Kimlun Corporation Berhad Annual Report 2018

Report on the audit of the financial statements Opinion We have audited the financial statements of Kimlun Corporation Berhad, which comprise the statements of financial position as at 31 December 2018 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 64 to 118. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence and other ethical responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By- Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. 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. We have determined that there are no key audit matter to communicate in our report on the financial statements of the Company. The key audit matters for the audit of the financial statements of the Group are described below. These matter were addressed in the context of our audit of the financial statements of the Group as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including those in relation to these matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements. (i) Recognition of revenue and cost of construction The Group is involved in a number of significant construction contracts for which it applies the percentage of completion method. The revenue and cost of construction contributed to approximately 79% and 81% respectively of the Group’s revenue and cost. We focused on this area because management made significant judgement and estimates in determining the estimated total contract costs and the extent of cost incurred, which form part of the computation of percentage of completion. The notes relating to revenue recognition are disclosed in Note 2.21 (a), Note 3.2 (b)(i) and Note 4 to the financial statements. As part of our audit, we performed the following: We obtained an understanding of contractual terms and conditions of significant projects; We obtained an understanding of the relevant controls performed by management in estimating the timing of revenue recognition, total contract costs, profit margin, and percentage of completion of a contract; We discussed the status of projects under construction with the management, finance and the project leaders. We also observed the progress of the projects by performing site visits and compared the estimated stage of completion to architect certificates; Annual Report 2018 60 To the members of Kimlun Corporation Berhad (Incorporated in Malaysia) (cont’d) INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF