FINANCIAL PERFORMANCE 166 Report on the Audit of the Financial Statements (cont’d) Key Audit Matters (cont’d) Revenue recognition The risk The Group relies heavily on the information technology system for the processing and recording of revenue involving large volumes of sales generated from its retail outlets. The Group also recognised contract liabilities of RM1,367,000 as at 31 December 2025 in current liabilities in respect of unredeemed membership points. The quantum of deferred revenue recognised at each reporting period requires management’s estimates in relation to the historical trends of redemption of membership points. The aforementioned factors gave rise to higher risk of material misstatements from the perspective of timing of recognition and the amount of revenue to be recognised. Accordingly, we identified revenue recognition to be an area of audit focus as the magnitude and the high volume of transactions may give rise to a higher risk of material misstatements relating to timing and the amount of revenue recognised. The disclosure for contract liabilities and revenue of the Group are included in Notes 21 and 22 respectively to the financial statements. 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. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF MST GOLF GROUP BERHAD (Incorporated in Malaysia) Registration No: 199301009307 (264044-M)
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