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Fima CORPORATION Berhad
(197401004110)
(21185-P)
• Annual Report 2020
107
Independent
Auditors’ Report
To the members of Fima Corporation Berhad
(Incorporated in Malaysia)
Revenue recognition (cont’d.)
(Refer to Note 3 to the financial statements)
(a) Obtained an understanding of the Group’s relevant internal controls and tested the controls over timing and amount of revenue
recognised;
(b) Inspected the terms of significant sales contracts to determine the point of transfer of control to customers;
(c) Inspected documents evidencing the delivery of goods to customers; and
(d) Tested the recording of sales transactions close to the year end, including credit notes issued after year end, to establish whether the
transactions were recorded in the correct accounting period.
Impairment of property, plant and equipment and right-of-use assets (arising from PT Nunukan Jaya Lestari’s land)
(Refer to Note 13, Note 15 and Note 40 (a) to the financial statements)
In accordance with MFRS136: Impairment of Assets, the Group is required to perform impairment test of assets whenever there is an
indication that the assets may be impaired by comparing the carrying amount with its recoverable amount.
As disclosed in Note 40 (a) to the financial statements, as at 31 March 2020, the unfavourable outcome arising from the judicial review dated
27 November 2019 against a subsidiary of the Company located in Indonesia, namely PT Nunukan Jaya Lestari (“PTNJL”) by the Minister
of Argrarian Affairs and Spatial Planning, pertaining to the legality of certain areas within the plantation land occupied by PTNJL (“Judicial
Review Outcome”), represents an indication of impairment.
Consequent to the Judicial Review Outcome, management has considered and recorded impairment losses on the affected property, plant
and equipment (“PPE”) and right-of-use (“ROU”). During the financial year, the management recognised impairment losses on the PPE and
the ROU of RM8.9 million and RM8.9 million respectively. As at 31 March 2020, the accumulated impairment losses of PTNJL’s PPE and ROU
amounted to RM17.9 million and RM12.0 million respectively. Given the significance of the matter, we identified this as an area of focus in
our audit.
We performed amongst others the following audit procedures:
(a) Discussed and considered the impact of the Judicial Review Outcome with management personnel responsible for managing the
Group’s legal matters, PTNJL’s legal advisor, component auditor and with those charged with governance;
(b) Discussed and considered the component auditor’s assessment of the objectivity, independence and expertise of the legal advisor
engaged by the PTNJL. We have also reviewed the opinion rendered by the legal advisor;
(c) Reviewed the list of the affected PPE and ROU and the computation of the impairment losses thereon; and
(d) Evaluated the adequacy of the disclosures of the Judicial Review Outcome giving rise to the impairment losses.
Information other than the financial statements and auditors’ report thereon
The directors of the Company are responsible for the other information. The other information comprises the information included in the
annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.