Datasonic Group Berhad Annual Report 2019

Key Audit Matters (Cont’d) We have determined the matters described below to be the key audit matters to be communicated in our report. Recoverability of Trade Receivables Refer to Notes 11 and 47.1(b)(iii) to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter As at31March2019, trade receivables thatwerepast due and not impaired amounted to approximately RM81.045 million. The details of trade receivables and its credit risks are disclosed in Note 47.1(b)(iii) to the financial statements. The management applied assumptions in assessing the level of allowance for impairment losses on trade receivables based on the following:- • specificknownfactsorcircumstancesoncustomers’ ability to pay; and/or • by reference to past default experiences TheGroupassessedat eachof the reportingdatewhether there is any objective evidence that trade receivables are impaired based on the validity of contractual terms, analysis of customer creditworthiness, past historical payment trends and expectation of repayment. The impairment assessment involved significant judgements and there is inherent uncertainty in the assumptions applied by themanagement to evaluate the adequacy of the allowance for impairment losses and estimation of future cash collection. We determined this to be a key audit matter due to the inherent subjectivity that is involved in making judgement in relation to credit risk exposures to assess the recoverability of trade receivables. Our audit procedures included, amongst others:- • reviewed and understand the management’s assessment of recoverability of major trade receivables; • reviewedcontractualtermstoensuretheGrouphas contractual right to recognise revenue and collect payments; • reviewed legal opinion, where applicable, on the contractual terms; • reviewed recoverability ofmajor trade receivables includingbutnotlimitedtothereviewofsubsequent collections; • enquired management on project/receivables status for major customers; • reviewed collections and sales trends during the financial year of major trade receivables; and/or • reviewedmanagement’s basis of estimation on the adequacy of theGroup’s allowance for impairment loss on trade receivables. Independent Auditors’ Report (Cont’d) To the Members of Datasonic Group Berhad 97 DATASONIC GROUP BERHAD (Company No. 809759-X) ANNUAL REPORT 2019