KUALA LUMPUR, July 31 (Bernama) -- Lembaga Tabung Haji’s (TH) profit distribution is only announced based on audited financial results, thus strengthening the integrity of the financial reporting process and increasing depositors' confidence in the institution.
The measure is taken following recommendations by the Royal Commission of Inquiry (RCI) regarding aspects of TH’s financial reporting and profit distribution declaration for the period prior to the implementation of the Recovery and Restructuring Plan in 2018.
The pilgrimage board said the RCI recommended that profit distributions be declared only based on audited financial statements, in line with the principles of good governance, transparency and financial sustainability.
“TH welcomes the recommendation and has been implementing the approach since 2022,” it said in a statement on Friday.
TH said that as a result of the implementation of governance reforms, improved risk management and strengthened investment strategies, the statutory body’s financial performance continued to show positive developments.
It said profit distribution has risen from 3.10 per cent in the financial year 2023 to 3.25 per cent in 2024, then to 3.50 per cent in 2025, the highest rate in eight years.
“This achievement reflects TH’s continued commitment to managing the savings of more than 9.8 million depositors in a prudent, transparent and sustainable manner, in line with the institution’s mandate as a fund manager for Muslims as well as facilitating the national hajj,” he added.
TH said that, according to the RCl report, TH’s financial statements for the 2017 financial year did not fully adopt the Malaysian Financial Reporting Standards (MFRS).
“Had MFRS standards been fully adopted at that point, TH should have recorded a net loss of around RM1.4 billion, compared to the RM3.4 billion net profit reported for the financial year.
"RCI is of the opinion that the use of the realisable asset value (RAV) method is inconsistent with Section 22 of the Tabung Haji Act relating to asset valuation because the RAV is not recorded in TH's audited financial statements,” it said.
The findings, it said, reinforced the need to ensure that financial statements are prepared transparently, consistently and in compliance with the accounting standards in force.
The RCI report also stated that TH’s approach to distributing profits from 2014 to 2017 was not in compliance with Section 22 of the Tabung Haji Act.
“Profit distribution should be paid from actual profits and not from the depositors’ own funds.
“The RCl report stated that the practice had an impact on TH’s financial reserves and created continued expectations of a high rate of profit distribution among depositors,” said the pilgrimage board.
TH’s financial position from 2014 to 2017 showed an asset-liability deficit gap that grew from RM352 million to RM4.093 billion, it said.
-- BERNAMA