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.
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Key audit matter
Market valuation of inventory and completeness,
existence and market valuation related to
open sales and purchase contracts
The Group applies hedging of fair value in relation
to raw material in inventory, meaning that a change
in the price of the hedge has a direct impact on the
value of the inventory. Open sales and purchase
contracts are recognized according to IFRS 9, and
thus measured and recognized at market value on
the balance sheet date. Recognition of raw material
purchases is complex and fluctuations in the
price of raw material can have a significant impact
on the financial information. An incorrect valuation
of purchase contracts and inventory has a direct
impact on the Group’s costs and earnings.
The Group’s raw material purchasing process is
based on the premise that the underlying currency
and raw material are hedged as soon as a sales
contract has been signed. A possible omission
in recognizing entered contracts or the risk that
a fictive contract is recognized would limit AAK’s
possibilities to implement appropriate risk management
and would also affect the recognized result.
How the Group works with risk management and
the measurement of sales and entered purchase
contracts is described in Note 3.