113 ENRA GROUP BERHAD ANNUAL REPORT 2025 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ENRA GROUP BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) (3) Impairment assessment of the carrying amounts of costs of investments in subsidiaries (continued) Audit response (continued) (c) assessed the suitability of the pre-tax discount rate used by each subsidiary by comparing to the weighted average cost of capital of the Group and relevant risk factor; and (d) performed sensitivity analysis to stress test the key assumptions used by management in the impairment model. (4) Impairment assessment of the carrying amounts of amounts due from subsidiaries As at 31 March 2025, carrying amounts due from subsidiaries of the Company amounted to RM37.28 million as disclosed in Note 9 to the financial statements of which an impairment of RM0.15 million was recognised during the financial year. We determined this to be a key audit matter because it requires management to exercise significant judgement in determining the probability of default by subsidiaries, appropriate forward looking information, significant increase in credit risk with incorporating the estimated cash flows recoverable in worst-case scenarios. Audit response Our audit procedures included the following: (a) recomputed probability of default using historical data and forward looking information adjustment; (b) assessed the appropriateness of the indicators of significant increase in credit risk applied by the management and the resultant basis for classification of exposure into respective stages; (c) challenged management on the basis for determining cash flows recoverable in worst case scenarios, where applicable; and (d) assessed actual loss events subsequent to the end of reporting period for its relationship with the indicators of significant increase in credit risk applied by management. Independent Auditors’ Report (Cont’d) TO THE MEMBERS OF ENRA GROUP BERHAD (Incorporated in Malaysia)
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