KUALA LUMPUR (April 11): The National Audit Department had highlighted unrecognised impairment of RM88.9 million as well as land sale proceeds of RM202.71 million which should not have been recognised in the Armed Forces Fund Board (LTAT)'s financial statements for FY17.

At a press conference in Parliament, LTAT chief executive officer Nik Amlizan Mohamed explained that the unrecognised impairments arose from two of the fund's investments, namely Dayang Enterprise Holdings Bhd and Sapura Energy Bhd.

"The fair value for the two shares as at end of FY17 amounts to RM18.46 million compared with the purchase cost of RM107.36 million. Significant or prolonged decline in fair value below cost is consideration to determine impairment for these two shares," she said.

Besides that, LTAT had also recognised RM202.71 million from the sale of lands located in Cochrane and Bukit Jalil which should not have been recorded in its financial statements, as the terms of the transaction were not completed in 2017. It is unclear whether the transaction had been completed after 2017.

"As such, impact from these findings as highlighted in the National Audit Department's qualified opinion caused LTAT's profit for FY17 to be reduced from RM662.17 million to RM370.56 million.

"In addition, LTAT's retained earnings would drop drastically to negative retained earnings of RM31.6 million from positive retained earnings of RM259.99 million previously," she said.

She said the issuance of the FY18 accounts had been delayed due to the late submission of the FY17 accounts, adding that this would have a significant impact on its FY18 accounts.

LTAT is in the midst of finalising its accounts for FY18 and expects to announce its financial statements by July 2019.