Sasbadi Annual Report 2019

PAGE 151 ANNUAL REPORT 2019 FINANCIAL STATEMENTS (continued) Key Audit Matters (continued) 2. Valuation of trade receivables Refer to Note 12 to the financial statements. The key audit matter How the matter was addressed in our audit The Group’s exposure to credit risk arises principally from its receivables from customers. MFRS 9, Financial Instruments became effective on 1 September 2018 for the Group. MFRS 9 requires the Group to change accounting policies to account for financial instruments. New judgments have been applied to classify financial assets and to measure impairment loss using the expected credit loss model. The adoption of MFRS 9 and recoverability of trade receivables is a key audit matter as the recoverability and the level of impairment loss of trade receivables involved Group’s judgement based upon the debtors’ credit risk evaluation, historical payment trends, subsequent to year end collections. These factors could have a material impact on the level of impairment loss determined by the Group. We performed the following audit procedures, amongst others, around recoverability of trade receivables and the adoption of MFRS 9: x We tested the accuracy of trade receivables ageing; x We assessed the recoverability of receivables by checking past payment trend and assessing the receipts during the year and subsequent to year end collections. We also considered receivables where there is evidence that the credit quality of the debtor is considered a risk; x We evaluated the reasonableness of key judgments and estimates made in adopting MFRS 9, including selection and application of methods, assumptions and data in making the estimates; x We evaluated the appropriateness of the accounting policies based on the requirements of MFRS 9; and, x We assessed the completeness, accuracy and appropriateness of disclosures in the financial statements as required by MFRS 9.