Page 185 - Sigmaroc Annual-Report 2023

Of the Group’s 41 components, including the Company, 5 material and significant components were subject to full scope audits for group purposes, a targeted scope review was performed on a further 19 components assessed as material, and the remaining components were subject to analytical review as they were not significant or material to the Group.
The components not subject to full scope audits contained only balances that eliminated on consolidation, or specific balances material to the financial statements. The Company was audited separately to the materiality level noted above.
Of the 5 material and significant components, 3 were located in Finland, Sweden, and Poland. The components in these locations were audited by firms outside of the PKF network operating under our instruction. The remaining components were located in London, where the audit work was conducted by us using a team with specific experience of auditing companies within the natural resources sector and publicly listed entities. We interacted regularly with the
component audit teams during all stages of the audit and we were responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the Group and Company financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
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Key Audit Matter How our scope addressed this matter
Valuation and Allocation of Investments in subsidiary undertakings (Company) (Note 18)
The Company carries an “Investment
in subsidiary undertakings” balance of £567.31 million (2022: £583.42 million) in its Statement of Financial Position.
There is a risk that the carrying value of the investments is greater than the recoverable amount and is therefore impaired.
We have assessed this to be a key audit matter as the estimated recoverable amount of investments is subjective due to inherent uncertainties involved in forecasting and discounting future cashflows, and thereby overstating the carrying value of investments.
Our work in this area included:
• Obtaining the impairment models and assessment for each subsidiary and reviewing the models for reasonableness;
• Assessing the mathematical accuracy of the models;
• For all key assumptions and inputs to the impairment models:
• discussing their appropriateness with management.
• agreeing to supporting evidence including, where possible, to third party data; and
• evaluating and recalculating the discount rate used;
• Reviewing the value of the net investment in subsidiaries against the supporting underlying assets;
• Assessing the historical forecasting accuracy, by comparing previously forecasted cash flows to actual results achieved;
• Performing a sensitivity analysis on the key assumptions and inputs noted above;
• Considering the existence of impairment indicators per IAS 36 Impairment of Assets; and
• Reviewing the associated disclosures in the financial statements and assessing the appropriateness of such disclosures.