What was the financial consequence of Tabung Haji not fully adopting MFRS in 2017?

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Tabung Haji Would Have Reported a Net Loss of RM1.4 Billion in 2017 if MFRS Standards Were Fully Adopted

In the 2017 financial year, Tabung Haji (TH) did not fully implement Malaysian Financial Reporting Standards (MFRS). Had these standards been applied retrospectively for that year, TH would have recorded a net loss of approximately RM1.4 billion. This contrasts with the reported net profit of RM3.4 billion for the same period.
Non-Adoption of MFRS Standards in 2017

The Royal Commission of Inquiry (RCI) report highlighted that TH’s financial statements for the 2017 financial year did not completely adhere to the Malaysian Financial Reporting Standards (MFRS). This deviation from full adoption is a key factor in understanding the reported financial figures of that year.
Impact on Net Profit Reporting

The RCI specifically noted that if MFRS standards had been fully adopted for the 2017 financial year, TH would have shown a net loss of around RM1.4 billion. The institution instead reported a net profit of RM3.4 billion for that same financial year, indicating a significant difference in financial outcomes based on reporting standards.
RCI's Findings on Asset Valuation

The RCI was of the opinion that TH's use of the realisable asset value (RAV) method was inconsistent with Section 22 of the Tabung Haji Act, which pertains to asset valuation. This inconsistency arose because the RAV was not recorded in TH’s audited financial statements, further underscoring the reporting discrepancies.
Implications for Financial Reserves

The RCI report also addressed TH's profit distribution practices from 2014 to 2017, stating they did not comply with Section 22 of the Tabung Haji Act. Profit distributions, it was noted, should originate from actual profits, not from depositors' funds. This practice, according to the RCI, negatively impacted TH’s financial reserves and fostered unrealistic expectations of high profit distribution rates among depositors.

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What was the financial consequence of Tabung Haji not fully adopting MFRS in 2017?

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