Overstatement revenue in Bank

Bukopin
General Issue
PT Bank Bukopin Tbk revised financial statement at 2016 on April 25, 2018. Bank Bukopin revised its net
income in 2016 to Rp 183.56 billion from the previous Rp 1.08 trillion. The biggest decrease is in the
provision and commission income which is the income from the credit card. This income fell from Rp 1.06
trillion to Rp 317.88 billion. In addition to credit card issues, revisions also occur in the financing of a Bank
Syariah Bukopin subsidiary (BSB) related to the addition of a reserve balance for certain debtor impairment
losses. As a result, the allowance for impairment losses on financial assets was revised up from Rp. 649.05
billion to Rp. 797.65 billion. This caused the company's burden to increase by Rp. 148.6 billion. Seeing the
incompatibility of the data, Bukopin claimed to directly report to the public accounting firm (KAP) and OJK.
After that, the company decided to do the restated alias re-submission of the 2016 financial statements
from the findings of the internal auditor.

In the 2016 financial statement before the revision, Bukopin's capital adequacy ratio (CAR) was still safe at
15.03%, but after the CAR revision, 11.62% remained. CAR has worsened at the end of 2017 which recorded
10.52%, although it increased again in the I / 2018 quarter to 11.09%. Another thing that affects the
decrease in CAR is the increase in Bukopin's non-performing loan / NPL ratio.
Restatement of
2016 financial
statement
 PSAK 23: Revenue

Estimation method:

● Survey of work that has been carried out

● Services carried out up to a certain date as a percentage of the total
services performed;
● Proportion of costs incurred up to a certain date divided by the
estimated total cost.
○ costs that have occurred related to these services
○ costs that reflect the total cost of the service
The sales transaction of services can be estimated reliably if it meets all of the
following criteria :

1. The amount of income can be measured reliably

2. The economic benefits of the transaction flow to the entity
3. The cost related to that transaction can be measured reliably
4. The stage of completion at the balance sheet date can be measured reliably
PSAK 72 Klasifikasi Pendapatan yang Dilakukan restatement

Revenue

https://finance.detik.com/moneter/d-3994551/bank-bukopin-permak-laporan-keuangan-ini-kata-bi-dan-ojk
Other fees and
commissions
Issues For Auditor
● The primary issue for auditors surrounding revenue is the risk that recorded
revenue is overstated by managers.
● In this case, external auditor can’t detect the overstated revenue.
● Not even just the external auditor, Bukopin's internal audit, Bank Indonesia as the
payment system authority that handles credit cards, and OJK as an institution
responsible for banking supervision, have also been overstepped by this
overstated revenue.
● Because it has been going on since 5 years ago, it could be that credit card revenue
in the financial statements is considered correct and not overstated by the auditor
● Auditor should be more careful about the revenue stated by the company,
especially the credit card. To audit credit card income, several ways can be done,
such as checking credit card customers and confirmation.
Recommendation
● New management need to transform the company's business. Improving the
Bank’s performance makes the BBKP stock investment attractive. Also the Q1 2018
performance began to improve.
● Peter Lynch, one of the biggest investment teachers, stressed that one of the
multi-bagger (up to many-fold) investment returns was obtained from turnover
companies. Turnover companies, companies that are falling and their stock prices
fall even deeper, offer big investment opportunities if the company is successful in
recovering and reversing its direction towards improvement.
Recommendation (cont.)
● Reflect on past lessons. In October 2008 the lowest price of BBKP shares was
141. And in May 2013 the highest share price was 890. In less than 5 years
the stock price rose from 141 to 890 making achievement of stock price
performance of 531% or CAGR of 45%. Very fantastic.
● Last note. The quality of company management is one of the most important
factors in weighing investment decisions. The new management is very
expected to be able to bring Bank Bukopin to do recovery and then continue
to have good business performance.
References
https://ekonomi.kompas.com/read/2018/05/03/070000026/laporan-keuangan-bukopin-tersandung-kasus-kartu-
kredit-ini-penjelasan-dirut

https://www.cnbcindonesia.com/market/20180607164716-17-18333/buntut-revisi-lapkeu-bukopin-bei-minta-
klarifikasi-ke-ey

PT BANK BUKOPIN TBK. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of
December 31, 2017 and for the Year Then Ended

PT BANK BUKOPIN TBK. AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of
December 31, 2016 and for the Year Then Ended

https://finance.detik.com/moneter/d-3994551/bank-bukopin-permak-laporan-keuangan-ini-kata-bi-dan-ojk