71 GHL SYSTEMS BERHAD 199401007361 (293040-D) ANNUAL REPORT 2021 Report on the Audit of the Financial Statements (Cont’d) Key Audit Matters (Cont’d) d) Assessment of impairment on the carrying amounts of amounts owing by subsidiaries As at 31 December 2021, gross amounts owing by subsidiaries of the Company were RM33,329,204 as disclosed in Note 20 to the financial statements. We determined this to be key audit matter because it requires management to exercise significant judgement in determining the probability of default by subsidiaries, appropriate forward-looking information and significant increase in credit risk, incorporating the impact of the COVID-19 pandemic. Audit response Our audit procedures included the following: (i) Recomputed the probability of default using historical data and forward-looking information adjustment, incorporating the impact of the COVID-19 pandemic applied by the Company; (ii) Recomputed the correlation coefficient between the macroeconomic indicators used by the Company and historical losses to determine the appropriateness of the forward-looking information used by the Company; (iii) Inquiries of management to assess the rationale underlying the relationship between the forward-looking information and expected credit losses; and (iv) Challenged management on the basis for determining cash flows recoverable, where applicable. 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 MFRSs, IFRSs 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 ability of the Group and of the Company 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. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF GHL SYSTEMS BERHAD (Incorporated in Malaysia) CONT’D
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