MISC Annual Report 2017

319 Financial Statements Key audit matters (cont'd.) KEY AUDIT MATTERS HOWWE ADDRESSED THE KEY AUDIT MATTERS Contingent liability – (Refer to Note 42 – Significant Events -Material litigation, to the financial statements) We focused on this area as the eventual outcome of claims is uncertain and the positions taken by the Directors are based on the application of material judgement and estimation. Accordingly, unexpected adverse outcomes could significantly impact the Group’s reported profit and statement of financial position. In addressing this area of audit focus, we considered whether an obligation exists, the appropriateness of provisioning and/or disclosure based on the facts and circumstances available. We have performed the following: (i) Obtained and reviewed the relevant correspondences in relation to Arbitration and Litigation cases; (ii) Compared the opinion provided by the Group’s external legal counsel against management’s assessment on the measurement and/or disclosures for the contingent liability; (iii) Considered the independence, reputation and capabilities of the external legal counsels; (iv) Obtained legal confirmations from the Group’s external legal counsels; and (v) Considered whether the Group’s disclosures of the application of judgement in estimating provisions and contingent liabilities adequately reflected the uncertainties associated with legal and regulatory matters. Information other than the financial statements and auditor’s report The directors of the Corporation are responsible for the other information. The other information comprises the information included in the Group’s 2017 Annual Report, but does not include the financial statements of the Group and of the Corporation and our auditors’ report thereon. The Group’s 2017 Annual Report is expected to be made available to us after the date of this auditors’ report. Our opinion on the financial statements 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 Corporation, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. INDEPENDENT AUDITORS ’ REPORT TO THE MEMBERS OF MISC BERHAD