Key audit matters
Key audit matters of the audit are those matters that,
in our professional judgment, were of most significance
in our audit of the annual accounts and consolidated
accounts of the current period. These matters were
addressed in the context of our audit of, and in forming
our opinion thereon, the annual accounts and consolidated
accounts as a whole, but we do not provide a
separate opinion on these matters.
Key audit matter How our audit addressed the Key audit matter
– accounting of entered sales contracts
The accounting of revenues comprises a significant risk based
on their importance in the financial information and the complexity
in the valuation of entered sales contracts.
As seen on page 34 and Note 3 of the annual report, AAK
applies active risk management. The value of the sales contracts
entered, are reported in accordance with IFRS 9 which implies
that all of these are valued and reported at market value as at
balance sheet date.
The market value is determined, as appropriate, on the basis
of liquid market prices in an open market and on stock exchange
Any possible error in the applied market price has a direct
impact on the reported revenues and results. Any possible omission
in the reporting of entered contracts, or the risk of fictitious
agreements being reported, would imply an impact on reported
revenues and would limit AAK’s possibility to achieve appropriate
risk management measures.
In order to verify that revenues are complete, correctly reported and valued, and that they comprise of
sales contracts, our audit has included, amongst other things, a combination of:
- a review and testing of AAK’s internal controls
- tests of detail through, amongst other measures, random sampling
- analytical procedures, amongst other things, with the help of data analyses
The audit activities described above refer to the sales process in its entirety (registration of sales contracts,
delivery to the customer, inventory transactions, invoicing, receipt of payments and valuation).
In order to ensure the completeness and correctness of the reporting regarding signed contracts, we have,
amongst other things:
- created an understanding for, and tested, the controls intended to identify unallowed activities linked to the
signing and valuation of sales contracts,
- tested confirmations from counterparties regarding established sales contracts.
No deviations have been noted in the reporting of established sales contracts based on the executed audit,
as described above.