INDEPENDENT AUDITOR'S REPORT (CONTINUED)
KEY AUDIT MATTERS (Continued)
Assessment of impairment of available-for-sale ("AFS”) securities
Refer to note 1 (accounting policy) and note 17 to the consolidated financial statements
The key audit matter
As at 31 December 2016, the Group held a portfolio of AFS securities with a fair value of HK$662 million and recognised impairment of HK$46 million in the consolidated statement of profit or loss for the year ended 31 December 2016.
The Group recognises impairment for AFS securities in the consolidated statement of profit or loss when there is objective evidence of impairment, which includes when there has been a significant or prolonged decline in the fair value of an investment. The impairment recognised in the consolidated statement of profit or loss is the cumulative difference between cost (less any impairment previously recognised) and fair value.
We identified the assessment of impairment of AFS securities as a key audit matter because of the significance of AFS securities to the Group's total assets and the significance of impairment of AFS securities to the Group's profit and because the determination of whether there is objective evidence of impairment involves significant management judgement and is subject to potential management bias.
How the matter was addressed in our audit
Our audit procedures to assess the potential impairment of AFS-securities included the following:
comparing the fair values of all AFS securities at 31 December 2016 to external third party sources and recalculating the cumulative fair value gain or loss;
discussing with management whether there was any objective evidence of impairment of individual
AFS securities as at 31 December 2016 and
critically challenging management's assertions and
conclusions;
assessing whether there was objective evidence of impairment for AFS securities where there was a cumulative fair value loss as at 31 December 2016 by analysing the recent movements in market prices of securities based on external third party sources and inspecting third party analysts' forecasts of future market prices for these securities.
INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON
The directors are responsible for the other information. The other information comprises all the information included in the annual
report, other than the consolidated financial statements and our auditor's report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Hong Kong Ferry (Holdings) Company Limited Annual Report 2016
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