Analysis of Cash Flow Shenanigans on PT. Pertamina (Persero) Tbk

Currently, In Indonesia, there are a rising number of instances of financial figures being fraudulently altered. An alleged corruption case occurred from 2009 to 2012. Where, PT Pertamina Patra Niaga entered into a non-cash fuel sale and purchase agreement with PT Asmin Koalindo Tuhup. This study aims to analyze the alleged corruption case that happened to PT Pertamina and analyze fraud cases using cash flow shenanigans. Secondary data for this study was obtained from PT Pertamina (Persero) Tbk's official website. The financial statements of the company for the years prior to, during, and following the fraud will be compared in this study to draw conclusions. The majority of the ratio proves that PT Pertamina experienced a decline in business in 2009. Where as PT. Pertamina needs more time to sell their inventoryand collect their receivable.


INTRODUCTION
Reports can be used as a decision-making guide for company management and investors, so that in order to convince and attract investors, companies try to continue to maintain financial reporting standards that investors like so that various levels of damage to financial reports continue to emerge. Financial statement fraud is an act that is deliberately carried out to present materially wrong information in financial reports (Christian et al., 2022). One of the cases of fraud on financial statements that occurred at PT Pertamina Tbk. As a result of the fraud incident, the Pertamina company experienced a loss. Apart from that, in this study, we will analyze the handling cases based on cash flow crimes with the aim of seeing the details of what kind of handling was carried out and how it happened with a comparison over the three (3) years of PT Pertamina Tbk's financial statements. Several studies examine ways to manipulate, detect, and prevent cash flow fraud (Tarjo et al., 2023). However, research is still rare that predicts manipulation of cash flows using financial crimes. Misstatements in financial statements are usually carried out using techniques contained in cash flow shenanigans. The cash flow shenanigans ratio is used in research as a red flag in financial crime (Tarjo et al., 2023).
Pertamina Company (Persero) is one of the State-Owned Enterprises engaged in the oil and gas sector. To carry out its main business, the company has six subholdings which are engaged in upstream, refinery & petrochemical, commercial & trade, gas, electricity & renewable energy, and shipping. In addition, through its other subsidiaries, the company also does business in insurance, health services, aviation, and property development. The company Pertamina (Persero) in 2009 -2012 was investigated for committing acts of corruption in the procurement of liquefied natural gas (LNG). State losses in this case are interpreted as Rp. 451,663,843,083.20 or Rp. 451 billion. Therefore, research was conducted to analyze fraud committed by PT Pertamina (Persero) Tbk using the cash flow shenanigans technique. The purpose of this report is to analyze cash flow reports in PT. Pertamina and to see the shenanigans that occurred in the cash flow report that caused losses to the state that occurred from 2009 to 2012.

LITERATURE REVIEW Cash Flow Statement
The cash flow statement is a report that presents information on sources, uses, changes in cash and equivalents during an accounting period (Tanjung, 2009). This report can provide information on the company's ability to generate cash from operating activities, investments, settlement of obligations and dividends (Hery, 2013).
Cash flow can be categorized into 3 activities, namely operations, investing, and financing. Each activity has different cash inflows and cash outflows. In operating activities, generally cash comes from receipts from customers, receipts from interest income and other income. While cash out is for payments to suppliers, employees, operations, interest expenses, and so on. Furthermore, in investing activities, cash comes in from the sale of fixed assets and cash out of the acquisition of fixed assets, payment of advances for fixed assets, and so on. The last part is financing activities which consist of receiving from loans, paying loans, paying dividends, paying financial charges, and so on (Schilit et al., 2018).

Financial Shenanigans
According to Schilit et al. (2018), Financial shenanigans are defined as actions taken by management to provide investors and financial readers with a perception of the company's good financial performance and economic health. Financial shenanigans consist of earnings manipulation shenanigans, cash flow shenanigans, key metric shenanigans, and acquisition accounting shenanigans. Financial shenanigans are used in names accounting flexibility, but its abuse remains unrevealed ultimately eroding shareholder value (Christian & Jully stella, 2021). The method that is often used by an accountant in his fraudulent actions is by making fake journal entries to hide misappropriation of assets (Christina et al., 2021).
Companies manipulate financial reports to give the perception that the company's performance is good and worthy of investment. Cash flow shenanigans can be manipulated from the emergence of the idea of transferring all desired cash inflows to the operations department and transferring unwanted cash outflows to other sections, namely investment and financing so that the results of a perfect cash flow statement are obtained (Schilit et al., 2018). There are 3 strategies to detect cash flow shenanigans.
Cash Flow Shenanigans 1 Diverting cash inflows from financing to operations. There are several techniques for diverting cash inflows from financing to operations, namely recording fake operational cash flows from ordinary bank loans, increasing operational cash flows by selling receivables before the billing date, and inflating operational cash flows by falsifying sales of receivables.
Cash expenses improperly, recording inventory purchases as an investment outflow, and shifting operating cash outflow from the statement of cash flows. Cash Flow Shenanigans 3 Increase operational cash flow using unsustainable activities. The four techniques used in these shenanigans are Increase operating cash flow by paying vendors more slowly, increase operating cash flow by collecting from customers faster, increase operating cash flow by purchasing less inventory, and increase operating cash flow by one-time gains.

