MID
SEMESTER TEST
Sekar
Tiyas Arum
1910631030139
Submitted
to Fulfill Paperwork Mid Semester Test
Irvan
Yoga Pardistya, SE.,MM.,Ak
FACULTY
OF ECONOMICS AND BUSINESS
UNIVERSITY
OF SINGAPERBANGSA KARAWANG
2019
TABLE OF CONTENTS
CHAPTER 1 INTRODUCTION
1.1 Background
1.2 Questions
CHAPTER 2 THEORY
2.1 Accounting
2.1.1
Definiton of Accounting
2.1.2
Types of Accounting
2.1.3
Scopes of Accounting
2.1.4
Advantages of Accounting
2.2 Financial
Accounting
2.2.1
Definition of Financial Accounting
2.2.2
Scopes of Financial Accounting
2.2.3
Advantages of Financial Accounting
CHAPTER 3 DISCUSSION
3.1 Company Profile
3.2 Discussion
CHAPTER I
INTRODUCTION
1.1 Background
Accounting consists of various types,
which will be discussed here is about financial accounting, especially profits.
PLN managed to print a net profit of IDR 11.56 trillion in 2018. The profit
increased by 162.30 percent or almost three times the 2017 profit of IDR 4.42
trillion. In fact, in the third quarter of 2018, PLN still pocketed a loss of
Rp18.48 trillion due to foreign exchange losses of Rp17.32 trillion. Whereas
PLN, the red plate electricity company indeed managed to record an increase in
revenue from Rp255.29 trillion in 2017 to Rp272.89 trillion in 2018. However,
revenue growth was only by single digits, that is 6.89 percent or lower than
the increase in revenue in the previous year amounted to 14.57 percent.
On the other hand, the increase in
revenue is not proportional to the growth of PLN's operating expenses.
Observed, operating expenses grew from Rp275.47 trillion in 2017 to Rp308.18
trillion in 2018. One note that should be observed, is that PLN has experienced
a foreign exchange loss. Observed, PLN experienced a surge in foreign exchange
loss from IDR 2.93 trillion in 2017 to IDR 10.92 trillion in 2018. That means,
PLN's foreign exchange loss skyrocketed by 272.27 percent.
PLN pocket a net profit of up to Rp
11.56 trillion if there is an increase in operating expenses, foreign exchange
losses, and financial costs which are in fact higher than the company's revenue
because, first is the compensation income item, interestingly this income has
not yet appeared on the 2017 balance sheet. Unmitigated, compensation income
was recorded at Rp23.17 trillion. In the financial statements, PLN explained
that compensation income came from government compensation. Compensation income
is receivable from compensation from the government for the replacement of the
electricity cost (BPP) of several classes of customers whose electricity sales
tariff is lower than the BPP, and has not been calculated in subsidies. These
government compensation receivables are recognized as income on an accrual
basis. As of December 31, 2018, the company's compensation receivables amounted
to Rp23.17 trillion.
Second is the net other income which
recorded a rise of 359.34 percent from Rp3.40 trillion in 2017 to Rp15.66
trillion in 2018. The increase in other net income posts was supported by
revenue from the government. In the financial statements, PLN explained that
the revenue from the government is receivable from the government which is
recognized as revenue of IDR 7.45 trillion. Previously, this note did not
appear on the balance sheet in 2017. PLN again explained, based on the letter
of the Minister of Finance of the Republic of Indonesia No. S 440 / MK.02 /
2018 dated June 28, 2018, the government approved the replacement of
electricity BPP for several classes of customers whose electricity sales
tariffs were lower than the BPP and had not been calculated in the 2017
electricity subsidies of IDR 7.45 trillion.
In addition, the surge in net other
income was also contributed by the adjustment in the purchase price of fuel and
lubricants. Noted, the adjustment in the purchase price of fuel and lubricants
rose 487.30 percent from Rp688.33 billion in 2017 to Rp4.04 trillion in 2018. However,
the company did not mention the contribution of these government compensation
receivables in increasing profits. PLN Finance Director Sarwono Sudarto said
the achievement was supported by sales, operational efficiency and government
support through the Coal Domestic Market Obligation (DMO).
