Finance Ministry Evaluated PT Garuda Indonesia Tbk Financial Report - Photo by TheInsiderStories

JAKARTA (TheInsiderStories) – Indonesia’ finance ministry concluded the alleged financial statement audit of PT Garuda Indonesia Tbk (IDX: GIAA) 2018 has not followed the applicable accounting standards. The ministry will impose sanctions on the public accounting firm that audits the state-owned flight carrier’ financial report.

Finance Ministry Secretary-General Hadiyanto said on Friday that his party could not immediately impose sanctions because it still had to coordinate with the Financial Services Authority (FSA).

Nevertheless, he stressed that the deepening had been done on the results of the audit of Tanubrata, Sutanto Fahmi, Bambang & Partners Public Accountant (Member of BDO International). The agency audited Garuda’ financial report, a publicly listed company listed on the Indonesian Stock Exchange.

“We are still coordinating with the FSA because the most important thing from public companies is that minority shareholders are also adequately protected,” Hadiyanto said.

“So that sanctions relating to allegations of negligence in conducting audits and giving opinions need to be shared with the FSA so that sanctions will be applied,” he adds.

Finance ministry as the center for financial professional development has the authority related to sanctions against public accountant agency, while the FSA has the authority regarding sanctions to Garuda Indonesia.

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 report 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 — 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 (US$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 includes 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 (IDX) 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.

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