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INDEPENDENT AUDITOR’S REPORT

TO THE MEMBERS OF INTERLOOP

LIMITED

S. No Key Audit Matter(s) How the Matter was addressed in audit
3. Capital expenditures (Refer notes 6.1, note 6.2 and note 8 to the unconsolidated financial statements)
The Company is investing significant amounts in its Our audit procedures in relation to capitalization of
operations and there is a number of areas where property, plant and equipment, amongst others included
management’s judgment impacts the carrying value the following:
of property, plant and equipment and its respective
depreciation profile. These include among others the • Understanding the design and implementation
decision to capitalize costs; and review of useful life of of management controls over capitalization and
the assets. performing tests of control over authorization of
capital expenditure and accuracy of its recording in
We focused on this area since the amounts the system.
have a significant impact on the financial position of the
Company and there is significant management judgment • Testing, on sample basis, the costs incurred on
required that has significant impact on the reporting projects with supporting documents and contracts.
of the financial position for the Company. Therefore,
considered as one of the key audit matters. • Assessing the nature of costs incurred for capital
projects through testing, on sample basis, of
amounts recorded and considering whether the
expenditure meets the criteria for capitalization as
per the accounting policy and applicable accounting
standards.

• Checked the reasonableness of management’s
assessment of categories of assets and working
of reclassification in categories of assets including
impact of reclassification on both cost of assets and
accumulated depreciation in each category.

• Inspecting supporting documents for the date of
capitalization when project was ready for its intended
use to assess whether depreciation commenced
and further capitalization of costs ceased from
that date and assessing the useful life assigned by
management including the calculation of related
depreciation.

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