"Compared to the previous year,
electricity sales during 2018 increased by Rp16.9 trillion to Rp263.5
trillion," Sarwono said in his release, Wednesday (5/29). In fact, if you
look back the increase in PLN electricity sales is not proportional to the
growth in operating expenses and foreign exchange losses.
From the above case, it can be
summarized that PLN's revenue in 2018 has increased compared to the previous
year from Rp255,29 trillion to Rp272,89 trillion, but there is still a shortage
that is in fact the increase in revenue is only one digit, lower than the
previous year's revenue which reached double digits.
Tabel 1.1
1.2 Questions
1. What is the case about?
2. Who is
involved in the case?
3. When did the case occur?
4. Where did the case occur?
5. Why does the PLN's income get a lot of attention
from the government?
6. How can PLN’s income go up?
CHAPTER
2
THEORY
2.1 Accounting
2.1.1
Definition of Accounting
1. According to the Committee of Terminology of
American Institute of Certified Public Account: “Accounting
is the art of recording, classifying summarising in a significant manner and in
terms of money, transaction, and events which are, in part at least of a
financial character and interpreting the results thereof.”
2.
According
to Bierman and Drebin: “Accounting
may be defined as identifying, measuring, recording and communicating of
financial information.”
From
the statement above, accounting is the process of recording, identifying,
measuring, recording, and communicating transaction or events which are in part
of financial character.
2.1.2
Types of Accounting
1. Financial accounting. This field is concerned with the
aggregation of financial
information into external reports. Financial accounting requires
detailed knowledge of the accounting
framework used by the reader of a company's financial
statements, such as Generally Accepted Accounting Principles (GAAP)
or International Financial Reporting Standards (IFRS).
Or, if a company is publicly-held,
it requires a knowledge of the standards issued by the government entity
responsible for public
company reporting in a specific country (such as the Securities
and Exchange Commission in the United States). There are several
career tracks involved in financial accounting. There is a specialty in
external reporting, which usually involves a detailed knowledge of accounting
standards. There is also the controller
track, which requires a combined knowledge of financial and management
accounting.
2. Public accounting. This field investigates the financial
statements and supporting accounting systems of client companies, to provide
assurance that the financial statements assembled by clients fairly present
their financial results and financial
position. This field requires excellent knowledge of the relevant
accounting framework, as well as an inquiring personality that can delve into
client systems as needed. The career track here is to progress through various
audit staff positions to become an audit partner.
3. Government accounting.
This field uses a unique accounting framework to create and manage funds, from
which cash is disbursed to pay for a number of expenditures
related to the provision of services by a government entity. Government
accounting requires such a different skill set that accountants tend to
specialize within this area for their entire careers.
4. Forensic accounting. This field involves the reconstruction
of financial information when a complete set of financial
records is not available. This skill set can be used to reconstruct
the records of a destroyed business, to reconstruct fraudulent records, to
convert cash-basis accounting
records to the accrual basis,
and so forth. This career tends to attract auditors.
It is usually a consulting position, since few businesses require the services
of a full-time forensic accountant. Those in this field are more likely to be
involved in the insurance
industry, legal support, or within a specialty practice of an audit firm.
5. Management accounting.
This field is concerned with the process of accumulating accounting information
for internal operational reporting. It includes such areas as cost
accounting and target
costing. A career track in this area can eventually lead to the
controller position, or can diverge into a number of specialty positions, such
as cost
accountant, billing clerk,
payables
clerk, and payroll clerk.
6. Tax accounting. This field is concerned with the
proper compliance with tax regulations, tax filings, and tax planning to reduce
a company's tax burden in the future. There are multiple tax specialties,
tracking toward the tax manager position.
7. Internal auditing.
This field is concerned with the examination of a company's systems and transactions
to spot control weaknesses, fraud,
waste, and mismanagement, and the reporting of these findings to management.
The career track progresses from various internal
auditor positions to the manager of internal audit. There are
specialties available, such as the information systems auditor and the
environmental auditor.
2.1.3
Scopes of Accounting
1. The
scope of Accounting in personal life
The financial
transactions which occur in the individual life of a person are recorded
properly in the books of accounts with a view to ascertaining receipts-payments
and assets-liabilities.
