173 FINANCIAL STATEMENTS REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D) Key audit matters (cont’d) Impairment of financing receivables and trade receivables Key audit matters How our audit addressed the key audit matters As disclosed in Notes 12 and 14 to the financial statements respectively, financing receivables and trade receivables as at the reporting date amounted to approximately RM209.74 million and RM350.45 million, representing 4.94% and 8.25% respectively of total assets of the Group. The management assessed the level of allowance for expected credit losses on financing receivables and trade receivables based on, amongst others, the realisable value of collaterals pledged, the borrowers’ financial position and their abilities to repay. This assessment involves significant judgement and there is inherent uncertainty in the assumptions applied by the management to determine the level of allowance for expected credit losses. We considered this as key audit matter due to the significance of financing receivables and trade receivables and the uncertainty inherent in determining the level of allowance for expected credit losses. Our audit procedures included, amongst others: z Reviewed recoverability of the financing receivables and trade receivables; z Reviewed management’s basis of assessment on expected credit losses on financing receivables and trade receivables; z Reviewed management’s assessment on the borrowers’ and guarantors’ creditworthiness and collaterals pledged for the financing receivables; z Enquired management on procedures established for the approval of financing receivables; z Reviewed the repayment of principal and interest during the financial year; and z Considered the adequacy of the Group’s disclosure in this area. Fair value assessment of other investments Key audit matters How our audit addressed the key audit matters As disclosed in Note 11 to the financial statements, other investments as at the reporting date amounted to approximately RM340.25 million representing 8.01% of total assets of the Group. The management’s determination of other investments’ fair value involves significant assumptions on future results of the business. In particular, key assumptions are made on, among others, growth rates and discount rates in the projected cash flows. This assessment involves significant judgement and there is inherent uncertainty in the assumptions applied by the management to determine the fair value of other investments. We considered this as key audit matter due to the significance of the other investments of the Group and the uncertainty inherent in determining the fair value of these other investments. Our audit procedures included, amongst others: z Obtained management’s fair value assessment and gained an understanding of their approach in determining the fair value of other investments; z Reviewed the reasonableness of key assumptions used and judgement made in determining the fair values of other investments; and z Reviewed the sensitivity analysis on revenue growth, profit margin and discount rate. INDEPENDENT AUDITORS’ REPORT To the members of MY E.G. Services Berhad [Registration No.: 200001003034 (505639-K)] (Incorporated in Malaysia) (cont’d)
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