Page 97 - Interloop Annual Report 2018-2019

INDEPENDENT AUDITOR’S INDEPENDENT AUDITOR’S

REPORT TO THE MEMBERS OF REPORT TO THE MEMBERS OF

INTERLOOP LIMITED INTERLOOP LIMITED

REPORT ON THE AUDIT OF UNCONSOLIDATED REPORT ON THE AUDIT OF UNCONSOLIDATED

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

Opinion How the Matter was addressed in
S. No Key Audit Matter(s)
We have audited the annexed unconsolidated financial statements of Interloop Limited (“the Company”), which comprise audit
the unconsolidated statement of financial position as at June 30, 2019, the unconsolidated statement of profit or loss, the either a 12-month period or the remaining life of • Reviewed the appropriateness of the assumptions used
unconsolidated statement of comprehensive income, the unconsolidated statement of changes in equity, the unconsolidated an asset, depending on the categorization of the (future and historical), the methodology and policies
statement of cash flows for the year then ended and notes to the unconsolidated financial statements including a summary of individual asset. applied to assess the ECL in respect of financial assets
significant accounting policies and other explanatory information, and we state that we have obtained all the information and of the Company.
explanations which, to the best of our knowledge and belief, were necessary for the purpose of the audit. In accordance with IFRS 9, the measurement of
ECL reflect a range of unbiased and probability- • We reviewed and assessed the impact and disclosures
In our opinion and to the best of our information and according to the explanations given to us, the unconsolidated statement of weighted outcomes, time value of money, made in the unconsolidated financial statements with
financial position, the unconsolidated the statement of profit or loss, the unconsolidated statement of comprehensive income, reasonable and supportable information based regard to the effect of adoption of IFRS 9.
the unconsolidated statement of changes in equity and the unconsolidated statement of cash flows together with the notes on the consideration of historical events,
forming part thereof conform with the international Financial Reporting Standard (IFRSs) as applicable in Pakistan, and, give current conditions and forecasts of future
the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and economic conditions. The calculation of ECLs in
fair view of the state of the company’s affairs as at June 30, 2019 and of the profit, total comprehensive income, the changes accordance with IFRS 9 is therefore complex and
in equity and its cash flows for the year then ended.
involves a number of judgmental assumptions.
Basis for Opinion We considered this as key audit matter due to
the significant amounts involved and significant
judgments made by management regarding the
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our matter.
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of
Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the 2. Adoption of IFRS 15 “Revenue from contracts with customers”:
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. (Refer notes 3.1 and 6.2 to the unconsolidated financial statements)

Key Audit Matters The International Financial Reporting Standard We reviewed and understood the requirements of the IFRS 15.
15 “Revenue from Contracts with Customers” Our audit procedures included the following:
(IFRS 15) became applicable for the first time
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial for the preparation of the Company’s annual • Considering the appropriateness of revenue recognition
statements of the current period. These matters were addressed in the context of our audit of the financial statements as a unconsolidated financial statements for the year policy, including recognition and classification criteria
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. ended June 30, 2019. for trade and other discounts and comparing it with the
applicable accounting standards.
Following are the Key Audit Matter(s): Under the aforesaid standard the revenue
from sale of goods is recognized when the • Testing the effectiveness of Company’s controls over the
How the Matter was addressed in Company satisfies its performance obligation classification of trade discounts and correct timing of
S. No Key Audit Matter(s) by transferring the promised goods to customer revenue recognition.
audit under the contract with customer.
• Reviewing a sample of contractual arrangement entered
Revenue from sale of goods is measured at into by the Company with its customers and checked
1. Adoption of IFRS 9 “Financial instruments”: transaction price net of trade discounts. the appropriateness of classification of trade discounts.
(Refer notes 3.1 and 6.1 to the unconsolidated financial statements)
As a result of application of the aforesaid standard • Reviewing the adequacy of disclosure as required under
IFRS 9 ‘Financial Instruments’ is effective for the We reviewed and understood the requirements of the IFRS 9. the management has performed extensive applicable financial reporting framework.
Company for the first time during the current year Our audit procedures included the following: evaluation of its contractual arrangement with its
and replaces the financial instruments standard
IAS 39 ‘Financial Instruments: Recognition and • Considered the management’s process to assess customers, 2018 - 19
Interloop Limited In relation to financial assets, IFRS 9 requires unconsolidated financial statements. We considered this as key audit matter due to Annual Report
the impact of adoption of IFRS 9 on the Company’s
Measurement’.
the significant amounts involved and significant
judgments made by management regarding the
the recognition of expected credit losses (‘ECL’)
rather than incurred credit losses under IAS
39 and is therefore a fundamentally different matter.
94 approach. Management is required to determine 95
the expected credit loss that may occur over