Name:ASRI SABILA
NPM:1912128010P
CLASS:2AK-P02
Examples of Audit
Fraud Cases (Fraud Auditors)
PT KIMIA FARMA
PT Kimia Farma is one of the state-owned pharmaceutical manufacturers in Indonesia. In the audit dated December 31, 2001, Kimia Farma's management reported a net profit of Rp 132 billion, and the report was audited by Hans Tuanakotta & Mustofa (HTM). However, the Ministry of SOEs and BAPEPAM consider that the net profit is too large and contains engineering elements. After a re-audit, on 3 October 2002 the financial statements
Kimia Farma 2001 was restated and the results have been found to be a pretty basic error.
In the new financial statement, the profit presented is only IDR 99.56 billion, or lower by IDR 32.6 billion, or 24.7% of the reported initial profit. The error arose in the Raw Material Industry unit, which was an overstated sales error of Rp 2.7 billion, in the Central Logistics unit in the form of overstated goods inventory of Rp 23.9 billion, in the Pharmaceutical Wholesaler unit in the form of overstated inventory totaling Rp 8.1 billion and overstated sales of IDR10.7 billion. It is suspected that the effort to inflate funds by the director of Kimia Farma was carried out to attract investors to invest their capital in PT. Kimia Farma. Presentation errors relating to inventories arise because of the value in the price list
supplies are inflated. PT Kimia Farma, through its production director, published two inventory price lists on February 1 and 3 2002. The price list as of February 3 has inflated its value and was used as the basis for inventory valuation at Kimia Farma's distribution unit as of December 31, 2001.
While the misstatement related to sales is by double recording of sales. This double recording is carried out on units that are not sampled by accountants, so that it cannot be detected. Based on Bapepam's investigation, it was stated that the KAP who audited PT Kimia Farma's financial statements had followed the applicable audit standards, but failed to detect the fraud. In addition, the KAP was not proven to have helped management commit such fraud. As a result of this incident, PT Kimia Farma was fined Rp.500 million, the old PT Kimia Farma directors were fined Rp.1 billion, and HTM partners who audited Kimia Farma were fined amounting to 100 million rupiah. The mistake made by the HTM partner was that he was unable to overcome the audit risk in detecting
there is a profit markup conducted by PT Kimia Farma, even though it has conducted an audit in accordance with SPAP.
 
Response: in my opinion the case of PT. Kimia Farma involved the production director and Hans Tuanakotta & Mustofa (HTM) who audited the report from PT Kimia Farma and committed fundamental fraud by reporting a net profit of 132 billion to attract investors to invest in PT. Kimia Farma. As Allegedly the effort to inflate the funds made by the director of Kimia Farma with a net profit that is too large and contains engineering elements that can be known after re-auditing.