KUALA LUMPUR: Different audit methodologies were behind the RM4.8bil gap between Lembaga Tabung Haji's (TH) reported profit and its financial position review, says Tan Sri Dr Madinah Mohamad.
The former auditor-general said TH's audited financial statements by the National Audit Department showed a net profit of about RM3.4bil, while PricewaterhouseCoopers' (PwC) Financial Position Review reported a deficit or loss of about RM1.4bil.
"The difference in methodology and approach is what caused the two reports to produce different figures," she said.
She was speaking at the Musyawarah Nasional 2.0 forum themed Reality and Perception: Do Not Politicise TH here on Tuesday (Aug 25).
Madinah said the difference should not immediately be interpreted as evidence that the department's audit had failed to detect problems with TH's finances.
Instead, she said, the two reports had different mandates, objectives, scopes and methodologies.
"Because you are comparing apples and oranges. So they are not the same," she said.
She said the department conducted TH's statutory audit under the Audit Act 1957 and Tabung Haji Act 1995, with the objective of giving an opinion on whether its financial statements presented a true and fair view in accordance with the Malaysian Financial Reporting Standards (MFRS) applicable at the time.
PwC, meanwhile, conducted its Financial Position Review as a special assignment based on different terms of reference and took a broader approach in assessing TH's financial position, she said.
Madinah said the difference also involved the recognition of asset impairment and the valuation of investments, including those involving TH's subsidiaries, associates and investment assets.
She said documents submitted to the Royal Commission of Inquiry (RCI) showed differing professional views over the use of FRSIC Consensus 14 in assessing TH's 2017 financial position.
"The issue is not whether FRSIC Consensus 14 existed, but whether its use was the only acceptable interpretation in the context of a statutory body such as TH," she said.
The RCI report, released on July 29, said TH should have recorded a net loss of RM1.4bil for the 2017 financial year instead of the RM3.4bil profit reported in its financial statements.
It said that if MFRS had been fully applied for the 2017 financial year, TH would have recorded the RM1.4bil loss, indicating that its financial position was already critical at the time.
Madinah, who served as auditor-general from 2017 to 2019, said audit opinions should be assessed based on the audit evidence, accounting standards and auditing standards in force when the audit was conducted, rather than information that emerged later.
She said weaknesses in management, governance or investment decisions did not necessarily mean auditors had failed to discharge their responsibilities.
Madinah added that JAN had an experienced audit team and that the audit process was not conducted by her alone.