2. The scope of Accounting in
business organizations
The prime
objective of a business is to earn a profit. Financial transactions of a
business concern are recorded in the books of accounts to ascertain operating
results and financial position. Besides accounts of financial transactions’ of
a business concern are kept properly to fulfill other objects also.
3. The scope of Accounting in
non-trading concerns
Keeping
accounts for non-trading concerns like, school, college, hospital, madrasa,
mosque, temple, church, club, association, etc. is essential because financial
transactions occur in these institutions also.
4. The scope of Accounting in
Government Offices
The system of
accounts is prevalent in govt. offices, courts and state-owned organizations
for determining income-expenditure and proper running of the administration. In
preparing national planning and budget, accounting information is needed and
reasons for national progress or regress can be known through interpretation
and evaluation of accounting data.
5. The scope of Accounting in
professionals
Professionals
like doctors, engineers, advocates, actors, actresses earn by their
professions. They also maintain their accounts of income and expenditure. It is
mandatory for them to maintain accurate accounts of income and expenditure as
they are to pay income tax.
2.1.4 Advantages of Accounting
1. Complete and Systematic
Record
Accounting
is based on generally accepted principles and a scientific way of presentation
of business transactions in books of accounts. As such, accounting is a
complete and systematic recording of all business transactions. The limitations
of humans, that they can not keep all transactions in mind, is overcome by
accounting because each and every business transaction can be recorded and
analyzed through same.
2. Determination of Selling
Price
The main
function of the management is decision making. Accounting helps and guides the
management to take decisions in respect of determining selling price, deduction
of cost, increase in sales etc.
3. Valuation of the Business
In case of
sale of business or conversion of one business into another, true and fair
value of the business is calculated. Through accounting, the correct picture
can be depicted in Balance Sheet and as such the purchase price can be
determined. Balance Sheet shows the value of assets & liabilities of the
business which can be used to calculate its net worth.
4. Helps in Raising Loan
For further
expansion, business must have sufficient funds. Sometimes, due to paucity of
funds business cannot do well. In those cases further funds can be raised by
taking loan from some financial institutions like banks, IDBI, ICICI etc. These
financial institutions lend money on the basis of profitability and soundness
of the business enterprise. The profitability and soundness can be measured by
the Trading and Profit & Loss Account and Balance Sheet, the final results
of books of accounts.
5. Evidence in Court of Law
The
business transactions are recorded in the books of accounts supported by
authenticated documents viz. vouchers etc. Thus, the accounts can be used as an
evidence in the court of law.
6. In Compliance of Law
Every
business has to deal with various government departments like income tax, sales
tax, custom and excise etc. Various periodic returns are to be filed with these
departments. Accounting helps in preparation and filing of such returns.
7. Inter-Firm or Intra-Firm
Comparison:
Trading and
Profit & Loss Account shows net profit earned or net loss sustained by the
business. If the accounts are maintained properly, records relating to various
expenses, sales, gross profit and net profit etc. can be compared. As such,
accounting helps in inter- firm and intra-firm comparison. Comparison of
accounts of two different enterprises for the same year is known as inter-firm
comparison and comparison of two different periods for the same business
enterprise is known as intra-firm comparison. The performance of the business
enterprise is then compared with the predetermined goals and shortcomings, if
any, can be rectified accordingly.
8. Facilitates Audit
Depending
upon the size, nature and type of business, certification of books of accounts,
known as audit, is mandatory. Audit certificate issued by the auditor on the
accounts is a clean chit to organization which proves that there are no
irregularities in the organization.
9. Effective Management
Accounting
facilitates proper feed back to the management. As such, it helps the
management in planning as well as control of different activities of the
business enterprise. It also helps the management to evaluate the performance
of the business enterprise and takes timely action to remove the shortcomings
in the management.
2.2 Financial Accounting
2.2.1 Definition of Financial Accounting
1. According to Marilyn Pendergast, CPA and
managing director of UHY Advisor: “Financial accounting describes the systems
that process business transactions, these systems provide useful information
about the financial position, income and expenses, and cash flows of your
business. Data is displayed in financial statements that are used to report
business activities in an understandable and consistent way. This allows people
outside of your company—such as stockholders, creditors or donors to
non-for-profit entities—to use the information to make better decisions about
your company when it comes to things like investments, loans or other financial
support,”
2. According to Robert Duron, PhD, CPA, CFE,
associate professor of accounting at Husson University: “Financial accounting is
geared toward external users and stakeholders such as investors, creditors,
regulators, and the general public, while accounting focuses more on the
preparation and dissemination of financial information to an organization and
its constituents, whereas finance focuses more on the acquisition and use of
financial resources by the organization.”
