Together with PwC modelling experts assessed the mathematical accuracy for a sample of the models. Assessed the reasonableness of the disclosures in the financial reports having regard to the requirements of Australian Accounting Standards.
Recoverability of concession intangible assets, assets under construction and equity accounted investments The recoverable amounts of the Group’s concession intangible assets, assets under construction and equity accounted investments are calculated by estimating the net present value of future cash flows using discounted cash flow models (the models). This area requires significant judgement by the Group due to a number of assumptions that impact the timing and quantum of future cash flows, specifically assumptions such as expected traffic performance, discount rates and growth rates. At 30 June 2024, the Group recognised an impairment of $22m in relation to its investment in the A25. We considered this to be a key audit matter due to the significance of the balances to the consolidated balance sheet(s), the complexity of the models and judgement required in determining the recoverable amounts.
Maintenance provision
Group – Note B17 Key audit matter
THT – Note B17
TIL – not applicable
How our audits addressed the key audit matter We performed the following procedures, amongst others: Considered the relevant obligations in the concession agreements and assessed whether the Group has accounted for its maintenance obligations in accordance with the requirements of Australian Accounting Standards. Assessed the design and tested the operation of a selection of relevant controls over the maintenance forecast and budgeting processes impacting the models. Tested a sample of amounts paid/utilised and compared them to relevant supporting documentation. Assessed whether the discount rates used in the models were appropriate by comparing them to market data.
The concession agreements contain clauses that require the Group to make future payments for the maintenance of the toll roads. The maintenance provisions recognised are calculated by estimating the net present value of future payments using discounted cash flow models (the models), requiring significant judgement. We considered this to be a key audit matter for the Group due to the complexity of the concession arrangements and models, and judgement required to estimate the maintenance provisions.
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