Annual Report 2022 93 ABOUT US LEADERSHIP PERSPECTIVE SUSTAINABILITY GOVERNANCE FINANCIAL STATEMENTS Other Information Key Audit Matters (Cont’d) Assessment for Impairment of Development Expenditure Refer to Notes 4.1(j), 4.10(b) and 11 to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter We determined this to be a key audit matter as the Group carries significant development expenditure which are in the process of development and the inherent subjectivity in impairment testing. For purposes of the annual impairment assessment of development expenditure, significant judgements are involved in the estimation of the present value of future cash flows generated by development expenditure. These assessments involves uncertainties and are significantly affected by assumptions used and judgement made in estimating the future cash flows, which include, amongst others, the achievability of long-term business plans. Our audit procedures included, amongst others:- • evaluation and determination of the cash-generating units; • reviewed management’s estimate of the recoverable amounts and tested the cash flow forecasts for their accuracy; • reviewed the key business drivers underpinning the cash flow forecasts prepared to support the recoverable amount; • evaluated the key assumptions used by management including any customer orders already contracted by the Group; • assessed the reasonableness of cash flow forecast and projections by comparison to historical performance, future outlook and the achievability of the business plans through discussion with management; • evaluated whether the model used to calculate recoverable amount of the individual cash-generating units complies with the requirements of MFRS 136 - Impairment of Assets; and • reviewed sensitivity analysis taking into account the historical forecasting accuracy of the Group to stress test the key assumptions in the impairment model performed by management. Independent Auditors’ Report to the Members of Datasonic Group Berhad (Cont’d)
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