From
the statement above, financial accounting is the systems that process business
transactions, these systems provide useful information about the financial
position, income and expenses, and cash flows geared toward external users and
stakeholders such as investor, creditors, regulators, and the general public.
2.2.2 Scopes of
Financial Accounting
1. Dealing with financial transactions
Accounting
as a process deals only with those transactions which are measurable in terms
of money. Anything which cannot be expressed in monetary terms does not form
part of financial accounting however significant it is.
2. Recording of information
Accounting
is an art of recording financial transactions of a business concern. There is a
limitation for human memory. It is not possible to remember all transactions of
the business. Therefore, the information is recorded in a set of books called
Journal and other subsidiary books and it is useful for management in its
decision-making process.
4. Classification of Data
The
recorded data is arranged in a manner so as to group the transactions of
similar nature at one place so that full information of these items may be
collected under different heads. This is done in the book called ‘Ledger’. For
example, we may have accounts called ‘Salaries’, ‘Rent’, ‘Interest’,
Advertisement’, etc. To verify the arithmetical accuracy of such accounts, the
trial balance is prepared.
5. Making Summaries
The
classified information of the trial balance is used to prepare profit and loss
account and balance sheet in a manner useful to the users of accounting
information. The final accounts are prepared to find out operational efficiency
and financial strength of the business.
6. Analyzing
It
is the process of establishing the relationship between the items of the profit
and loss account and the balance sheet. The purpose is to identify the
financial strength and weakness of the business. It also provides a basis for
interpretation.
7. Interpreting
the financial information
It
is concerned with explaining the meaning and significance of the relationships
established by the analysis. It should be useful to the users, so as to enable
them to take correct decisions.
8. Communicating
the results
The
profitability and financial position of the business as interpreted above are
communicated to the interested parties at regular intervals so as to assist
them to make their own conclusions.
2.2.3 Advantages of
Financial Accounting
1. Have information
about the results of economic operations.
2. Know the financial
position and cash flows.
3. Identify what the
organization’s assets are.
4. Report timely the
situation of the company.
5. Render accounts to
third parties.
6. Monitor expenses and
income corresponding to each period that is evaluated.
CHAPTER
3
DISCUSSION
3.1
Company Profile
Vision
of PLN is recognized as a world-class company that is growing, superior and
trusted by relying on human potential. Mission of PLN is conducting electricity
business and other related fields, oriented to customer satisfaction, company
members and shareholders. Making electricity as a medium to improve the quality
of people’s lives. Keeping electricity as driving economic activity. Conducting
business activities that are environmentally sound.
Motto
of PLN is “Electricity for a Better Life”. Purpose and Objectives of the
Company is to carry out the business of providing electricity for the public
interest in an adequate quantity and quality and to foster profits and carry
out the assignment of the Government in the electricity sector in order to
support development by applying the principles of a Limited Liability
Company. PLN history Starting in the
late 19th century, the fields of sugar factories and electricity factories in
Indonesia began to be increased when a number of Dutch companies engaged in
sugar factories and tea factories set up electric power plants for their own
needs. Between 1942-1945, there was a shift in management of Dutch companies by
the Japanese, after the Dutch surrendered to Japanese troops at the beginning
of World War II.
The
process of transfer of power occurred again at the end of World War II in
August 1945, when Japan surrendered to the Allies. This opportunity was
exploited by the youth and electric workers through the delegation of the
Workers / Employees of Electricity and Gas who together with the Central KNI
Leader took the initiative to face President Soekarno to hand over the
companies to the Government of the Republic of Indonesia. On October 27, 1945,
President Soekarno established the Electricity and Gas Bureau under the
Department of Public Works and Energy with a power generation capacity of 157.5
MW. On January 1, 1961, the Electricity and Gas Service was changed to BPU-PLN
(General Chairman of the State Electric Company) engaged in electricity, gas
and coke which was dissolved on January 1, 1965. At the same time, 2 (two)
companies the state namely the National Electricity Company (PLN) as the
manager of state-owned electricity and the State Gas Company (PGN) as the gas
manager was inaugurated. In 1972, according to Government Regulation No. 17,
the status of the State Electricity Company (PLN) is stipulated as the Public
Electricity Company and as the Holder of Electricity Business Authority (PKUK)
with the task of providing electricity for public purposes. In line with the
Government’s policy of providing an opportunity for the private sector to
engage in the electricity supply business, since 1994 the status of PLN has
shifted from a Public Company to a Company (Persero) and also as a PKUK in
providing electricity for public use until now.
