PETALING JAYA: The Auditor-General has flagged the financial position of waste management agency Solid Waste Management and Public Cleansing Corporation (SWCorp) as a “going concern”.
“Based on SWCorp’s financial statement as of Dec 31, 2023, there are uncertainties on its ability to continue operations on the basis of a going concern,” said the Auditor-General report series 1/2025 tabled in the Dewan Rakyat on Monday (Feb 24).
It added that SWCorp’s cash and cash equivalents were not enough to cover payments to concessionaire company creditors.
“The annual grants from the federal government and SWCorp’s revenue are not enough to cover its operations cost. SWCorp’s ability to cover operations cost and its future financial commitments would depend on the additional financial aid from the federal government,” the report said.
SWCorp reported losses for three consecutive years. As for the year under review, SWCorp reported a total revenue of RM2.24bil which included RM46.63mil in grants from the government – against an expenditure of RM2.294bil. The high operating cost resulted in a deficit of RM53.90mil
A bulk of SWCorp’s operational cost came from solid waste collection and cleaning services, which amounted to RM2.014bil in 2023, leading to a net deficit.
As the agency’s liabilities continue to increase, it is unable to cover its long-term liabilities with its existing assets. Its outstanding payments to concessionaire company creditors amounted to RM681.78mil.
For every RM1 of current liabilities, SWCorp only had RM0.80 in current assets, which has led to difficulties in meeting its short-term debt obligations.
In the audit recommendations, the AG had suggested that SWCorp has to come up with clear directions and effective mechanisms to generate revenue to continue operations with a strong financial position to reduce dependence on the federal government.
It said the company should also take action to resolve the discrepancies in the recorded balances of Accounts Receivable between SWCorp and the relevant local authorities.
SWCorp said in its response to the audit that one of the main reasons for its cashflow problem is the issues related to debt collection.
“SWCorp is in the midst of devising a strategy to reduce dependence on federal government grants in the future,” it said.
