PT Hanson International Tbk. Finally, restatement the financial statements for the 2016 and 2017 financial years in accordance with the orders of the Financial Services Authority. OJK asked Hanson International to resubmit the financial statements for the 2016 and 2017 financial years because the company was proven to have committed a violation by recognizing revenue from the sale of ready-to-build lots with a gross value of Rp732 billion using the full accrual method in the annual financial statements for the period 31 December 2016. 

Restatement of 2017 financial statements audited by public accountant Moch. Dadang Syachruna from the Public Accounting Firm (KAP) Purwantono, Sungkoro & Surja, partner of Ernst & Young. Meanwhile, the 2016 financial report restatement was audited by public accountant Sherly Jokom from the same KAP. In his note, the auditor stated that the consolidated financial statements as of December 31, 2017 and December 31, 2016 were restated to correct the recognition of revenue from land sales. In note 39, the income referred to is the sale of land or ready-to-build land (Kasiba) transactions to PT Asabri (Persero) because of different views on the legal position of documents related to the sale transaction in applying the accounting standard for revenue recognition based on PSAK No.44 " Accounting for Real Estate Development Activities "as concluded in the written order of the OJK in letter No.S-38 / PM.1 / 2019 dated 11 July 2019. The Financial Services Authority (OJK) imposed sanctions on the partner public accounting firm of Ernst and Young (EY) because it was considered inaccurate in the presentation of the financial statements of PT Hanson International Tbk (MYRX). 

For this mistake, OJK has sanctioned to freeze the Registration Certificate (STTD) for one year. Deputy Commissioner for Capital Market Supervision Djustini Septiana in her letter said that Sherly Jokom of the Purwantono, Sungkoro and Surja Public Accountants Firm was proven to have violated the capital market law and the code of ethics for the public accountant profession of the Indonesian Institute of Certified Public Accountants (IAPI). Sherly was proven to have violated Article 66 UUPM jis. Paragraph A 14 SPAP SA 200 and Section 130 of the Code of Ethics for the Professional Public Accountant - Indonesian Institute of Certified Public Accountants. OJK assessed that this KAP had committed a violation because it was not careful and thorough in auditing PT Hanson International Tbk's financial statements. (MYRX) for the financial year of December 31, 2016. 

The mistakes made by the auditors were unprofessional in implementing audit procedures related to whether the annual financial statements of MYRX contained material errors that required changes or not on the facts known by the auditors after the financial statements were published. The error referred to by OJK is an overstatement with a value of up to Rp 613 billion. due to the recognition of revenue using the full accrual method for transactions with a gross value of Rp 732 billion. In addition, the financial report also does not reveal the existence of a Sale and Purchase Agreement (PPJB) for ready-to-build lots (KASIBA) dated July 14, 2019, which was carried out by Hanson International as a seller.

Question:

a. In this case, the auditor committed negligence or fraud? Explain your answer!

b. Because of this fraudulent financial reporting, whose side suffers the loss at most? Explain your answer!

c. According to your analysis, what mistakes auditor did, and how they should act!