Yinson Annual Report 2018

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (continued) Key audit matters How our audit addressed the key audit matters Uncertain tax position in a foreign operation As disclosed in Note 5(g) to the consolidated financial statements, there was a change in the tax administration for a foreign operation of a subsidiary whereby with effect from the Year of Assessment 2015, the corporate tax basis was changed from a deemed income approach to the actual profit basis. The effective date for this change of tax law which was the Year of Assessment 2015 for the foreign operation was for the financial year ended 31 January 2014. In the financial year ended 31 January 2018, the foreign operation re-filed its income tax returns for the Year of Assessment from 2006 to 2015 from the deemed profits basis to the actual profits basis. Given that the change in tax administration is only recent, there may be potentially varying interpretations between the foreign operation and tax authority on the application of the change, which would result in the ultimate tax determination for these tax submissions to be uncertain. As at 31 January 2018, RM23.8 million was accounted by the subsidiary as an income tax liability as disclosed in Note 5(g) and 35(a) to the consolidated financial statements. In connection with this, as disclosed in Note 24(b), the Group recognised an accrued reimbursable recoverable of RM13.5 million representing the additional tax that would be compensated under the contractual terms with the customer. We performed the following audit procedures: Uncertain tax position due to a change in a foreign operation tax administration • Enquired the Group’s tax department and their tax agent on their understanding of the financial implications arising from a change in the foreign operation tax administration as well as status of the submitted revised tax computations; • Discussed with the Group’s tax department and their tax agent on the basis of the tax resubmissions and checked the accuracy of inputs used to supporting schedules; • Evaluated the relevant controls regarding completeness of the inputs and procedures used by management for estimating the uncertain tax position; • Assessed the contractual terms to ascertain the Group’s rights to recover the accrued reimbursable recoverable representing the additional tax to be compensated by the customer; and • Tested the calculation and adequacy of disclosure of current and deferred tax in the consolidated financial statements. There are no key audit matters in relation to the financial statements of the Company. Corporate Overview Stewardship Governance Accountability 191 Yinson Holdings Berhad Annual Report 2018