PRG Holdings Berhad Annual Report 2017

• Annual Report 2017 67 INDEPENDENT AUDITORS’ REPORT Report on the Audit of the Financial Statements Opinion We have audited the financial statements of PRG Holdings Berhad, which comprise the statements of financial position as at 31 December 2017 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on page s 73 to 157. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2017, and of their financial performance and their cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters of the Group a) Recognition of property development revenue, costs estimates and profit recognition As disclosed in Note 24 to the financial statements, revenue from property development at 31 December 2017 amounted to RM83,187,000 and property development costs amounted to RM167,959,000 as set out in Note 14 to the financial statements respectively.  Property development revenue, property development costs and the profit recognition thereof involve significant judgements in estimating the saleability, selling prices and estimated completion costs of the development. In estimating saleability and selling prices, the Group considers the number of units sold to-date, the current economic condition and the market selling prices. In estimating the total costs to complete, the Group considers the completeness and accuracy of its costs estimation, including its obligations to contract variations, claims and cost contingencies. The total costs to complete including, sub-contractors’ costs, can vary with market conditions and may also be incorrectly forecasted due to unforeseen events during development. Audit response Our audit procedures included the following: (i) assessed management’s estimate of budgeted costs to be incurred by comparing historical budgets to actual costs incurred to assess the reliability of management’s budgeting process and controls; (ii) verified development costs incurred during the financial year to supporting documentation; (iii) assessed estimated total costs to complete through enquiries with operational and financial personnel of the Group in relation to variations and claims and verified documentation to support the cost estimates including variation orders and cost contingencies; TO THE MEMBERS OF PRG HOLDINGS BERHAD (Incorporated in Malaysia)