Auditor General Issues ‘Disclaimer of Opinion’ on WAMCO Financials as Net Losses Surge Past MVR 127 Million

The Auditor General’s Office has issued a “Disclaimer of Opinion” on the 2022 financial statements of state-owned Waste Management Corporation Limited (WAMCO), citing extensive record-keeping failures, unverified expenses, and unreconciled revenue streams.

The audit report, signed by Auditor General Hussain Niyazy, stated that auditors were unable to obtain sufficient appropriate evidence to form an opinion on the corporation’s financial statements.

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WAMCO’s net loss increased by 55.5% to MVR 127.9 million in 2022, compared with MVR 82.2 million in 2021.

The report identified 17 grounds for the disclaimer, highlighting concerns over the verification of expenses, revenue reconciliation, asset records, debt collection, and the disclosure of legal claims.

WAMCO’s operating loss increased by 12.3% to MVR 281.6 million in 2022, up from MVR 250.8 million the previous year. Its accumulated deficit reached MVR 486.2 million by the end of the reporting period.

Revenue rose by 23.1% to MVR 215.4 million, including MVR 88.1 million from waste disposal fees and MVR 76.1 million from collection services.

However, rising administrative costs driven by staff-related expenses amounting to MVR 234.7 million and continued operating losses placed further pressure on the corporation’s financial position.

The government injected MVR 105.2 million in equity into WAMCO in 2022, following a capital injection of MVR 66.9 million in 2021.

The audit report also raised concerns about the company’s ability to continue operating, stating that its going-concern position depended on continued government financial support and working capital subsidies from the Ministry of Finance.

Among the issues identified in the report was MVR 32.5 million recorded in fuel costs under cost of sales. Auditors said WAMCO had failed to maintain fuel inventory movement records throughout the year, preventing them from verifying the reported expenditure.

Auditors were also unable to reconcile MVR 76.1 million in collection service revenue with the company’s internal billing system, raising concerns about the completeness and accuracy of the reported income.

Capital work in progress was valued at MVR 54.5 million, but auditors could not establish the completion status or physical existence of the projects.

The report further highlighted concerns over trade receivables, which totalled MVR 124.7 million. Of this amount, MVR 44.2 million was owed by government bodies and state-owned enterprises. WAMCO recognized an accumulated expected credit loss allowance of MVR 75.6 million against unrecoverable debts.