Kimlun Corporation Berhad Annual Report 2020

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF KIMLUN CORPORATION BERHAD (INCORPORATED IN MALAYSIA) Key audit matters Jeco_nition o^ renenue and cost o^ construction 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 matters 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 matters 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 matters. 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. The Group is involved in construction contracts for which it applies the percentage of completion method. The revenue and cost of construction contributed to approximately 78% and 81% respectively of the Group’s revenue and cost of sales. 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 2.22 (a), Note 3.2 (b) 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 internal controls over the accuracy and timing of revenue and profit recognised in the financial statements, including controls performed by management in estimating the total construction costs, profit margin and percentage of completion of the construction contracts; - 10 - Kimlun Corporation Berhad Registration No. 200901023978 (867077-X) 067