Garuda Indonesia to fix financial statement after regulator order

Workers clean the body of a Garuda Indonesia Airbus A320 aircraft inside Hangar 4 of PT Garuda Maintenance Facility (GMF) Aero Asia at Soekarno-Hatta airport in Jakarta.

Indonesian flag carrier Garuda will comply with requests from regulators to “fix and restate” its financial statements and pay fines for accounting errors, company executives said on Sunday.

Garuda’s shares plunged 7.6% on Friday to their lowest since January, after the Financial Services Authority (OJK) ordered Garuda to restate its 2018 financial results within two weeks and, along with its directors, pay fines for the errors.

The Indonesia Stock Exchange (IDX) separately ordered the same for 2019 results.

The total sum of fines Garuda has to pay the OJK and IDX is 1.25 billion rupiah ($88,496).

“We will not argue with what the OJK has decided,” chief executive Ari Askhara told a news conference.

On Friday, the finance ministry also ordered global accounting firm BDO International Limited to improve quality control and carry out a review of its local affiliate who handled Garuda’s finances, while suspending the main person who audited the financial statements.

Askhara said Garuda would appoint a new accounting firm.

Garuda’s initial reaction was that the orders from the authorities was “premature”.

While regulators did not disclose details of the errors, Garuda’s executives confirmed on Sunday that they were related to a misrepresentation of $240 million in revenue that it had yet to receive from PT Mahata Aero Teknologi.

The carrier forward-booked the revenue from Mahata in its 2018 earnings. Mahata had agreed to pay Garuda in exchange for installing Wi-Fi connectivity and advertisements on some planes.

Askhara said the required changes by regulators would not affect Garuda’s financial health, including its debt-to-equity ratio.

“The correction will not affect operations because there is no cash out,” he said.

Reuters

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.