that impact the timing and quantum of future cash flows, specifically assumptions such as expected traffic performance, discount rates and growth rates.
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
THT – not applicable
TIL – not applicable
Key audit matter
How our audits addressed the key audit matter
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.
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. • Assessed the mathematical accuracy and methodology of the models with regard to the requirements of the Australian Accounting Standards. • Assessed the reasonableness of the disclosures in the financial report having regard to the requirements of Australian Accounting Standards.
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