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Kumpulan Fima Berhad (11817-V) •
Annual Report 2018
Revenue recognition
(Refer to Note 3 to the financial statements)
Revenue from production of security documents, net sale of oil palm products and sales of food products recognised by the
Group amounted to approximately RM423.7 million. Given its magnitude and significant volume of transactions involved, revenue
recognition is identified as an area of focus in our audit.
As part of our audit, we performed the following procedures to address the possible cause of revenue misstatement, particularly in
respect of the timing and amount of revenue recognised:
(a)
Obtained an understanding of the Group’s relevant internal controls and tested the controls over timing and amount of
revenue recognised;
(b)
Inspected the terms of significant sales contracts to determine the point of transfer of significant risk and rewards;
(c)
Inspected documents evidencing the delivery of goods to customers; and
(d)
Tested the recording of sales transactions close to the year end to establish whether the transactions were recorded in the
correct accounting period.
Provision for warranty
(Refer to Note 33 to the financial statements)
As at 31 March 2018, the provision for warranty amounted to RM9.9 million. The Group provides warranty for defective travel
documents and licenses for a specified period or term.
The Group assessed the provision for warranty based on the estimated replacement costs to be incurred for the defective products
during the warranty periods. The costs are estimated based on historical rate of return of the defective products. Given the significant
judgement involved in management’s assessment, we identified the provision for warranty to be an area of audit focus.
As part of our audit, we performed the following:
(a)
Obtained an understanding of the Group’s warranty estimation process;
(b)
Assessed the reasonableness of the provision for warranty by comparing with the average historical rate of return of the
respective products. Our audit procedures, included amongst others, evaluating the validity of the historical data used to
determine the rate of return and performing test of details on the historical products claims; and
(c)
Recomputed the management’s calculation of the provision for warranty.
Independent auditors’ report
to the members of Kumpulan Fima Berhad (Incorporated in Malaysia)