The Association of Certified Fraud Examiners (2016) indicates that asset misappropriation is the most common form of occupational fraud. There are six other types of frauds such as collusion, commissions, fictitious sales, rebates, refunds, and write-offs. Asset misappropriation includes examples relating to theft of cash, misuse of inventory, and fraudulent reimbursement. The most interesting part of this case was a financial innovation product called JS Saving Plan. It was a ‘bancassurance’ insurance product, with protection for five years, but with a one-year investment period. The product was distributed through eight Indonesian banks: Bank Rakyat Indonesia, Bank Tabungan Negara, KEB Hana Bank Indonesia, DBS Indonesia, ANZ Indonesia, QNB Indonesia, Standard Chartered and Bank Victoria International. JS Saving Plan was sold with the minimum amount of IDR 100 million (USD 6890, with an exchange rate of 1USD = Rp 15,000) The scheme claim the investor would be paid on a yearly basis unless the customer requested an extension of the policy or rolled it over. After the claim was paid, the personal accident protection period would continue until the fifth year. The company tried everything to survive, but it could not weather the economic conditions and turned around the direction of the stock price as an underlying foundation for its portfolio.

This case discusses Garuda Indonesia’s 2018 financial report which is deemed to be misstated with respect to its revenue account. Despite this, the auditor issued an unqualified opinion. As a public company and national flag carrier of Indonesia, this case attracted a lot of attention from and was scrutinized by many stakeholders. A financial report should contain certain characteristics to it (usually referred to as qualitative characteristics of financial information), so that users can rely on it to help them make business decisions. Two commissioners of Garuda decided that Garuda’s 2018 report did not satisfy the accounting standards, and hence they refused to sign the report.

After receiving high publicity and conducting a thorough investigation, in June 2019, regulators finally announced that Garuda had manipulated its 2018 report and required Garuda to publish a restated financial report. In addition, Garuda was also required to pay a fine. The regulator also imposed sanctions to the auditor for failing to perform the audit process according to the auditing standards. In a sense, this case is yet another example of an accounting scandal and audit failure. Nevertheless, there is always another side of the story, which is expected to be discussed during the class discussion.