Yinson Annual Report 2020

329 Annual Report 2020 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (continued) Key audit matters (continued) Key audit matters How our audit addressed the key audit matters Assessing the impact of expected credit loss (“ECL”) on the trade receivables of the Group Refer to Note 5(c), Note 24 and Note 42(b) to the financial statements. As at 31 January 2020, the Group’s trade receivables balance prior to loss allowance was RM289.8 million where RM9.4 million was provided for as loss allowance. MFRS 9 requires the use of an expected credit loss (“ECL”) model to measure impairment of financial assets. The model requires consideration of both historical and current information, as well as reasonable and supportable forecasts of future conditions (including macroeconomic information). Management adopted a simplified approach of using lifetime ECL in measuring the ECL for trade receivable balances, incorporating historical loss rate being adjusted to reflect current and forward-looking information on macroeconomic factors and probability weighted estimates. We considered this as a key audit matter due to the judgements and estimates involved in the application of the expected credit loss model, including the downside scenarios related to the spread of COVID-19. In assessing the recoverable amount of trade receivables, we performed the following audit procedures: • Evaluate the valuation methodology and model used by management to ascertain that these have been consistently applied by management; • Tested the accuracy of the ageing against supporting documents on a sample basis; • Assessed and considered the reasonableness of the current and forward-looking information as well as discussed with management to understand the judgements and estimates involved in applying the simplified approach of using lifetime ECL on trade receivables including considering the COVID-19 impact; and • Evaluated the adequacy of the Group’s disclosures included in the consolidated financial statements. We evaluated the adequacy of the impairment charge recognised and the appropriateness of the disclosures included in the notes to the financial statements. No material exceptions were noted.