Page 34 - Inegrated Annual Report 2020-Eng

Management has also considered this area to We also inspected the governance around
be a key accounting estimate as disclosed in approval of project budgets and held discussions
the ‘accounting estimates and management with management where significant variances
judgements’ note to the consolidated financial against the approved budgets were noted.
statements.
In addition, we performed procedures to ensure
that the revenue recognition criteria adopted by
the Group is appropriate and is in line with Group’s
accounting policy.

Valuation of trade receivables and Unbilled
receivables (including the provision for
expected credit losses) How our audit addressed the area of focus

As at 31 December 2020, the gross trade We performed procedures on individually
receivables and the gross unbilled receivables on significant projects, such as, substantiating
projects amounted to AED 927 million and AED transactions with underlying documentation,
2,779 million respectively, out of which, AED 513 including contracts and third party
million and AED 2,071 million related to signed correspondence, to obtain evidence for the
contracts while AED 414 million and AED 708 accuracy and collectability.
million related to unsigned/ verbal contracts. Such
receivables are significant to the Group as these We examined the Group’s assessment of the
represent approximately 51% of the balance customers’ financial circumstances and ability to
sheet total. Furthermore, the balance of trade repay the debt and considered the customers’
and unbilled receivables aged more than 1 year historical payment habits along with other
is 33% of the trade receivables account. Hence, macroeconomic information.
collectability of receivables is considered to be a
key matter for the Group. We requested and assessed legal opinions in
situations where the outcome of project results
The provision for expected credit losses on or the recoverability of (un)billed receivables was
trade and unbilled receivables from customers is dependent on the outcome of legal proceedings
considered to be a key audit matter as it requires or arbitration.
the application of judgement by management,
since the expected credit losses must reflect We Gained an understanding of management’s
information about past events, current conditions assessment of expected crdit losses and their
and forecasts of future conditions, as well as the assumptions applied such as historical loss rates,
time value of money. The Group’ disclosures time value of money etc. and evaluated whether
are included in Note 3 and Note 12 to the the assumptions used in the assessment were
consolidated financial statements, which outlines reasonable.
the accounting policy for determining the provision
for expected credit losses.

Other information

Other information consists of the information included in the Group’s 2020 Annual Report and Board
of Director’s report, other than the consolidated financial statements and our auditors’ report thereon.
We obtained the Board of Directors’ report, prior to the date of our auditors’ report, and we expect to
obtain the remaining sections of the Group’s 2020 Annual Report after the date of our auditors’ report.
Management is responsible for the other information.

34 2020 Integrated Annual Report