T The misappropriation of village credit institution (lpd) funds is a recurring issue in bali. in practice, such misappropriation is frequently prosecuted as a corruption offense, even though the classification of lpd funds as state finances remains a subject of debate. this study examines whether the defendant\\\'s actions met the criteria established in article 2, paragraph (1) of law number 31 of 1999 (as amended by law number 20 of 2001) and whether the judge\\\'s reasoning in rendering the verdict adhered to legal provisions. the study employs a normative legal research method with a descriptive approach, utilizing secondary data analyzed qualitatively. the findings indicate that the defendant\\\'s actions did not satisfy the elements of article 2, paragraph (1) of the law on the eradication of corruption crimes, as the element of \\\"potentially causing financial loss to the state\\\" was not met. consequently, the application of that article is deemed inappropriate; the defendant\\\'s actions are more accurately classified as the criminal offense of embezzlement in office. regarding the judge\\\'s reasoning, the assessment concerning the elements of acting \\\"unlawfully\\\" and \\\"enriching oneself or another person\\\" aligned with the facts revealed during the trial; however, the assessment regarding the element of \\\"causing financial loss to the state\\\" lacked an adequate analysis of the legal status of lpd funds. thus, the verdict finding the defendant guilty of corruption under article 2, paragraph (1) of the law on the eradication of corruption crimes leaves room for legal debate.