MKH Annual Report 2018

83 MKH Berhad Annual Report 2018 INDEPENDENT AUDITORS’ REPORT To the Members of MKH Berhad (Incorporated in Malaysia) 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, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How the matter was addressed in the audit Revenue from property development activities The Group recognises property development revenue by reference to the stage of completion of the development activity at the reporting date. The stage of completion is determined based on the proportion of development costs incurred for work performed to-date compared to the estimated total property development costs. Significant judgement is required in the estimation of total property development costs. Where the actual total property development costs is di erent from the estimated total property development costs, such di erence will impact the property development profits/(loss) recognised. Refer to “Significant accounting estimates and judgements” in Note 2(c)(i) to the financial statements. Our audit procedures included, among others: • Obtained an understanding of the relevant controls put in place by the Group in respect of revenue recognition for property development activities and performed procedures to evaluate the design and implementation and operating e ectiveness of such controls. • Performed site visits for individually significant projects to arrive at an overall assessment as to whether information provided by management is reasonable. • Reviewed management prepared budgets for property development projects and ensured that budgets are appropriate and reflected cost incurred and cost to complete, current cost of operations and computation of profit recognition. • Verified the gross development value by reviewing the sale and purchase agreement entered into between the purchasers and the Group. • Checked the mathematical accuracy of the revenue and profit based on percentage of completion calculations and considered the implications of any changes in estimate. We have determined that there are no key audit matters in the audit of the separate financial statements of the Company to be communicated in our auditors’ report.