Government may fire Telkom management if audit shows error<\/p>\n
Dow Jones
\nJakarta<\/p>\n
The government said on Friday that it could fire management of
\nthe country's largest phone company if an ongoing financial audit
\nuncovers evidence of mismanagement.<\/p>\n
The publicly-listed PT Telkom said late on Thursday that it
\nmay have to reduce a previously stated Rp 8.34 trillion (about
\nUS$987 million) net profit for 2002 by between 4 percent and 20
\npercent.<\/p>\n
Problems with the 2002 accounts emerged after
\nPricewaterhouseCoopers was called in to reaudit the figures in
\nJune. The U.S. Securities & Exchange Commission had rejected an
\nearlier filing because the original auditor, an Indonesian
\ncompany, was not properly registered in the U.S.<\/p>\n
\"We could replace Telkom's management if the audit results
\nshows the management made mistakes,\" Roes Aryawijaya, a deputy at
\nthe Office of the State Minister of State Enterprises, said.<\/p>\n
During its reaudit, PricewaterhouseCoopers discovered that
\nTelkom had not made adequate provisions in its 2002 accounts for
\na number of liabilities. These included employee benefits such as
\nhousing allowances, transportation, and a post-retirement health
\ncare scheme, Telkom said.<\/p>\n
The auditor also identified the need to make adjustments in
\nthe 2002 results to the calculation of deferred taxes.
\nPricewaterhouseCoopers believes these adjustments also mean the
\ncompany will have to restate its 2000 and 2001 financial results,
\nTelkom said.<\/p>\n
Telkom said it was currently in talks with Deloitte Touche
\nTohmatsu, the auditor of the 2000 and 2001 results, over what
\nadjustments to make.<\/p>\n
Failure to reach agreement with Deloitte would mean that
\nPricewaterhouseCoopers will have to reaudit those accounts, which
\ncould delay the restatement of the 2002 profit by up to four
\nmonths, Telkom said.<\/p>\n
The SEC has threatened to delist Telkom's shares from the NYSE
\nif it fails to quickly clear up the mess.<\/p>\n
Meanwhile, Telkom announced on Friday that it would need more
\ntime to complete the reauditing process.<\/p>\n
\"The process is longer than expected because Telkom and audit
\nfirm PricewaterhouseCoopers are still in the process of
\ndetermining the necessary adjustment to Telkom's previously
\nissued financial statements for 2002,\" the company said in a
\nstatement made available to The Jakarta Post on Friday.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-may-fire-telkom-management-if-audit-shows-error-1447893297",
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