On Wednesday, December 1, 2021, the Specific Industry Audit class was led by Mr. Andreas Haryono as Audit Director of KPMG, discussing Real Estate. It began with an introduction about the business process of real estate which is dependent on the motivation of purchasing the asset, which was connected to Financial Accounting Standards (PSAK). Developer’s business process consists of: 1) Planning, 2) Preliminary survey, 3) Permit & Licenses, 4) Land acquisition, 5) Construction, and 6) Marketing and sales. Each step in the business process has different risks. Relevant auditing procedures depend on the risks of each business process, moreover, auditors also need to consider assertion management.
Mr. Andreas, in addition to delivering lessons, also provided us with a case study that students needed to complete first before being checked together. Lessons were resumed by discussing accounting behavior in the real estate industry, including how to record each of the motivations for the property and how it will affect the balance sheet and income statement.
Furthermore, discussion about common issues in the real estate industry occurred, including:
- Dual Purpose and ancillary service, on how to record the purchase as either Property Plant Equipment (PPE) or Property Investment
- Regarding PSAK 1, if the normal operation is more than 1 year, then it is acknowledged as current as the age of operations on a property is usually more than 1 year.
- Joint Arrangement
- Borrowing costs from a property.
We also specifically discussed PSAK 72 regarding Accounting Policy Revenue, five-step revenue model with regards to the real estate industry, the financial statements of a real estate company, and issues regarding materials that had been discussed. The class ended in Q&A session with Mr. Andreas.