One example of fraud within the scope of a large corporation occurred at PT Kimia Farma Tbk

in 2002, which found a marker of net income in the company's financial statements in the 2001
financial year. The incident started from the findings of Hans Tuanakotta and Mustofa (HTM)
matters of discretion in the financial statements in the first semester of 2001. The party that
conducted the 2001 book year audit was the HTM office itself, only different partners. In the
year 2001 the partner of KAP HTM is Syamsul Arif, while the partner of KAP HTM in auditing
the first semester of 2002 is Ludovicus Session W. Mark up is worth Rp 32.7 Billion, because
in the financial statements that should profit obtained amounting to Rp 99.6 billion written Rp
132.3 Billion, with net sales of Rp 1.42 Trillion.

According to PT Kimia Farma Tbk suspect that such misalignment may be different in
inventory stock post. Based on the results of examination of Bapepam found some evidence as
follows:

1. In the framework of restructuring of PT Kimia Farma Tbk, there were errors in the valuation
of inventories of goods and services as well as sales record errors for the year ended 31
December 2001.

2. News reporting in Kontan said that the Ministry of State Owned Company decided to
suspend the divestment process of state-owned shares in PT Kimia Farma after seeing an
indication of inflated profits in the financial statements in the first half of 2002.

3. There is a misstatement in the presentation of the financial statements of PT Kimia Farma

Tbk. The impact of the error resulted in an overstated profit in net income for the year ended
December 31, 2001 amounting to Rp 32.7 billion which represents 2.3% of sales and 24.7% of
PT Kimia's net profit Farma Tbk.

4. There was an error in the raw material industry unit in the form of overstated on the sales
side of Rp 2.7 billion, overstated goods inventory at central logistic unit of Rp 23.9 billion and
overstated goods inventory at pharmaceutical wholesalers unit of Rp 8.1 billion.

The mistake was done by:

1. Made two different inventory price lists respectively issued on February 2002 and February
3, 2002, both of which are master price authorized by the authorized party, namely the Director
of Production of PT Kimia Farma Tbk

2. Double-listing sales on units of pharmaceutical wholesalers and raw material units.

Based on the description, the actions taken by PT Kimia Farma are proven to violate Bapepam
Regulation no. VIII G 7 on the guidelines for presentation of financial statements. Based on
the examination that has been done, it is proven that the accountant who has performed audit
procedures including audit sampling procedures that have been arranged in the SAP and not
found any element of deliberate them. Nevertheless, the audit process did not succeed in
detecting the markup of profit made by PT Kimia Farma. According to Article 5 letter N of
Law No. 8 of 1995 on capital market, the old directors of PT Kimia Farma for the period of
1998-June 2002 are required to pay Rp 1 billion to be deposited to the state treasury for
conducting inflation practices on the financial statements as of December 31, 2001. Ludovicus
Sensi W KAP HTM as the auditor of PT Kimia Farma is required to pay Rp 100,000,000 to be
deposited to the state treasury because of the audit risk which fails to detect the profit bubbles
made by PT Kimia Farma, even though it has conducted audit procedures according to SPAP
and not found the existence of intentional elements.

The occurrence of misstatement of financial statements which is an indication of unhealthy

actions conducted by the management of PT Kimia Farma which apparently can not be detected
by a public accountant who audited the financial statements of the period. This is a question of
whether the incident is a mistake from a public accountant, while the public accountant after
being examined has performed an audit procedure in accordance with SPAP. If you look at
section SA section 230 paragraph 12 states that: (12) Because the auditor's opinion on financial
reporting is based on the concept of obtaining reasonable assurance, the auditor is not a
guarantor and his report is not a guarantee. Therefore, the discovery of subsequent material
misstatements, caused by errors or frauds contained in the financial statements does not imply
that by itself it is evidence