Lang
A report issued by the Central Auditing Organization (CAO) revealed 12 significant observations regarding the financial statements of Misr Oils & Soaps Company for the period ended March 31, 2026. These observations encompassed multiple aspects related to provisions, inventory, supply prices, social insurance, and cash flows. In its response, the company affirmed that it has taken or is in the process of taking the necessary corrective actions to address these observations in subsequent financial reports.
The CAO noted that the financial statements did not reflect the impact of adjustments approved by the company's General Assembly on May 16, 2026, pertaining to strengthening the tax provision by EGP 9.4 million. The company attributed this to the financial position being prepared on March 31, 2026, prior to the General Assembly's decisions, confirming that this will be accounted for in upcoming financial statements.
The report also pointed out that the statement of financial position did not reflect the impact of a reduction in the supply price of crude edible oil (soybean and sunflower) from the Holding Company for Food Industries during the period ended December 31, 2025. The total affected quantities amounted to 6,050 tons of soybean oil and 22,217 tons of sunflower oil, with a reduction of EGP 500 per ton, as per the Holding Company's letter dated April 23, 2026. The company justified the omission by stating that the letter was received after the preparation and approval of the financial position on March 31, 2026, indicating that the impact will be included in the next financial position.
The CAO further recorded that the company provisionally valued crude oil received during the period from January 1 to March 31, 2026, at estimated prices of EGP 32,250 per ton for soybean and EGP 32,000 per ton for sunflower. This represents an increase of EGP 500 per ton over the accounting prices applied during the period from January 1 to February 28, 2026. The company responded that the matter has been rectified and its effect included in the subsequent financial position, with the full impact expected to appear in the financial statements ended September 30, 2026.
The report highlighted the company's failure to conduct an accounting and quantitative reconciliation with the Holding Company for Food Industries regarding a credit balance of approximately EGP 362.9 million, coupled with a mismatch in the balance carried forward from the financial period ended December 31, 2025. The company stated that the reconciliation was completed on June 15, 2026.
Regarding social insurance, the CAO indicated that the account's credit balance reached approximately EGP 5.887 million as of March 31, 2026. It clarified that the company calculated and paid the employer's share based on the insured subscription wage provided in Form (2) each January, despite it being lower than the actual wages of employees, resulting in a difference of approximately EGP 1.214 million.
The report added that the company deducted the employee's share according to actual wages but paid it to the authority based on the aforementioned subscription wage, leading to a difference of approximately EGP 712,000. Additionally, an amount of EGP 805,000, representing the sickness insurance percentage, was charged to 'in-kind benefits,' whereas it should have been charged to the 'wages and social insurance' account. The company responded that it pays social insurance regularly and has no outstanding dues to the National Social Insurance Authority.
The CAO also observed that the valuation of finished goods inventory for free oil at the Sandoub and Zagazig factories, as well as feed at the Belqas and Mit Ghamr factories, and other soap products at the Sandoub factory, was based on cost lists dated June 30, 2025. This could affect the accuracy of inventory value, production cost, and operating results. The company explained that it adopted the latest cost lists prepared on December 31, 2025, and will prepare new cost lists for the financial position on September 30, 2026.
The report further noted the repeated inclusion of 5 tons of palm acids and 1.176 tons of imported pasta, with a total value nearing EGP 290,000, in both work-in-progress inventory and main raw materials inventory. The company confirmed it would rectify this in upcoming financial reports.
Furthermore, the main raw materials inventory at the Sandoub factory included approximately EGP 8.461 million worth of 140.6 tons of 'free' crude soybean oil, considered company-owned. However, this oil was supplied by the Holding Company for Food Industries for the production of subsidized edible oil, with an estimated value of approximately EGP 4.534 million. The company reported that this observation was subsequently rectified.
The CAO also clarified that the finished goods inventory at the Sandoub factory included 44.815 tons of soybean oil No. (1) valued at EGP 1.615 million, which was assessed at EGP 36,028 per ton according to subsidized edible oil prices. This was despite inventory count sheets and production reports indicating it as company-owned 'free' oil, whereas the valuation price per ton according to the latest cost list on June 30, 2025, was approximately EGP 60,336. The company responded that it has studied the matter and taken appropriate action.
The report indicated that the finished goods inventory at the Zagazig factory did not include the value of 218 cartons of Kado (0.8 liters x 12 bottles), equivalent to approximately 1.925 tons, despite their presence in inventory count sheets and production reports as of March 31, 2026. The company affirmed it would make the correction in subsequent financial reports.
The CAO also noted the non-inclusion of freight expenses for transporting bottled oil during the financial period, despite invoices from the Cooperative Society for Goods Transport by Cars in Assiut, amounting to – as far as could be determined – approximately EGP 902,000. The company confirmed it would take the necessary actions.
Finally, the Central Auditing Organization highlighted that cash flows from operating activities appeared negative by approximately EGP 8.099 million, while the company stated it would address this in future financial periods. Source: Al-Youm Al-Sabea