Asia-Pacific Strategic Investments Limited - Annual Report 2021

Independent Auditor’s Report To the Members of Asia-Pacific Strategic Investments Limited

Key Audit Matters (continued)

1.

Valuation and impairment of assets (continued)

(a) Property, plant and equipment and development properties (continued)

How our audit addressed the area of focus

In obtaining sufficient audit evidence, we:

• Obtained an understanding of the current status of the Huzhou Project through discussions with management and examination of documentation such as the master development plan;

• Assessed the net realisable value of the development properties by ascertaining the principal situations in which net realisable value is likely to be less than the cost in accordance to SFRS(I) 1-2 Inventories ;

• Assessed the objectivity, independence and expertise of the external professional valuers;

• Held discussions with the external professional valuers to understand the valuation methodologies, key assumptions used in the valuation of the property, plant and equipment and their scope of work in response to the heightened level of estimation uncertainty; • Involved our internal valuation specialists to assist us in assessing the reasonableness of the valuation models and assessing the reasonableness of the key assumptions used by management and the external professional valuers; and

• Reviewed the adequacy of the disclosure on the Group’s property, plant and equipment and development properties.

(b)

Expected credit loss (“ECL”) on other receivables [Refer to Notes 3.3 and 13]

Area of focus

As at 30 June 2021, the Group has other receivable from non-related party – Nanxun District Government in relation to the reimbursement of infrastructure expenditures incurred by the Group amounting to S$10,023,000 which will be offset against the cost of acquisition of development land for Huzhou Project in future. This receivable represents 16% of the Group’s total assets, accordingly any ECL recognised for this receivable could have a material impact on the Group’s financial statements. In accordance with SFRS(I) 9 Financial Instruments , the Group is required to recognise ECL on financial assets. For other receivables, the Group has applied the general approach and measured loss allowance at an amount equal to the 12-month ECL. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating the ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience. The Group also considers the forward-looking adjustments on the uncertainties in existing market conditions including the potential effects of COVID-19 pandemic on the industry.

ASIA-PACIFIC STRATEGIC INVESTMENTS LIMITED

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