A-G’s report paints incomplete picture of HRD Corp’s investments, according to document
PETALING JAYA: The national audit department may not have painted a fair picture about Human Resource Development Corporation’s (HRD Corp) investments, according to a reply document on the findings of the 2024 Auditor-General’s Report.
The report highlighted HRD Corp’s unrealised losses in its investments, without emphasising its unrealised profits.
However, according to the reply document sighted by FMT, the company had recorded unrealised profits of RM119 million, making for an unrealised net investment profit of RM69 million as of Dec 31, 2023.
Until an investment is divested, any changes in its value are considered unrealised, or “on paper”. A realised profit or loss occurs when an investment is sold for a higher or lower price than it was purchased.
About 84% of HRD Corp’s RM3.7 billion investments are in low-risk investments such as fixed deposits, bonds, sukuk and unit trusts, with the remainder in equities which, though considered higher risk, have provided unrealised returns of 10.8%.
In its audited financial statements, HRD Corp recorded investment gains of RM82 million in 2020, RM71 million in 2021, RM90 million in 2022 and RM176 million last year.
Contrary to several reports that HRD Corp “failed’ its audit, it does not appear to be so according to the 2023 audit report by BDO, as disclosed in its annual report last year. Based on the said audit report, HRD Corp recorded a net surplus of RM81.3 million in the financial year ending December 2023, up from RM29.8 million in the previous year.
According to a financial expert familiar with HRD Corp, it is a misrepresentation to “cherry-pick” certain key facts to be presented in an audit report.
“It is also expected that while some investments may lose money, others gain in value. In the case of HRD Corp, not only does their principal capital appear to remain preserved and intact, they recorded a clear net gain,” the source added.
Under Section 27 of the PSMB Act 2001, the investment panel of HRD Corp can invest funds to earn a return to finance the organisation’s operations.
HRD Corp is responsible for administering the human resources development fund and collecting a levy for promoting training and development of employees, apprentices and trainees.
