BAKER
TECHNOLOGY
L IMI TED
THE BE ST
I N US
. 74
Keyauditmatters (cont’d)
Impairment assessment of the vessel
As at 31December 2017, the carrying amount of theGroup’s vessel was S$100,050,000, representing 48% of the
Group’s total assets. Due to the continued weakness in oil prices, the oil and gas industry has been affected by
slower demand in rigs and vessels deliverables. This results in significant pressures on charter rates and triggered
indications of potential impairment on the vessel. As a result, management carried out impairment test on the
vessel. We considered the audit of management’s impairment test on the vessel to be a key audit matter due to
themagnitudeof thecarrying amount of the vessel and the significantmanagement’s judgement and assumptions
used in the impairment assessment process.
As disclosed in Note 3.2 to the financial statements, management determined the recoverable amounts of the
vessel basedon value-in-usecalculations. Basedon the assessment, no impairmentwas recognised.
As part of our audit procedures, we assessed the valuationmethod used bymanagement and evaluated the key
assumptions used, in particular the discount rates, forecasted charter rates and utilisation rates. We evaluated the
forecasted charter rates and utilisation rates by benchmarking them to the industry rates. We also involved our
internal valuation specialists to assist us in assessingmanagement’s valuationmethod and the reasonableness of
the discount rates, forecasted charter rates and utilisation rates used. Finally, we reviewed the adequacy of the
disclosuresmadeon the impairment of the vessel inNote10 to the financial statements.
Other information
Management is responsible for other information. Theother informationcomprises the information included in the
annual report, but does not include the financial statements andour auditor’s report thereon.
Our opinionon the financial statements does not cover the other information andwe do not express any formof
assuranceconclusion thereon.
In connectionwithour audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to bemateriallymisstated. If, based on the work we have
performed, we conclude that there is amaterial misstatement of this other information, we are required to report
that fact.Wehavenothing to report in this regard.
Responsibilitiesofmanagement anddirectors for the financial statements
Management is responsible for the preparationof financial statements that give a true and fair view in accordance
with the provisions of theAct and FRSs, and for devising andmaintaining a systemof internal accounting controls
sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use
or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the
preparationof true and fair financial statements and tomaintain accountabilityof assets.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic
alternativebut todo so.
Thedirectors’ responsibilities includeoverseeing theGroup’s financial reportingprocess.
INDEPENDENT
AUDITOR’SREPORT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
