Modul-6- Full Disclosure in Financial Reporting · PDF fileFull Disclosure in Financial Reporting ... omitting account payable and other liabilities. ... kasus Fraudulent Financial

MODUL-6

Financial Accounting

Full Disclosure in

Financial Reporting By

MUH. ARIEF EFFENDI,SE,MSI,AK,QIA

Magister Accounting Program (MAKSI)

BUDI LUHUR UNIVERSITY

Jakarta - Indonesia

2010

Full Disclosure in Financial Reporting

After studying this topic, students should be able to:1. Understand the basic of Full Disclosure in Financial Reporting.

2. Understand the Full Disclosure Principles.

3. Understand the Objective of Financial Reporting.

4. Understand the types of Financial Information.

5. Understand the Financial Accounting Environment.

6. Understand the Supply & Demand of Financial Information.

7. Understand the Type of Transactions to be Disclosure.

8. Identify the Agregation of Operating Segments & Reportable Segments.

9. Understand the Required Segmented Information.

10. Understand the Interim Reporting Requirements and the Problems of Interim Reporting.

11. Identify the major disclosures in the Auditor’s Report Standards & Auditor’s Opinion.

12. Understand the Management’s Report.

13. Identify issues related to Financial Forecasts and Projections.

14. Understand the Internet Financial Reporting.

15. Understand the regulation of BAPEPAM-LK in Indonesia.

16. Describe the profession’s (Independent Auditor & Internal Auditor) response to Fraudulent Financial Reporting (FFR).

Full Disclosure in Financial Reporting

Full Disclosure in Financial

Reporting : The Basic

Full Disclosure

Principle

Notes to

Financial

Statements

Disclosure

Issues

Auditor’s and

Management’s

Report

Current

Reporting

Issues

Increase in

reporting

requirements

Differential

disclosure

Accounting

policies

Common notes

Special

transactions or

events

Post-balance-

sheet events

Diversified

companies

Interim reports

Auditor’s report

Management’s

reports

Reporting on

forecasts and

projections

Internet financial

reporting

Fraudulent

financial reporting

Criteria for

accounting and

reporting choices

Full Disclosure Principles

Full disclosure principle calls for financial reporting of any

financial facts significant enough to influence the judgment of an

informed reader.

Financial disasters at Microstrategy, PharMor, WorldCom, and

Global Crossing highlight the difficulty of implementing the full

disclosure principle.

Requires that statements and their notes present all information that

is relevant to the users’ understanding .

Objectives of Financial Reporting

Financial reporting must provide information that is useful to

investors & creditors & other users in making rational

investment, credit, and similar decisions.

The information must be comprehensible to those who have a

reasonable understanding of business and economic activities

& are willing to study the information with reasonable

diligence.

To provide information useful in assessing cash flow

prospects.

To provide information about business resources, claims to

those resources, and changes in them.

Types of Financial Information

Financial Accounting Environment

Profit-orientedcompanies

Not-for-profitEntities

Households

Relevant

Financial

Information

Investors

Creditors

Employees

Labor unions

Customers

Suppliers

Governmentagencies

Financialintermediaries

Suppliers (Providers) of

Financial Information

External Users Group

(Demand) of information

Relevant of Financial Information

Market share

Capital expenditures

Market growth

Earnings

Cash flow by business segment

Competitive landscape

Revenue by product type

Relevant of Significant Informations

Quality of management

Regulatory environment

Customer churn rate

Pricing strategy

Growth strategy

Significant operating costs by category

Sales and marketing strategy

Number of customers by type

Cost per gross additional customer

Strategic alliances

Research & development activities

Breadth of product offerings

Brand equity

Supply of Financial Information

Financial information is provided primarily

through financial statements and disclosure notes.

1. Mandatory Financial statements for public

firms including : balance sheet, income

statement, statement of stockholders’

equity and statement of cash flows.

2. Disclosures (mandatory and voluntary)

3. Other forms of information: Press release and

management forecasts (MD&A).

Supply of Financial Information :

Disclosures

Type of Disclosures:

Mandatory Disclosures: accounting policies, critical

estimates, subsequent events, pension information, lease

disclosures, etc.

Voluntary disclosure is guided by cost/benefit

considerations

The following are disclosure costs :

Information production cost.

Competitive disadvantage.

Litigation exposure.

Political exposure..

What are the suppliers’ disclosure

incentives?

The following are disclosure benefits of

supplying quality, credible, audited financial

statements:

Increase investors’ confidence on

company’s financial information and thus,

reduce the uncertainty about the quality of

financial information.

Enable managers to raise capital cheaply.

