141 F INANC IAL Statements Sect ion 05 Annual Report 2022 Key Audit Matters (contd.) Recognition of government grant on meeting year 2021 NRW target (contd.) Our key audit procedures are as follows: • Read the correspondences between RanhillSAJ, SPAN and NRECC; • Evaluated and challenged the key judgement used, particularly the timing of the recognition of the government grant as other income; and • Involved internal tax specialist to evaluate and challenge the key assumptions used, particularly the allocation of expenses according to the nature of NRW expenses in estimating the tax impact. Recoverability and timing of collection of other income for reimbursement of expenses receivable from Johor State Government (Refer Note 8 – Other income, Note 24(c) – Trade and other receivables, Note 4(a)(i) Reimbursement of expenses receivable from Johor State Government) During the current year, RanhillSAJ, a subsidiary of the Company, submitted a reimbursement request to the Johor State Government (“JSG”) and recognised other income of RM45.4 million (2021: RM22.2 million), being reimbursable expenses incurred relating to shortfall of raw water supply for year 2021 and 2022 (2021: year 2020). In determining the basis for recognising this other income, management has taken into consideration of terms and conditions stated in the Water Supply Agreement entered with JSG on 9 July 2009, letter of acknowledgement of reimbursement request from Johor State Economic Planning Division dated 29 December 2021 and 15 February 2023 and legal opinions obtained from solicitors. Management has exercised judgement on the recoverability and timing of collection of claims made by RanhillSAJ. Accordingly, we have identified the recognition of other income for reimbursement of expenses receivable from Johor State Government as a key audit matter. Our key audit procedures are as follows: • Reviewed the minutes of discussion and approval for the claims by the Board of Directors of RanhillSAJ which includes representatives from JSG; • Sighted the correspondences between RanhillSAJ and JSG relating to the claims which are available todate; • Performed test of details on the occurrence and accuracy of the amount recognised; and • Evaluated and challenged the judgement used, particularly the recoverability and timing of collection of other income for reimbursement of expenses receivable from Johor State Government. We have determined that there is no key audit matters in the audit of the separate financial statements of the Company to communicate in our auditors’ report. Information Other Than the Financial Statements and Auditors’ Report Thereon The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report of the Group but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. Our opinion on the financial statements of the Group and of the Company do not cover the other information and we do not express any form of assurance conclusion thereon. INDEPENDENT AUDI TORS ’ REPORT To the Members of Ranhill Utilities Berhad (Incorporated in Malaysia)
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