CULTIVATING FINANCIAL EXCELLENCE: A THOROUGH EXAMINATION OF PSAK 69 IN AGRICULTURAL BUSINESS OPERATIONS

Abstract

This research explores the readiness of Agro Industry Companies in Jember and Probolinggo, Indonesia, for the implementation of Accounting Standards for Agriculture (PSAK 69) in their 2018 financial statements. Employing a qualitative method involving interviews and observations within the selected companies, namely PT Mangli Djaya Raya, PTPN X (Kertosari Garden), and Perum Perhutani KPH Jember and Probolinggo, the study assesses the adoption and adherence to PSAK 69. The findings reveal a partial implementation of PSAK 69 among the selected companies, with a predominant reliance on historical cost to recognize and measure biological assets. PT Mangli Djaya Raya, specializing in tobacco plants, presents an interesting case where financial statements are reported annually, although the lifecycle of tobacco plants extends beyond the reporting period. Consequently, tobacco plants do not manifest as biological assets on their balance sheet. PTPN X, engaged in the cultivation of tobacco, cacao, and sugarcane, demonstrates a tendency to recognize biological assets based on historical cost rather than fair value, although cacao and sugarcane are exceptions, having been duly recognized as biological assets. Similarly, Perum Perhutani KPH Jember and Probolinggo, with commodities such as teak, rosewood, and mahogany, also refrain from recognizing biological assets based on fair value. The common impediment faced across these companies in the implementation of PSAK 69 is the challenge of measuring biological assets using fair value, primarily due to a lack of an active market. This obstacle poses potential implications for the reliability and relevance of financial statement information pertaining to biological assets.

In essence, the research sheds light on the varying degrees of adherence to PSAK 69 within the agro industry, underscoring the prevalent use of historical cost over fair value in recognizing and measuring biological assets. The identified challenges related to fair value measurement highlight the need for further consideration and guidance in the context of agricultural activities. Addressing these challenges is crucial for enhancing the reliability and relevance of financial information disclosed by agro industry companies, ultimately contributing to the overall transparency and accountability of financial reporting in the sector.