Why did LTAT fail to report RM88.9m impairment in FY17?

Question

Accepted Answer

LTAT Failed to Report RM88.9 Million Impairment Due to Non-Compliance with Financial Reporting Standards

The Armed Forces Fund Board (LTAT) did not report an RM88.90 million impairment in its financial statements for the fiscal year ended December 31, 2017 (FY17) because of lapses in adhering to Financial Reporting Standards. Specifically, the National Audit Department (JAN) identified that the fair value of two "available for sale securities" had significantly declined below their purchase cost, a key consideration for recognizing impairment losses. The fair value of these two shares stood at RM18.46 million against a purchase cost of RM107.36 million as of FY17.
Failure to Recognise Impairment Losses

LTAT’s financial statements for FY17 did not account for the RM88.90 million impairment loss related to two securities. The determination of impairment for these particular shares hinges on whether there has been a significant or prolonged decline in their fair value below the initial cost. As of the close of FY17, the market value of these investments had fallen to RM18.46 million from the original acquisition cost of RM107.36 million.
Non-Compliance with Financial Reporting Standards

The findings by the National Audit Department highlighted that these reporting omissions were a direct result of failures to comply with established Financial Reporting Standards. This non-compliance extended beyond the impairment of securities. JAN also noted that proceeds from a property development sale, amounting to RM202.71 million, were incorrectly included in LTAT's FY17 revenue.
Impact on Financial Performance

The identified lapses had a substantial impact on LTAT's reported financial results for FY17. The fund's profit for the year was consequently reduced to RM370.56 million from an initial figure of RM662.17 million. Furthermore, LTAT's retained earnings were adversely affected, shifting from a positive RM259.99 million to a negative RM31.6 million.
Broader Financial Reporting Delays

The non-recognition of the impairment and other reporting errors in FY17 contributed to a delay in the finalisation of LTAT's FY18 accounts. The board acknowledged that the negative retained earnings in the finalised FY17 audited accounts were expected to have a profound impact on its FY18 performance. LTAT indicated that it was in the process of finalising its FY18 accounts and anticipated announcing the results by July 2019.

Reading history

Hide →

This history is cleared when the page is closed.

Why did LTAT fail to report RM88.9m impairment in FY17?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends