FGV Annual Report 2016

FELDA GLOBAL VENTURES HOLDINGS BERHAD 154 FINANCIAL REPORT REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (continued) Key audit matters How our audit addressed the key audit matters Accounting for bearer plants During the financial year, the Group changed its accounting policy for bearer plants from capital maintenance method to amortisation method. The change in accounting policy had been applied retrospectively in accordance with FRS 108 "Accounting Policies, Changes in Accounting Estimates and Errors". Accordingly, prior year adjustments had been made as if the new accounting policy had always been applied from the beginning. In establishing the planting costs to be capitalised, management had used data collated from the accounting system and records. Where estimated average cost per hectare had been used, this was an area of focus for our audit. Refer to Notes 2(i), 5(ii) and 58 to the financial statements. We have performed the following audit procedures: •We evaluated management's assessment of planting costs directly attributable to planting activities identified for capitalisation, previously expensed off in the income statement. We assessed if these costs met the recognition criteria under FRS 116 "Property, Plant and Equipment" ("PPE"); •We assessed the costs capitalised during the planting period until maturity. We also assessed the period from maturity until the next replanting to determine the reasonableness of the estimated useful lives of the bearer plants; •We checked the reasonableness of estimated average cost per hectare used by management by comparing the costs capitalised against average planting cost per hectare for the same estate or neighbouring areas incurred by the Group in the same year of planting; •We checked the adjustments made to the prior years in accordance with FRS 108, to reflect the planting costs which had been capitalised as PPE, the related depreciation charges and reclassification of bearer plants from biological assets to PPE and the impact of relevant deferred tax. Based on our procedures, we noted no significant exceptions. INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FELDA GLOBAL VENTURES HOLDINGS BERHAD