Garuda Indonesia to restate financial statements after accounting errors

Garuda Indonesia will be restating its financial statements and paying fines put in place by the Financial Services Authority for accounting errors, according to multiple media reports. The error reportedly involved a misrepresentation of US$240 million in expected revenue from Mahata Aero Teknologi, a company that provides the WiFi connection service on Garuda’s flights.According to media outlets such as Nikkei Asian Review and CNBC, Garuda has carried forward the amount it stands to receive from Mahata Aero Teknologi over the next 15 years in the 2018 accounts. After the restatement, the airline’s financial performance for 2018 is expected to be in the red, contrary to what was previously reported.Besides 2018’s financial statement, The Indonesia Stock Exchange has separately requested the airline to restate its first quarter 2019 results as well, and slapped on a IDR 250 million fine. Garuda Indonesia Group posted US$19.7 million in profits in the first quarter of 2019, a huge leap from the US$64.3 million loss it experienced in the same period last year.Additionally, Garuda as a company and its directors would be fined IDR 100 million each. Additional fines are imposed on those who signed off the 2018 results. Meanwhile, the Financial Services Authority has suspended the auditor in change of the financial statements and has ordered global accounting firm BDO International Limited to review the necessary and improve accounting standards.In a statement to media outlets, Garuda said the issue arose due to “different interpretations” of its 2018 financial report and the company will comply with the regulator’s decision. Garuda will also be appointing a new accounting firm.