KUALA LUMPUR: The International Islamic University Malaysia (IIUM) denies that it is unable to repay its debts, as reported in the Auditor General's Report (LKAN) 2/2024.
In a statement today, IIUM clarifies that it has not taken any loan and emphasises that the findings in the AG's report presented in Parliament are inaccurate and misleading.
The AG's report has revealed that IIUM's financial position is not stable. Up to Dec 31, 2022, it recorded a cumulative deficit of RM17.06 million.
The institution also supposedly could not repay current and long-term debts, as it depended on government grants, from 2020 to 2022.
"As a public university, IIUM is not allowed to take loans from any financial institution for operational expenses. Therefore, the management of IIUM would like to confirm that no loans have ever been taken to date," the IIUM statement read.
"This can be proved through the audit results of the financial statements by independent auditors, KPMG Malaysia, which has awarded IIUM a clean certificate rating for three consecutive years (2021 - 2023)."
The university said its financial position, flagged as unstable, was due to significant provisions for the retirement benefit plan for IIUM staff who will retire, in accordance with the Malaysian Financial Reporting Standards (MFRS).
"In the financial year ending 2022, RM308.59 million was recorded as the overall commitment for the retirement benefit plan."
It said at the beginning of implementing the retirement benefit payment, the management intended not to rely on special government grants but to use the university's internal resources.
"Up to 2023, almost RM100 million has been paid to retiring IIUM staff using the university's internal resources.
"The government fully funds other public universities through the Public Service Department (Pension Division).
"However, with the increase in inflation rates, gradual salary increases since 2012, and the increasing age pattern of staff (retirements), the annual payment commitment has also increased."
The university added that it conducted a study and found that internal resources were no longer sufficient to finance retiring staff's retirement service benefit expenses.
"Therefore, the management has submitted a paper to the Finance Ministry to request for additional annual allocations. IIUM is expected to spend an average of RM24 million starting from the financial year 2024.
"This amount is expected to increase in line with the prime minister's earlier announcement to improve the new public service salary structure, which will be implemented at the end of 2024."