Indonesian Government to Summon Garuda’s Auditors and Directors Next Week
PT Garuda Indonesia Tbk (GIAA).

JAKARTA (TheInsiderStories) – State-owned flight carrier, PT Garuda Indonesia Tbk (IDX: GIAA) announces it had made a net loss of Rp2.4 trillion (US$175 million) on revenues of $4.17 billion in a revised financial statement for 2018, against a previously reported net profit of $5 million on $4.37 billion of sales.

The airline said that the changes were related to the way it had reported income from the installation of in-flight connectivity services — a move that brought accusations of financial misrepresentation from two of the company’s largest private shareholders.

Two commissioners — Chairal Tanjung, who represents PT Trans Airways and Dony Oskaria, who represented 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.

The majority state-owned carrier had been forced to make revisions after Indonesia’s financial services authority (FSA) and the national stock exchange in June ordered it to “repair and restate” its annual accounts, overriding protests from its chief financial officer that it had acted in line with accounting standards.

However, the regulator imposed only modest sanctions on the airline’s board at the time, fining each of the directors Rp100 million for the violations.

In the 2018 financial report that was restated, Garuda adjusted its other net income from the previous $278.8 million to $38.9 million. It’s just that the company doesn’t carry out restatement on its expenses, except for the tax burden which was original $14 million to $46 million.

Changes in earnings also affect the company’s total equity. If the initial equity was $910.2 million, the company’s equity is now adjusted to $180 million to $730.1 million.

Adjustments were also seen in recording total assets from previously $4.37 billion to $4.16 billion and liabilities from previously $3.46 billion to $3.43 billion.

Not only that, but the company also conducted restatement on several indicators in the first quarter of 2019 financial statements. As a result of changes in profits, the company improved its equity position in the first quarter from $971.1 million to $791.1 million.

Then, adjustments were made to recording total assets from $4.53 billion to $4.32 billion and liabilities from $3.56 billion to $3.53 billion.

“Meanwhile, regarding the Supreme Audit Agency’s decision regarding the cooperation of Mahata Aero Teknologi, Citilink Indonesia as the contracting party has also sent a letter to Mahata Aero Technology regarding the cancellation of the cooperation,” said Garuda Indonesia Director of Finance and Risk Management Fuad Rizal in a written statement on Friday (07/26).

In the presentation of the restatement, Garuda appointed the Public Accounting Firm Tanubrata Sutanto Fahmi Bambang & Partners (Member of BDO International), referring to regulators’ rules and references that still provide space for the Accountant Office to complete the restatement audit process in question.

Submission of the 2018 financial restatement and the first quarter of 2019, as well as the holding of public exposures, is a form of Garuda’s compliance with the regulator’s decision.

Garuda Indonesia has also fulfilled administrative sanctions in the form of a number of fines before the deadline required by the FSA and IDX, reporting on the fulfillment of fines sanctions has been submitted by letter dated July 11, 2019.

With today’s re-presentation and public expose, Garuda Indonesia has fulfilled all the sanctions and requirements requested by the regulator.

US$1=Rp14.000

Written by Lexy Nantu, Email: lexy@theinsiderstories.com