Type Transactions to be Disclosure

Two types of post-balance sheet events

must be disclosed :

1. Events that provide additional evidence about conditions that existed at the balance sheet date that require adjustments.

2. Events that arose subsequent to the balance sheet date, not requiring adjustments.

Identifying Operating Segments

An operating segment is a component that:

engages in business activities,

is reviewed by the conglomerate’s chief

operating officer; and

produces discrete financial information

from the internal financial reporting

system.

Agregation of Operating Segments

Operating segments may be aggregated if

they have the same basic characteristics in:

products and services rendered

production process

type or class of customer

methods of product or service distribution

regulatory environment

Reportable Segments

An operating segment is identified as

a reportable segment if it satisfies one

or more of the following criteria:

1. revenue criterion

2. profit or loss criterion

3. identifiable assets criterion

Reportable Segments

Criterion Thresholds

Segment revenue

Segment profit or loss

Identifiable assets

Is more than ten percent of the

combined revenue of all

operating segments

Is ten percent or more of the

greater of: the combined profit

of all operating segments not

showing a loss, or the combined

loss of all operating segments

reporting a loss

Ten percent or more of the

combined assets of all operating

segments

Required Segmented Information

General information about its operating segments

Segment profit and loss and related information

Segment assets

Reconciliation of segment revenues, profits and losses, and segment assets

Information about products and services and geographical areas

Major customers

.

Interim Reporting Requirements

Two approaches: integral and discrete

Most companies employ both approaches for

Reporting requirements:

1. Use of same accounting principles.

2. Period costs often charged as incurred

3. Not required to publish Balance Sheet or Statement of Cash Flows (SCF).

.

Problems of Interim Reporting

Advertising and similar costs

Expenses subject to year-end

adjustments

Income taxes

Extraordinary items

Changes in accounting principles

Earnings per share

.

Auditor’s Reporting Standard

states whether the financial statements are

in conformity with GAAP.

identify circumstances in which GAAP

have not been consistently applied.

disclosures in financial statements are

deemed adequate unless otherwise stated.

an opinion on the financial statements, if

possible.

.

The Auditor’s Opinion

The auditor can render or provide:

A qualified opinion

An unqualified opinion

Reasons requiring the addition of

explanatory paragraphs to the

unqualified report

An adverse opinion (circumstances)

A disclaimer

.

The Management’s Report

Management’s Discussion and Analysis covers three aspects of an enterprise :

Liquidity

Capital resources

Results of operations

Identifies favorable or unfavorable trends

Identifies any significant events and uncertainties that affect the three aspects

.

The Financial Forecasts & Projections

The investing public needs and wants more and better information about corporate expectations.

The disclosures take one of two forms:

1. Financial forecast of an entity’s expected financial position.

2. Financial projection based on hypothetical assumptions.

.

The Internet Financial Reporting

Corporations can reach more users by the

internet.

Internet reporting can make traditional reports

more useful:

Corporations can report more timely

information;

They can also report disaggregated data;

There is, however, concern about security

on the internet (hackers).

BAPEPAM-LK Regulation

Kewajiban bagi Emiten dan Perusahaan Publik untuk

menyampaikan Laporan Tahunan (annual report) :

1. Ikhtisar data keuangan penting

2. Laporan dewan komisaris

3. Laporan direksi

4. Profil perusahaan

5. Analisis dan pembahasan manajemen

6. Tata kelola perusahaan

7. Tanggung jawab direksi atas laporan keuangan

8. Laporan keuangan yang telah diaudit


Peraturan BAPEPAM No. X.K.1 Lampiran Keputusan

Ketua Bapepam-LK Nomor : Kep-86/PM/1996

tanggal 24 Januari 1996 tentang Keterbukaan

Informasi yang Harus Segera Diumumkan kepada

Publik.


Pedoman Penyajian dan Pengungkapan Laporan Keuangan

Emiten atau Perusahaan Publik (P3LKEPP):

Untuk memberikan suatu panduan penyajian danpengungkapan yang terstandarisasi dengan mendasarkanpada prinsip-prinsip pengungkapan penuh (full disclosure), sehingga dapat memberikan kualitas penyajian danpengungkapan yang memadai bagi pengguna informasiyang disajikan dalam pelaporan keuangan Emiten atauPerusahaan Publik.

Aturan yang lebih detil sebagai acuan untuk pelaksanaanguna melaksanakan Peraturan Nomor VIII.G.7 tentangPedoman Penyajian Laporan Keuangan. Peraturan inimenetapkan bentuk, isi, dan persyaratan dalam penyajianlaporan keuangan yang harus disampaikan oleh Emitenatau Perusahaan Publik.

