24 Jun Garuda asked to restate 2018 financial report for sake of ‘…
The Indonesian Public Accountant Institute (IAPI) has asked that state-owned airline PT Garuda Indonesia restate its 2018 financial report.
IAPI chairman Tarkosunaryo told the press on Friday that he hoped the airline would publish a new and restated report as it was used by investors, stakeholders and the public to assess the company’s business and financial health.
“It’s really important for the company to have a credible report, so we really hope that Garuda will restate its financial report,” he said in a forum in Jakarta.
Previously, two Garuda commissioners refused to approve the 2018 financial report due to discrepancies they found in it. The company included in the report a US$239-million transaction made from a 15-year contract with PT Mahata Aeroteknologi to provide in-flight entertainment and Wi-Fi in the aircraft of Garuda subsidiaries Citilink Indonesia and Sriwijaya Air.
Such a move allowed Garuda to book a net profit of $809,846 after years of enduring losses.
The inclusion of the transaction as revenue was deemed inappropriate by the commissioners as Garuda had yet to receive any money from Mahata up until the end of last year. This, they argued, meant that the transaction should have been stated as account receivables instead of revenue in the report.
Although Tarko said stating unreceived payments as revenue was allowed and sometimes happened in financial reporting, the IAPI believed Garuda was “too fast” to claim the transaction as the company had yet to enjoy any benefits from the contract.
“A transaction can only be recognized as revenue if the company has enjoyed the economic benefits,” he said, adding that he was also concerned about the possibility of the long-term contract suddenly being dismissed if something were to happen.
Other than discrepancies, kompas.com reported that Finance Ministry secretary-general Hadiyanto said the ministry found that the public accountant auditing Garuda allegedly did not comply with current accounting standards when auditing the report.
Tarko also said the institute had filed its investigation result to the Finance Ministry and the Financial Services Authority (OJK) so that they could determine if Garuda and the public accounting firm that audited the report were at fault.