PLN’s
core business is the supply of electricity, especially in generation, transmission
and distribution. Obtaining the task of electrifying all over the archipelago,
PLN has the obligation to increase installed capacity for power supply and the
development of electricity infrastructure such as transmission networks,
substations, and distribution networks. At all times, we continue to improve
ourselves and improve services, considering that electricity is a basic
infrastructure need that will create a multiplier effect for the progress of
the Indonesian economy. PLN’s business continues to expand into various
business sectors through subsidiaries, associated entities, joint ventures, and
special purpose vehicles (SPV) under the auspices of the PLN Group. Through the
implementation of SOLID (Securing Business Sustainability, Optimizing Cost
Efficiency, Leading Industry Capabilities, Increasing Profit Contribution and
Developing New Edge) business portfolios, we will continue to develop services
to become a World Class Electricity Company.
PLN’s
board of Directors :
1.
Djoko Raharjo Abumanan as (Plt) Managing Director of PLN
2.
Sripeni Inten Cahyani as Director of Strategic Procurement 1
3.
Djoko Raharjo Abumanan as Strategic Procurement Director 2
4.
Sarwono Sudarto as Finance Director
5.
Muhamad Ali as Director of Human Capital Management
6.
Syofvi Felienty Roekman as Director of Corporate Planning
7.
Amir Rosidin as Regional Business Director in Central Java
8.
Supangkat Iwan Santoso as Regional Business Director of East Java, Bali and
Nusa Tenggara
9.
Haryanto W.S. as Regional Business Director for West Java
10.
Machnizon as Kalimantan Regional Business Director
11.
Syamsul Huda as Sulawesi Regional Business Director
12.
Ahmad Rofiq as Maluku and Papua Business Director
13.
Wiluyo Kusdwiharto as Sumatra Regional Business Director.
3.2
Discussion
1. What is the case about?
The
case is about an increase in PLN's income in the following year but there are
still shortages, the drawback is the percentage increase in revenue is lower
than the previous year.
2.
Who is
involved in the case?
Those who took part in the case were PLN
management especially the finance department, and certainly the government
because PLN was a State-Owned Enterprise, here the government could protest or
ask for an explanation if there were any irregularities in the financial
statements of PLN.
3. When did the case occur?
The case occurred from 2017 to 2018 because
the financial statements or the total revenue of a company are released at the
end of each year.
4. Where did the case occur?
The case certainly occurred within the
scope of PLN, especially central PLN.
5. Why does the PLN's income get a lot of attention
from the government?
Because PLN is one of the State-Owned Enterprises, and what attracts attention is that PLN is also one that has a net profit in 2018 and has experienced a significant increase in revenue. in revenue even though the amount of revenue increase only touched one digit but this is an extraordinary achievement.
6. How can PLN’s income go up?
First is the compensation income item.
Interestingly, this income has not yet appeared on the 2017 balance sheet.
Unmitigated, compensation income was recorded at Rp23.17 trillion. Second is
the net other income which recorded a rise of 359.34 percent from Rp3.40
trillion in 2017 to Rp15.66 trillion in 2018. The increase in other net income
posts was supported by revenue from the government. In the financial
statements, PLN explained that the revenue from the government is receivable
from the government which is recognized as revenue of IDR 7.45 trillion.
Previously, this note did not appear on the balance sheet in 2017.
In addition, the surge in net other
income was also contributed by the adjustment in the purchase price of fuel and
lubricants. Noted, the adjustment in the purchase price of fuel and lubricants
rose 487.30 percent from Rp688.33 billion in 2017 to Rp4.04 trillion in 2018.
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