P3LKEPP BAPEPAM-LK :

Industry Categories

Industri Manufaktur

Industri Investasi

Industri Rumah Sakit

Industri Jalan Tol

Industri Perhotelan

Industri Restoran

Industri

Telekomunikasi

Industri Konstruksi

Industri Perdagangan

Industri Transportasi

Industri Real Estate

Industri Peternakan

Industri Perkebunan

Industri PertambanganUmum

Industri Minyak & Gas Bumi.

Industri Perbankan.

Arens (2005) :Fraudulent financial reporting (FFR) is an intentional misstatement or omission

of amounts or disclosure with the intent to deceive users.

Most cases of FFR involve the intentional misstatement of amounts not disclosures.

For example, Worldcom is reported to have capitalized as fixed asset, billions

dollars that should have been expensed.

Omission of amounts are less common, but a company can overstate income by

omitting account payable and other liabilities. Although less frequent, several

notable cases of FFR involved adequate disclosure.

For example, a central issue in the Enron case was whether the company had

adequately disclosed obligations to

affiliates known as specialm purpose entities.

Fraudulent Financial Reporting (FFR) :

Definition


Definition

Defined as “intentional or reckless

conduct, whether act or omission, that

results in materially misleading financial

statements.”

Could be gross and deliberate distortions.

Could be misapplication of accounting

principles or failure to properly disclose

material items.

Fraudulent financial reporting adalah perilaku

yang disengaja atau ceroboh,baik dengan tindakan

atau penghapusan,yang menghasilkan laporan

keuangan yang menyesatkan (bias).

Fraudulent financial reporting yang terjadi disuatu

perusahaan memerlukan perhatian khusus dari

auditor independen & internal auditor.

Fraudulent Financial Reporting (FFR)

1. Manipulasi, falsifikasi, alterasi atas catatan akuntansi

dan dokumen pendukung atas laporan keuangan yang

disajikan.

2. Salah penyajian (misrepresentation) atau kesalahan

informasi yang signifikan dalam laporan keuangan.

3. Salah penerapan (misapplication) dari prinsip

akuntansi yang berhubungan dengan jumlah,

klasifikasi, penyajian (presentation) dan

pengungkapan (disclosure).


Categories


Causes

Impacted by internal and externalenvironments.

Opportunities increase in certain situations:

1. Weak board of directors or audit committee.

2. Weak internal controls.

3. Unusual or complex transactions.

4. Accounting issues requiring significant subjective judgments.

5. Ineffective internal audit function.

Penelitian COSO (1999) yang berjudul “Fraudulent

Financial Reporting : 1987 – 1997, An Analysis of U.S.

PublicCompany”, bahwa dari hasil analisa perusahaan yang

listing di Securities Exchange Commission (SEC) selama

periode Januari 1987 s.d. Desember 1997 ( 11 tahun) :

Teridentifikasi sejumlah 300 perusahaan yang terdapat

fraudulent financial reporting yang memiliki karakteristik yaitu

memiliki permasalahan bidang keuangan (experiencing

financial distress), lax oversight dan terdapat fraud dengan

jumah uang yang besar (Ongoing, large-dollar frauds). Contoh

kasus Fraudulent Financial Reporting antara lain Enron, Tyco,

Adelphia dan WorldCom.


COSO Research

The National Commission On Fraudulent Financial Reporting

(The Treadway Commission) merekomendasikan 4 (empat)

tindakan untuk mengurangi kemungkinan terjadinya fraudulent

financial reporting :

1. Membentuk lingkungan organisasi yang memberikan

kontribusi terhadap integritas proses pelaporan

keuangan(financial reporting).

2. Mengidentifikasi dan memahami faktor- faktor yang

mengarah ke fraudulent financial reporting.

3. Menilai resiko fraudulent financial reporting di dalam

perusahaan.

4. Mendisain dan mengimplementasikan internal control yang

memadai untuk financial reporting.


Prevention & Detection

Mulfrod & Comiskey (2002) “The Financial

Numbers Game : Detecting Creative Accounting Practices”

Difokuskan bagi para investor sebagai pembelajaran untuk mengetahui secara cepat

adanya fraudulent accounting.

Tiga (3) atribut untuk mendeteksi adanya risiko fraudulent financial reporting :

1. terdapat kelemahan dalam internal control.

2. perusahaan tidak memiliki komite audit.

3. terdapat family relationship antara Director dengan karyawan perusahaan.

