SECTION 4: FINANCIAL PERFORMANCE 138 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MST GOLF GROUP BERHAD (Incorporated in Malaysia) Registration No: 199301009307 (264044-M) Report on the Audit of the Financial Statements (Cont’d) Key Audit Matters (cont’d) Revenue recognition (cont’d) Our response Our audit procedures included, amongst others: - obtained understanding of the design and implementation of key controls pertaining to the recording of sales and revenue recognition; - tested the information technology dependent manual and manual controls in place to ensure the completeness and accuracy of revenue recognised; - performed procedures to corroborate the occurrence of revenue by tracing samples of cash receipts to the settlement reports from financial institutions; - assessed the accuracy of deferred revenue recognition using the historical rate of redemption of the membership points used by the management; and - performed cut-off procedures to determine if revenue is recorded in the correct accounting period. Inventories valuation The risk As at 31 December 2024, the total inventories of the Group amounted to RM165,754,000 representing 60% and 42% of current assets and total assets respectively. The disclosure for inventories of the Group are included in Note 9 to the financial statements which are subject to a risk that the inventories might become slow-moving or obsolete and rendering them not saleable or can only be sold for selling prices that are less than the carrying value. Judgement is required to access the appropriate level of provision for items which may be ultimately sold below cost. Our response Our audit procedures included, amongst others: - obtained an understanding and reviewed the internal control over the process of the inventories recognition; - attended and observed the inventory counts at selected outlets and performed inventory roll-forward procedures when the inventory counts were performed before financial year end. - performed costing and net realisable value test to ensure that inventories were correctly valued and stated at lower of cost or net realisable value at the reporting date; and - assessed the adequacy of allowance of stock loss and slow-moving inventories by reference to the historical data on sampling basis and discussion with management.
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