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Frontken Corporation Berhad (651020-T)
ANNUAL REPORT
2016
Key Audit Matters (Cont’d)
Recoverable of trade receivables
Refer to Note 17 in the financial statements.
Key Audit Matter
How our audit address the key audit matter
The trade receivables of the Group amounted to approximately
RM96.1 million and it constituted 44% of the total current
assets of the Group.
We focused on this area due to the long outstanding receivable
balances which exceeded the credit term of 90 days granted
by the Group. The total long outstanding balance which
exceeded the credit term amounted to approximately
RM12.3 million is considered to be of a major credit risk.
The assessment of recoverability of these long outstanding
receivables involved judgement and estimation of uncertainty
by Management.
Our procedures included, amongst others:-
(a) Testing the adequacy of the Group’s allowance for
impairment losses on trade receivables by assessing
the Group’s policy and historical data from the Group’s
previous collection experience;
(b) Testing the Group’s subsequent collection after the
financial year for major receivables; and
(c) Assessed the adequacy of disclosure in the financial
statements.
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 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 Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act 1965 in Malaysia. The directors are also responsible for such internal
control as the directors determine is necessary to enable the preparation of financial statements 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
Group’s and the Company’s ability 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.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Independent Auditors’ Report
To The Member Of Frontken Corporation Berhad
(cont’d)