Klasifikasi dari Creative Accounting Practices :

1. Recognizing Premature or Ficticious Revenue.

2. Aggressive Capitalization & Extended Amortization Policies).

3. Misreported Assets and Liabilities.

4. Creative with the Income Statement.

5. Problems with Cash-flow Reporting.



Menurut The National Commission on Fraudulent Financial

Reporting, pencegahan dan pendeteksian awal atas

fraudulent financial reporting harus dimulai pada saat

penyiapan laporan keuangan.

Rezaee (2002) dalam bukunya “Financial Statement Fraud:

Prevention and Detection” membahas cukup mendalam

tentang teknik untuk mencegah dan mendeteksi adanya

fraud dalam laporan keuangan . Dalam buku tersebut

dijelaskan kasus kolapsnya Enron di Amerika Serikat (USA),

yang menghebohkan kalangan dunia usaha secara jelas dan

lengkap, termasuk adanya praktek kolusi.



Statements on Auditing Standards No. 99(Consideration of Fraud in a Financial Statement Audit).

Revisi dari SAS No. 82, diberlakukan efektif untuk audit

laporan keuangan setelah tgl 15 Desember 2002.

Auditor bertanggungjawab untuk merencanakan dan

melaksanakan audit guna mendapatkan reasonable

assurance bahwa laporan keuangan bebas dari salah saji

material, baik yang disebabkan oleh kekeliruan error

maupun fraud.

Terdapat perubahan penting terhadap prosedur audit serta

dokumentasi yang harus dilakukan oleh auditor

Menegaskan agar auditor independen memiliki integritas

serta menggunakan professional skepticism melalui critical

assessment terhadap audit evidence yang dikumpulkan.


Independent Auditor’s Responsibility

Standar Profesional Akuntan Publik (SPAP)

Standar Auditing Seksi 110 :“Tanggung Jawab dan Fungsi Auditor Independen”

Pada paragraf 2, auditor bertanggung jawab untuk merencanakan dan

melaksanakan audit untuk memperoleh keyakinan memadai tentang

apakah laporan keuangan bebas dari salah saji material, baik yang

disebabkan oleh kekeliruan atau kecurangan.

Oleh karena sifat bukti audit dan karakteristik kecurangan, auditor

dapat memperoleh keyakinan memadai, namun bukan mutlak, bahwa

salah saji material terdeteksi.

Auditor tidak bertanggung jawab untuk merencanakan dan

melaksanakan audit guna memperoleh keyakinan bahwa salah saji

terdeteksi, baik yang disebabkan oleh kekeliruan atau kecurangan, yang

tidak material terhadap laporan keuangan.


Independent Auditor’s Responsibility

Statement on Internal Auditing Standards (SIAS) No. 3,

tentang Deterrence, Detection, Investigation, and

Reporting of Fraud (1985), memberikan pedoman bagi

auditor internal tentang bagaimana auditor internal

melakukan pencegahan, pendeteksian dan

penginvestigasian terhadap fraud. SIAS No. 3 tersebut

juga menegaskan tanggung jawab auditor internal untuk

membuat suatu laporan audit tentang fraud.


Internal Auditor’s Responsibility

REFERENCES

1. American Institute of Certified Public Accountants (AICPA) ,http://www.aicpa.org

2. Arens, Alvin A, Randal J. Elder & Mark S. Beasley, Auditing and AssuranceServices : An Integrated Approach, Pearson Education, 10th Edition, 2005.

3. Financial Accounting Standard Board (FASB), http://www.fasb.org4. Http://www.bapepam.go.id5. Indonesian Institute of Accountants (IIA), Dewan Standard Akuntansi

Keuangan (DSAK), http://www.iaiglobal.or.id6. International Accounting Standard Board (IASB), http://www.iasb.org7. International Financial Reporting Standard (IFRS), http://www.ifrs.org8. Kieso, Donald E., Jerry J. Weygandt & Terry D. Warfield, Intermediate

Accounting, John Wiley & Sons, Inc, 13th Ed, 2009.9. Mulford, Charles W. & Comiskey , Eugene E. The Financial Numbers Game :

Detecting Creative Accounting Practices. John Wiley & Sons. January 2002.

10. Rezaee, Zabihollah. Financial Statement Fraud : Prevention and Detection.

John Wiley & Sons, August 2002. 11. Warren, Carl S., James M. Reeve & Philip E. Fess, Accounting, South-Western College

Publishing, 21th Ed, 2004.

http://www.aicpa.org/







http://www.fasb.org/








http://www.bapepam.go.id/









http://www.iaiglobal.or.id/









http://www.iasb.org/







http://www.ifrs.org/







Documents

Modul-6- Full Disclosure in Financial Reporting · PDF fileFull Disclosure in Financial Reporting ... omitting account payable and other liabilities. ... kasus Fraudulent Financial