Audit report highlights major discrepancies in Fenaka’s 2024 financial statements; Auditor General issues a disclaimer of opinion!

The Auditor General’s Office has released the 2024 audit report for Fenaka Corporation Limited, issuing a disclaimer of opinion stating that an audit opinion could not be provided on the company's financial statements.

In the report signed and released by Auditor General Hussain Niyazy on November 1, 2026, it was stated that a formal opinion could not be expressed regarding the company's financial statements due to a lack of sufficient evidence to verify their accuracy. This disclaimer highlights significant irregularities in the company’s financial management.

One of the most significant issues highlighted in the audit report is the inability to verify the accuracy of the 2024 opening balances and the comparative figures for 2023. The Auditor General stated that the figures in the financial statements cannot be deemed reliable, noting that previous years' audit reports for Fenaka also resulted in a disclaimer of opinion. Furthermore, the report pointed out that complete details of journal entries recorded during 2024 were not provided for the audit.

The audit report has raised significant concerns regarding the company's revenue and expenditure. Specifically, it highlighted the absence of an adequate accounting system to manage the 36.8 million MVR in revenue generated from subcontracted projects and the corresponding 357.9 million MVR in expenses incurred for those ventures. Furthermore, the audit revealed that there is no formal agreement governing 20.5 million MVR allocated for mosque electricity tariffs, which is currently included within the 789 million MVR provided as government subsidies.

The audit report reveals significant deficiencies in Fenaka Corporation’s asset and inventory management. A discrepancy of MVR 147.5 million was identified between the company’s fixed asset register and its financial statements, while the validity of MVR 1.6 billion recorded as Capital Work-in-Progress could not be verified. Furthermore, although the company reported an inventory valued at MVR 530 million, the report highlights that MVR 444.5 million of this figure consists of negative balances.

Regarding its financial position, Fenaka Corporation recorded a substantial net loss of MVR 547 million by the end of 2024. While this marks an improvement compared to the MVR 811 million loss reported in 2023, the company’s debt has surged to critical levels. Current liabilities have reached MVR 3.9 billion, exceeding the company's total assets by MVR 2.7 billion. Consequently, the Auditor General has raised serious concerns regarding the company's ability to continue as a going concern.

Regarding the company's administrative operations, 1.4 billion MVR was incurred in administrative expenses, of which 398.4 million MVR lacked sufficient supporting documentation. The report also highlighted that the validity of 3.5 billion MVR in trade payables owed to various parties could not be verified. Furthermore, a significant discrepancy was revealed between the 2.5 billion MVR stated as the company’s share capital and the 750 million MVR actually registered with the Ministry of Economic Development.

The audit report further noted that, in line with the government's decision to streamline Fenaka’s operations, efforts have commenced to transfer certain functions to STELCO and MWSC. To this end, the board has decided to transition specific services to STELCO by September 2026, while water and sewerage services in Addu City and Fuvahmulah City are slated for transfer to MWSC. However, the report stated that the financial impact of these structural changes has yet to be determined.