Telkom again fails to submit audit to SEC

Telkom again fails to submit audit to SEC

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned telecommunications company PT Telkom said over the
weekend that it would not be able to submit its audited 2002
financial report to the U.S. Securities and Exchange Commission
(SEC) as was previously ordered.

The company, which is listed on both the Jakarta Stock
Exchange and New York Stock Exchange, said that its auditor
needed another month to complete the work, but added even that
could be delayed.

Telkom explained that the completion of the audit work had to
be extended because the company had to confirm the status of the
audit with a local market watchdog as well as to get more
information from the previous auditor, which was not a valid
auditor recognized by the SEC.

The SEC had actually given Telkom until July 15 to resubmit
the audited 2002 financial report, after an earlier report was
rejected the market regulator on grounds that the auditor, Eddy
Pianto, which has no affiliation with an accounting firm
certified by the SEC.

Eddy Pianto was formerly an affiliate of Grant Thornton
International, an auditor certified by the SEC. But the
relationship ended last year and Eddy later formed an accounting
firm called KAP Jimmy Budhi.

The SEC has threatened to remove Telkom from the NYSE if it
fails to submit the report by the deadline.

But Telkom said it was impossible to meet the deadline due to
difficulties in finding a certified auditor here that both met
SEC requirements and did not have a conflict of interest with
Telkom. The company finally appointed PricewaterhouseCoopers
(PwC) in June to do the audit work, and promised that the audit
would be completed by the end of September.

It is still unclear whether the latest delay would increase
the chance of Telkom of being delisted from the NYSE. Telkom is
the second largest counter on the Jakarta Stock Exchange.

In the press statement Telkom also announced that there would
be several changes to the 2002 report that could possibly be
contradictory of the earlier report.

However, Telkom said it did not yet know how much the
adjustments would affect the report.

"At this phase, it is still difficult for us to decide whether
the net effect of the adjustment will be minor or not, because
PwC is still doing the audit," the company said.

The adjustments will likely cover several areas such as on
income tax accounting problems, and on the effect of an
arbitration settlement between Telkom and PT Aria West
International --Telkom's joint venture company with U.S. AT&T
Corp.

According to the earlier report by the Pianto firm, Telkom
made a net profit of Rp 8.34 trillion (US$992 million) in 2002,
nearly double that of 2001.