Page 186 - KELAG Annual Report 2019
P. 186

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
                    consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial
                    statements as a whole, however, we do not provide a separate opinion thereon.



                    Refer to note 5 to the consolidated statement of comprehensive income and to notes 10 and 11 to the consolidated
                    statement of financial position.




                    Intangible assets (in particular electricity purchase rights) and property, plant and equipment (in particular power plants)
                    with a total carrying amount of EUR 1,530.5 million account for 71.9 % of total assets of the Group as of the balance sheet
                    date.

                    At each reporting date, the Group assesses whether there is any indication that the recoverable amount has decreased
                    significantly and consequentely, intangible assets and property, plant and equipment (PPE) are impaired. For those items
                    of intangible assets and PPE, for which impairment losses were recognized in prior periods, the Group assesses whether
                    the impairment loss no longer exists and therefore needs to be reversed. Impairment testing for items of intangible assets
                    and PPE for which separate cash inflows cannot be determined is performed at the level of the cash generating unit (CGU).


                    In testing for impairment, the Group determines the value in use and if necessary, the fair value less costs of disposal. The
                    value in use as well as fair value less costs of disposal are calculated as the present value of the future cash flows using a
                    recognized discounted cash flow method.

                    The result of this measurement depends to a high degree on  estimates of future production and sales volumes, the
                    development of power tariffs, production costs and investments as well as on the discount rates used in the calculations.
                    As such, these assumptions and estimations are subject to significant estimation uncertainties.

                    There is a risk that intangible assets and PPE are over- or understatated in the consolidated financial statements.



                    We assessed the appropriateness of the measurement of intangible assets and PPE as follows:

                        We analyzed the processes and methods followed in testing intangible assets and PPE for impairment and critically
                        questioned whether these processes are suitable for the appropriate measurement of intangible assets and property,
                        plant and equipment. We collected information about the significant internal controls and evaluated the key controls in
                        respect of their design, implementation and operating effectiveness for the purpose of identifying whether there is any
                        indication that intangible assets and PPE may be impaired or an impairment loss recognoized in prior periods may no
                        longer exist.
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