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.