AwanBiru Technology Berhad - Annual Report 2021

Key Audit Matters (Cont’d) Impairment assessment of trade receivables Refer to Notes 13 and 51.1(b)(iii) to the financial statements Key Audit Matter How our audit addressed the key audit matter As at 30 June 2021, trade receivables amounted to approximately RM187.62 million (included an amount of RM182.798 million owing by the Government of Malaysia (“GOM”) in relation to the development of SKIN Solution). The details of trade receivables and its credit risks are disclosed in Note 51.1(b)(iii) to the financial statements. The management applied assumptions in assessing the level of allowance for impairment losses on trade receivables based on the following:- • updates from the material litigation with GOM; • customers’ payment profiles of past sales and corresponding historical credit losses; • specific known facts or circumstances on customers’ ability to pay; or • by reference to past default experience. The impairment assessment involves significant judgements and there is inherent uncertainty in the assumptions applied by the management to determine the level of allowance. This is considered a key audit matter due to the inherent subjectivity that is involved in making judgement in relation to the recoverability of trade receivables. Our procedures included, amongst others:- • Obtained the confirmation from legal advisors for the updates of the material litigation with GOM; • Obtained an understanding of:- • the Group’s control over the receivables collection process; • how the Group identifies and assesses the impairment of receivables; and • how the Group makes the accounting estimates for impairment; • Reviewed the ageing analysis of receivables and testing the reliability thereof; • Reviewed subsequent cash collections for major receivables and overdue amounts; • Made inquiries of management regarding the action plans to recover overdue amounts; • Examined other evidence including customers’ correspondences, proposed or existing settlement plans, repayment schedules, etc; and • Evaluating the reasonableness and adequacy of the allowance for impairment loss recognised. Financial Review | Awantec Annual Report 2021 133