Frontken Berhad Annual Report 2023

Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 80 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF FRONTKEN CORPORATION BERHAD (CONT’D) (Incorporated in Malaysia) Registration No: 200401012517 (651020 - T) Recoverability of Trade Receivables Refer to Note 14 to the financial statements. Key Audit Matter The trade receivables of the Group amounted to approximately RM119 million and it constituted 21% of the total current assets of the Group. We focused on this area due to the outstanding receivable balances which exceeded the credit term granted by the Group. The total outstanding balances which exceeded the credit term amounted to approximately RM22 million is considered to be of a higher credit risk. The assessment of recoverability of these outstanding receivables involved judgement and estimation of uncertainty by Management. How our audit addressed the Key Audit Matter Our procedures included, among others: a) Testing the adequacy of the Group’s allowance for impairment losses on trade receivables by assessing the Group’s policy and historical data from the Group’s previous collection experience; b) Reviewing the Group’s subsequent collection after the financial year for major receivables; c) Reviewing the expected credit loss assessment by challenging whether the historic experience is representative of the current circumstances and of recent losses incurred in the receivables and assessing the reasonableness of forward-looking adjustments; and d) Assessing the adequacy of disclosure in the financial statements. Key Audit Matters (Cont’d) Information Other than the Financial Statements and Auditors’ Report Thereon The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Statements The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

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