6/28).
The FSA said Garuda and its directors would each be fined Rp100 million (US$7,042), in addition to another collective sanction that will be imposed on directors and commissioners who had signed off on the results.
FSA’ Deputy of Commissioner Market Fakhri Hilmi said the decision is to revise and restate Garuda’ financial statement per December 2018 and hold public expose regarding with the financial statement. The restatement should be done 14 days after the sanction, he said.
As for the Public Accountant Tanubrata, Sutanto, Fahmi, Bambang, and Partners Kasner Sirumapea, Ministry of Finance imposed license freezing until a year later. As for the Public Accounting Firm, the ministry asked for quality repairment.
Meanwhile, Garuda’ Vice President Corporate Secretary Ikhsan Rosan confirmed the company has never made financial engineering related to the 2018′ financial report. He said the regulators’ decision was premature and said it would need to further re-examine the results given its different interpretations.
Previously, the finance ministry concluded the alleged financial statement audit has not followed the applicable accounting standards. So they will impose sanctions on the public accounting firm that audits the state-owned flight carrier’ financial report.
The ministry stressed that the deepening had been done on the results of the audit of Public Accountant (Member of BDO International), the agency audited Garuda’ financial report, a publicly listed company listed on the Indonesian Stock Exchange.
By legal, finance ministry as the center for professional financial development has the authority related to sanctions against public accountant agency, while the FSA has the power regarding permissions to Garuda.
The company, previously, has stressed that there were no flaws in 2018 financial report, which had been criticized by two of the commissioners, saying that the story met the accountancy standards and abided by existing regulations.
“It (the report) did not violate Financial Accounting Standard (FAC) no 23 because [under it], revenue can be included [in a financial report] before it is cashed,” according to Garuda’ statement recently.
Two commissioners — Chairman Jung, who represents PT Trans Airways and Dony Oskaria, who served Finegold Resources Ltd — objected to the airline’s financial report, particularly details on the revenue from a cooperation agreement with PT Mahata Aero Teknologi ($239.94 million) and receivables from PT Sriwijaya Air $28 million in the 2018 fiscal year.
Garuda argues that according to FAC 23, the income that can be included in financial reports consists of that from the sales of goods and services and other recognized income such as royalties and dividends and other benefits that can be measured.
The airlines’ finance director Fuad Rizal said the financial report had passed the check by auditors of Tanubrata Sutanto Fahmi Bambang & Partners. He stated: “The management believes the inclusion of revenue from compensation fees of transactions with Mahata is in line with accounting standards.”
Garuda’ financial report to the Indonesia Stock Exchange on April 1, recorded a net profit of $809,846 in 2018, compared with a loss of $64.2 billion in 2017. But the two commissioners argued that without the inclusion of receivables from Sriwijaya Air and revenue from Mahata, the airline still recorded losses of $244.96 million in 2018.
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