ENRA Group Berhad Annual Report 2018

53 A N N U A L R E P O R T 2 0 1 8 KEY AUDIT MATTERS (Cont’d) Group level (Cont’d) (1) Impairment assessment of the carrying amount of goodwill (Cont’d) Audit response Our audit procedures included the following: (a) compared cash flow projections against recent performance and assessed the reasonableness of the key assumptions used by management in the cashflow forecast and projections by comparing to actual historical growth rates; (b) compared prior period budgets and forecasts to current period’s actual results to assess the historical accuracy of the forecasts; (c) assessed the suitability of the pre-tax discount rate used by the CGU by comparing to the weighted average cost of capital of the Group and relevant risk factors; and (d) performed sensitivity analysis to stress test the key assumptions used by management in the impairment model. (2) Recoverability of trade receivables As at 31 March 2018, trade receivables that had been past due but not impaired amounted to RM22.9 million as disclosed in Note 12 to the financial statements. Management recognised impairment losses on trade receivables based on specific known facts or circumstances or customers’ abilities to pay. The determination of whether the trade receivables are recoverable involves significant management judgement and inherent subjectivity given uncertainty regarding the ability of the trade receivables to settle their debts. We focused on the audit risk that the impairment losses on trade receivables may be understated and hence, further impairment losses may be required. Audit response Our audit procedures included the following: (a) obtained an understanding of the credit process operated by management over the recoverability of trade receivables of the Group; (b) assessed recoverability of trade receivables by reference to their historical bad debt expense, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms; and (c) assessed cash receipts subsequent to the end of the reporting period for its effect in reducing amounts outstanding as at the end of the reporting period. INDEPENDENT AUDITORS’ REPORT To the Members of ENRA GROUP BERHAD (Incorporated in Malaysia) cont’d