Rafizi Defends PwC Audit of Tabung Haji, Says RAV Method Violates Accounting Principles

KUALA LUMPUR, Aug 25 — Former Economy Minister and Pandan MP Rafizi Ramli has defended the PricewaterhouseCoopers (PwC) audit of Lembaga Tabung Haji (TH), arguing that relying on Realisable Asset Value (RAV) instead of marked-to-market accounting violated core financial principles of prudence and substance over form.

Addressing claims that both RAV and marked-to-market methods are valid and that the PwC audit was conducted solely to tarnish TH’s reputation, Rafizi stated that financial reporting standards require transactions to reflect true market realities rather than artificial valuations.

Drawing on his background as a chartered accountant with the Institute of Chartered Accountants in England & Wales (ICAEW), Rafizi highlighted two fundamental accounting rules that govern financial evaluation:

• Substance Over Form: Financial transactions must be reported according to their actual economic reality rather than their legal classification. Rafizi explained that using the RAV method allowed TH to report an on-paper profit of over RM3 billion instead of acknowledging a RM1 billion loss. Consequently, hibah (dividend) payouts were maintained by rolling over new depositors’ funds, meaning distributions were drawn from fresh deposits rather than genuine profit.
• Prudence: Financial statements must reflect the most realistic and conservative value obtainable if assets were to be liquidated in the market. Rafizi asserted that the RAV approach artificially inflated TH’s assets far above their true market worth.

As evidence of this valuation gap, Rafizi pointed out that TH assets transferred to Urusharta Jamaah Sdn Bhd (UJSB) eight years ago for recovery have failed to recover, resulting in UJSB’s debt to TH being rolled over for another 10 years.

He urged financial professionals and the public to look past political views, emphasizing that focus should instead be directed toward resolving the national debt burden arising from the Tabung Haji bailout.

–NMT