Key Audit Matter

Given its complexity and significance the valuation of insurance contract liabilities-short term insurance has been considered as a key audit matter

How the matter was addressed in the audit

We evaluated the actuarial assumptions used by management based on the analysis of the experience to date, industry practice and the financial and regulatory requirements;

We evaluated managements methodology and assumptions against actuarial practices and industry standards; and

We evaluated whether the actuary has the relevant expertise and experience in this field

Fair Valuation of Investment Properties Including Land and Buildings in Property, Plant and Equipment

The Group has investment properties of Rs 2.8 billion at 30 June 2020 and accounts for 4.31% of total assets. As detailed in note 3 to the financial statements, these are measured at fair value, with the corresponding changes in fair values being recognised in the statement of profit or loss. The investment properties have been fair valued by independent external valuers and managements internal expert as detailed in Note 5 to the financial statements. Significant judgements have been used by managements internal valuer and the independent external valuers in determining the fair value of investment properties. Accordingly, the valuation of properties is a key audit matter due to the significance of the balance to the financial statements as a whole and the level of judgement involved.

Our procedure in relation to the valuation of investment properties including land and buildings included the following: We reviewed the working papers and deliverables of the component auditors and the substantive testing procedures included the following: We have obtained, read and understood the 2020 reports from the independent valuation specialists and managements internal expert. We have tested the mathematical accuracy of the reports and evaluated the valuation methodology used by the external property valuers and managements internal expert. We have assessed the competence, capabilities and objectivity of the managements internal expert and the independent external valuers. We also verified the qualifications of the internal and external valuers. We have verified the appropriateness of the models used by the independent external valuers and the internal managements expert and reviewed the scope of work with management to ensure that there were no matters affecting the internal and external valuers judgements. Other audit procedures also included challenging key assumptions adopted in the valuations and reasonableness of the assumptions used through performing the following: Tested a selection of data inputs against supporting documentation to ensure it is accurate, reliable and reasonable. We discussed the valuations with the external property valuers and the internal managements expert, and challenged the key assumptions comprising of the discount rate and capitalisation rate adopted in the valuations, including available market selling prices, market rents and by comparing them with historical rates and other available market data. We performed a sensitivity analysis using the key assumptions used. We ensured the reasonableness of the inputs and assumptions used in the context of Covid-19 pandemic. We have ensured that proper disclosures have been made in respect of valuation of investment properties whilst attesting the transfers made from property, plant and equipment to investment properties in the consolidated financial statements. We have reviewed the significant estimates and critical judgements and ensured that adequate disclosures as per IAS 40 Investment Property have been in the consolidated financial statements.

Question :

Review the KAM and critically assess if each KAM meets the requirements of ISA701 Communication Key Audit Matters In The Independent Auditor's Report in terms of Determining Key Audit Matters and Communicating Key Audit Matters.