Yinson Annual Report 2020

330 Yinson Holdings Berhad SECTION 7 ACCOUNTABILITY 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 carrying value of equity investments in subsidiaries and amounts receivable from subsidiaries Refer to Note 19 and Note 24 to the financial statements. As at 31 January 2020, the net carrying value of equity investments in subsidiaries and amounts receivable from subsidiaries recorded in the Company’s statement of financial position totalled RM807.0 million and RM1,608.9 million, respectively. (a) Equity investment in subsidiaries During the current financial year, the equity investments in a subsidiary was written down by RM7.6 million as the recoverable amounts were lower than the corresponding carrying values. We focused on the recoverable amounts of equity investments in subsidiaries as they are subject to significant judgement and critical estimates made by management over the key assumptions used in projected cash flows and the discount rates. (b) Amounts receivable from subsidiaries During the current financial year, the amounts receivable from subsidiaries were impaired by RM4.2 million as a result of applying ECL. We focused on the carrying value of amounts receivable from subsidiaries as there are significant judgements and critical estimates made by management in determining the ECL, including the downside scenarios related to the spread of COVID-19. (a) Equity investments in subsidiaries In assessing the recoverable amounts of equity investments in subsidiaries, we performed the following audit procedures: • Evaluated management’s assessment of impairment indicators; • Agreed the projected cash flows to the budgets approved by the Board of Directors; • Discussed with management the key assumptions used in the valuation model and checked these to supporting documentation; and • Using our internal valuation specialists to independently assess the reasonableness of the discount rate to comparable peers and industry benchmarks. (b) Amounts receivable from subsidiaries In assessing the ECL model on the amounts receivable from subsidiaries, we performed the following audit procedures: • Discussed with management to understand the underlying assumptions used in the general 3-stage impairment model under MFRS 9 including considering the COVID-19 impact; • Reviewed the appropriateness of key assumptions used in the 3-stage impairment model and tested the mathematical accuracy of the model used; and • Tested the accuracy of the ageing against supporting documents on a sample basis. We evaluated the adequacy of the impairment charges that was recognised and the appropriateness of the disclosures included in the notes to the financial statements. No material exceptions were noted. Independent auditors’ report (cont’d) to the members of Yinson Holdings Berhad (Incorporated in Malaysia) Registration No. 199301004410 (259147-A)