FINANCIAL REPORTING AND AUDITING

PROBLEM:
PT GARUDA INDONESIA CASE

Group 8

Adilla Ikhsani Kartika Dewi Widya Lestari

1610533041 1610532048 1610533037
 PT Garuda Indonesia
Garuda Indonesia is one of the leading airlines in Indonesia

net profit of US $ 809

thousand in 2018

In the third
lost US $ 216.58 quarter of 2018
million in 2017 the company
still lost US $
114.08 million

The presentation of this annual financial report is not in accordance with the OJK Regulations
and does not comply with the Statement of Financial Accounting Standards (PSAK)
Problem Identification

1. What are the violations committed by PT

Garuda Indonesia?

2. Which PSAK was violated by PT Garuda

Indonesia?

3. What sanctions are received by PT Garuda

Indoensia?
 Problem Statement

PT Garuda Indonesia (Persero) Tbk made a mistake

related to the case of presenting the Financial
Statements, because there were irregularities in the
financial statements of PT. Garuda Indonesia until the
OJK decided to provide a number of sanctions for
violating many violations that are not in accordance
with the standards on the financial statements.
In the financial statements 2018 , Garuda Indonesia posted a net profit of
USD809.85 thousand. Its jumped sharply compared to 2017 which
suffered a loss of USD216.5 million. The financial statements caused
a polemic, because two commissioners (Chairal Tanjung and Dony
Case Analysis
Oskaria) considered the financial statements of Garuda Indonesia 2018
not in accordance with the PSAK

In this case PT Garuda violates PSAK No. 30 about Accounting for Leases.
Garuda Indonesia record revenue from PT Mahata Aero Teknologi, which
has debt related to the installation of unpaid wifi with PT Garuda . By signing
a partnership with Garuda, Mahata recorded a debt of USD 239 million to
Garuda, and by Garuda recorded it in the 2018 Financial Statement as a
income.

May 2019, Garuda Indonesia finally issued an official statement after its
financial statements were rejected by two of its Commissioners.PT Garuda
Indonesia claimed that it would not re-audit the 2018 financial statements
which were considered to be inappropriate because it included profits from
PT Mahata Aero Teknologi.
On June 14, 2019, the Ministry of Finance completed an examination of
KAP Tanubrata Sutanto Fahmi Bambang & Partners (Member of BDO
International) regarding Garuda's 2018 financial statements. This KAP is Case Analysis
an auditor for the GIIA coded stock issuer's financial statements which is
reaping the polemic

Secretary General of the Ministry of Finance Hadiyanto stated, based on the

results of a meeting with the KAP it was concluded that there were
allegations of audits that were not in accordance with accounting
standards. The Ministry of Finance is also still waiting for coordination with
the FSA regarding the determination of sanctions that will be imposed on
KAP Tanubrata Sutanto Fahmi Bambang & Partners (Member of BDO
International), who became auditors on Garuda Indonesia's 2018 financial
statements.
The violation committed by PT Garuda Indonesia
Financial Services Authority (OJK) has decided that PT Garuda Indonesia Case Analysis
(Persero) Tbk made a mistake regarding the presentation of the Annual
Financial Report as of December 31, 2018. The OJK represented by Deputy
Commissioner for Public Relations and Strategic Management, Anto
Prabowo , state that Garuda Indonesia had been proven violating ;

• Article 69 of Law Number 8 of 1995 concerning the Capital Market (PM Law)
"(1) Financial reports submitted to Bapepam must be prepared based on
generally accepted accounting principles. (2) Without prejudice to the
provisions referred to in paragraph (1), Bapepam may determine the
accounting provisions in the Capital Market field. "
• Bapepam and LK Rule Number VIII.G.7 concerning Presentation and
Disclosure of Financial Statements of Issuers and Public Companies.
• Interpretation of Financial Accounting Standards (ISAK) 8 concerning
Determination of whether an Agreement Contains Leases.
• Statement of Financial Accounting Standards (PSAK) 30 regarding Leases.
Sanctions for PT Garuda Indonesia
Deputy Commissioner for Capital Market Supervisor II, Fakhri Hilmi, said that after coordinating
with the Ministry of Finance of the Republic of Indonesia, the Center for Financial Professional
Development, PT Indonesia Stock Exchange, and other related parties, the OJK decided to
Case Analysis
impose a number of sanctions.

1.Give Written Orders to PT Garuda Indonesia (Persero) Tbk to correct and restate the LKT of PT Garuda Indonesia
(Persero) Tbk as of December 31, 2018 and conduct a public expose on the improvement and restatement of the LKT as
of December 31, 2018 referred to the most no later than 14 days after the stipulation of the sanction letter, for violations of
Article 69 of Law Number 8 of 1995 concerning Capital Market (PM Law), Bapepam and LK Regulation Number VIII.G.7
concerning Presentation and Disclosure of Issuers and Public Companies' Financial Statements, Standard Interpretation
Financial Accounting (ISAK) 8 concerning Determination of whether an Agreement Contains Leases, and Statement of
Financial Accounting Standards (PSAK) 30 concerning Leases.
2.In addition, Written Orders to KAP Tanubrata, Sutanto, Fahmi, Bambang & Partners (Member of BDO International
Limited) to improve quality control policies and procedures for violating OJK Regulation Number 13 / POJK.03 / 2017 jo.
SPAP Quality Control Standards (SPM 1) no later than 3 (three) months after the enactment of an order from OJK.
3.Deputy Commissioner for Public Relations and Strategic Management, Anto Prabowo, said the OJK also imposed an
Administrative Sanction in the form of a fine of Rp 100 million to PT Garuda Indonesia (Persero) Tbk for violating OJK
Regulation Number 29 / POJK.04 / 2016 regarding the Issuer's Annual Report or Public company.
4.Penalty sanctions for each member of the Board of Directors of PT Garuda Indonesia (Persero) Tbk in the amount of Rp
100 million for violating Bapepam Regulation Number VIII.G.11 concerning Directors' Responsibility for Financial
Statements. 5. The Indonesia Stock Exchange (IDX) officially imposes sanctions on PT Garuda Indonesia Tbk (GIAA) for
the case of the company's financial statement claims that are reaping polemics. Some of the sanctions imposed include
fines worth Rp 250 million and restatement or improvement of the company's financial statements by the latest July 26,
2019.
 Solution and Recommendation

• 1.It should be to avoid confusion because of the recording of cooperation transactions in

the provision of connectivity services (wifi) in flight with PT Mahata Aero Teknologi
(Mahata), GIAA as a listed company on the capital market should explain to the public the
nature of the transaction and the points already exist or the points already exist or not yet.
So that it does not raise questions for the public that companies in the third quarter of
2018 that are still losing money suddenly pocketed profits in the last three months let
alone have been ratified at the AGM.
• 2.Directors and Financial Management of PT Garuda Indonesia should creating a culture
of honesty, openness, and assistance.