METHOD
This study uses a drafting scheme in the form of a case study, where the case study used comes from one of the companies listed on the Indonesia Stock Exchange (IDX). The research was conducted using qualitative and quantitative data approaches, where qualitative data is research data in the form of sentences or pictures and not in the form of numbers or numbers (Sugiyono, 2017). And quantitative data involves ratio numbers in the analysis of company financial statements. This research uses secondary data sourced from the official website of PT Pertamina (Persero) Tbk. The company's financial statements in the year before the fraud occurred, the year the fraud occurred, and after the fraud occurred will be compared in this study to obtain conclusions.

RESULTS AND DISCUSSION Case Chronology
This case started with searches that were carried out in three offices of PT. Pertamina Patra Niaga and PT. Asmin Koalindo Tuhup on Wednesday 9/11/2022 which was carried out by Bareskrim Polri. This search is carried out to search for evidence and/or other evidence as evidence for an investigation. The corruption case at PT Pertamina allegedly took place from 2009 to 2012 which allegedly resulted in state losses reaching IDR 451 billion. The results of the investigation prove that there have been unlawful acts and abuse of authority that enrich themselves or other people or corporations. For losses to state finances as referred to in article 2 and or article 3 of Law No. 31 of 1999 as amended by Law no. 20 of 2001 concerning the Eradication of Criminal Acts of Corruption Jo article 55 paragraph (1) 1 of the Criminal Code. PT Asmin Koalindo Tuhup did not carry out its payment obligations, resulting in the occurrence of bad debts in the implementation of the 2009-2012 Industrial Fuel sale and purchase agreement (Hutasuhut & Raharjo, n.d.).
This corruption case that occurred from 2009-2012 started with a sale between PT. Pertamina Patra Niaga with PT Asmin Koalindo Tuhup for a non-cash fuel sale and purchase agreement. Initially, the contract for the 2009-2010 period involved an agreement of 1,500 kiloliters of fuel/month. But in 2010-2011 there was an increase in the volume of shipments to 6,000 kiloliters of fuel/month. In 2011-2012 there was an increase to 7,000 kiloliters of fuel/month (Kumparan, n.d.).

Technical analysis of cash flow shenanigans at PT Pertamina Tbk in 2009
Source:   emergence of a very significant increase in the provision for impairment of trade receivables can be caused by manipulated sales in 2009, where PT Pertamina won an international tender process to take over the management rights of ROC Oil Company Australia in the Basker Manta Gummy (BMG) oil block. However, on May 27, 2009, the board of commissioners of PT Pertamina was unable to fulfill the sale and purchase agreement from the tender that was won and continued with the takeover process, so that the BMG block was officially closed because it was considered uneconomical to continue. This fact resulted in a loss for PT Pertamina of IDR 568 billion. Apart from that, ratio analysis is carried out using the ratios of Days Payable Outstanding ( Next comes the operating cycle, generally a shorter operating cycle is preferred because it shows that the company can turn its investment into cash more quickly, allowing for increased liquidity and faster reinvestment of funds. However, it can be seen from the comparison that 2008 and 2009 had a difference of about 40 days, which in 2009 showed weakness in business. Longer cash conversion cycles may indicate inefficiencies in managing working capital, potential liquidity issues, or difficulty collecting payments from customers. It can be seen from the results of the author's processing that in 2009 it took 60 days which indicated the possibility of a cash tie-up in the business.

CONCLUSION
One of the alleged corruption cases occurred at PT Pertamina, allegedly occurring from 2009-2012. Thus, we conduct an analysis of cash flow shenanigans at PT Pertamina. PT Pertamina (Persero) Tbk is experiencing potential bottlenecks in paying its business receivables and is suspected of having committed acts of corruption with a very large number by the Criminal Investigation Police. The third cash flow trick, Boosting Operation via Unstainable Activities, includes this kind of deception. The allowance for a reduction in trade receivables increased significantly. PT Pertamina suffered a loss of IDR 568 billion because of this occurrence. From the comparisons of ratios, we can conclude that PT Pertamina from the year 2008 to 2009 needs more time to collect receivables and paying their payables. Also need longer time to sell existing inventory and turn their investment into cash which can tie up cash and potentially impact liquidity of the company. The majority of the ratio proves that PT Pertamina experienced a decline in business in 2009.