This article first appeared in The Edge Financial Daily, on February 11, 2016.

KUALA LUMPUR: Lembaga Tabung Haji has rejected the claim that it resorted to “creative accounting” in preparing its financial statements, saying they were drawn according to standards underlined by the Malaysian Accounting Standards Board.

The fund said it was still in the black after paying out the dividend and bonus for 2015, and did not dip into its reserves for the payout as suggested by certain quarters.  

In its statement yesterday, Tabung Haji said Auditor-General Tan Sri Ambrin Buang on Feb 3 confirmed that the fund’s accounting policies were consistent and prudent.

“Therefore, there [was] no issue of creative accounting by Tabung Haji as alleged by certain quarters,” it said.

Tabung Haji recently courted controversy after it received a letter from Bank Negara Malaysia (BNM) warning the fund of its reserves slipping into negative territory, as it had 98 sen in assets for each ringgit in liabilities, and as such may not be able to pay out dividends to its nine million depositors.

Tabung Haji acknowledged receiving the letter, but said that if its investment portfolios were taken into account, its assets outweighed its liabilities.

On Feb 4, Tabung Haji announced a 5% dividend for 2015 to its depositors and an additional 3% haj bonus to contributors who had not yet performed the Muslim pilgrimage.

The fund’s assertion comes on the heels of criticism levelled against it by PKR vice-president Rafizi Ramli, who said on Tuesday that its ability to pay out the dividend and bonus is by no means a measure of stability of its financial standing.

Rafizi claimed that Minister in the Prime Minister’s Department Datuk Seri Jamil Khir Baharom’s announcement that Tabung Haji had made a profit of RM3.53 billion was misleading, as it did not take into account the losses incurred from its shares and securities.

Tabung Haji, however, insisted that its financial standing is stable, saying its accumulated profit is in positive territory even after its recently announced 5% dividend payout.

The fund said its accumulated profit currently stands at RM609 million, more than double the RM293 million recorded at the end of 2014.

“This effort is a preliminary move and is in accordance with Bank Negara’s recommendation to Tabung Haji to revise its existing reserve policy.

“It should be stressed here again that the 2015 bonus was paid according to the current annual profit and [the] reserves [were never used],” it added.

The fund also explained that there are two categories of its reserves — distributable and non-distributable. The distributable portion consists of accumulated and current-year profits, while the non-distributable category is from AFS (available for sale) reserves that change according to the share price.

Last week, Parti Amanah Negara urged the fund to reveal the source of its dividend and bonus for 2015, saying it should not be dipping into its reserves following BNM’s warning that they were in the red.