INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MATRIX CONCEPTS HOLDINGS BERHAD (INCORPORATED IN MALAYSIA) REGISTRATION NO: 199601042262 (414615-U) (CONT’D) 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 financial 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, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. Reasonableness of revenue recognition arising from contracts with customers Refer to Note 4.1(e), 4.23(a) and 30 to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter Area of focus Most of the Group’s revenue is derived from property development activities. Pursuant to MFRS 15, revenue may be recognised at a point in time or progressively over time and judgements required to assess the performance obligations and revenue recognition. Judgements impacting the revenue recognition are as follow:- • interpreting of contract terms and conditions; • assessing and identifying the performance obligations; and • assessing the computation of revenue recognition. To address this risk, our audit procedures involved the following: • reviewing the contract terms and identifying performance obligations stipulated in the contracts, on sample basis; • evaluating whether the performance obligations are satisfied at point in time or over time; and • assessing the revenue recognised are in accordance with MFRS 15 “Revenue with Contract Customers”. Reasonableness of attributable profits arising from property development projects Refer to Note 4.1(e), 11(b), 30 and 31 to the financial statements Key Audit Matter How our audit addressed the Key Audit Matter Area of focus The Group’s property development division recognises revenue and cost over time by reference to the progress towards complete satisfaction of the performance obligation at the end of the reporting period using the input method. This requires the use of estimates, namely on project development revenue and cost. Revenue and cost recognised on property development activities have an inherent risk as it involves judgement and estimates. Substantial changes to construction contract revenue and cost estimates in the future can have a significant effect on the Group’s results. To address this risk, our audit procedures involved the following: • making inquiries and obtaining an understanding from management on the procedures and controls in relation to the estimation of and revision to the property development revenue and cost; • reviewing the reasonableness of the estimated property development revenue by comparing the selling prices of units sold, on sample basis; • reviewing the reasonableness of the estimated property development cost by reviewing the contract works awarded, assessing the basis of estimation for contract works not awarded and comparing to the actual costs incurred up to the end of the reporting period, on sample basis; and • evaluating the reasonableness of percentage of completion using the input method. INTEGRATED ANNUAL REPORT 2023 MATRIX CONCEPTS HOLDINGS BERHAD 139
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