MKH BERHAD ANNUAL REPORT 2024 Laying The Foundation of Excellence Where People Matter Guided by Leadership, Inspired by People Delivering Value That Matters to People PG. 162 Report on the Audit of the Financial Statements (Cont’d) Key Audit Matters (Cont’d) Key audit matter How the matter was addressed in the audit Revenue from property development activities (Cont’d) Significant judgement is required in the estimation of total property development costs. Where the actual total property development costs are different from the estimated total property development costs, such differences will impact the property development profits recognised. Refer to “Significant accounting estimates and judgements” in Note 2(c)(i) to the financial statements. Our audit procedures included, among others: (Cont’d) • Challenged management assumptions used in the preparation of the respective management-prepared property development budgets (“budgets”) and performed a retrospective review to establish the reliability of the budgets and considered the implication of any changes in assumption used in the budgets. • Challenged the stage of completion taking into account the development costs recognised up to the end of the financial year during the financial year over the budgeted cost. • Performed test of details on actual development costs incurred during the financial year by vouching to the relevant supporting documentation such as contractors’ claim certificates, surveyor certificates, architect certificates and others, to determine whether the development costs recorded are valid and in the correct accounting period. • Performed site visits for individually significant projects to arrive at an overall assessment as to whether information provided by management is reasonable. • Verified the gross development value by reviewing the sale & purchase agreements (“SPA”) entered into between the purchasers and the Group. In respect of loan financial purchasers, further verified that there is an approved loan offer letter from licensed financial institution for each SPA signed. • Performed test check for subsequent cancellation of SPA to determine that there is no significant reversal in the amount of cumulative revenue recognised up to the end of the financial year. • 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. Independent Auditors’ Report to the Members of MKH BERHAD (Incorporated in Malaysia)
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