Staatsolie Annual Report 2017

Confidence in Our Own Abilities
28
Report on the Audit of the Consolidated Financial Statements
(Continued)
Key audit matters
(Continued)
Key audit matter
How our audit addressed the key audit matter
Estimation of decommissioning and
restoration provisions
Provisions associated with decommissioning
and restoration are disclosed in Note 4.7 to the
consolidated financial statements; a description
of the accounting policy and key judgements
and estimates is included in Note 2.5.
The calculation of decommissioning and
restoration provisions is conducted by
specialist engineers and requires the use of
significant judgement in the application of
key assumptions in respect of asset lives,
timing of restoration work being undertaken,
environmental legislative requirements, the
extent of restoration activities required and
estimation of future costs. Changes in these
assumptions may result in material changes to
the decommissioning and restoration provisions
recorded by the Group.
Our audit procedures focused on the work of the
consolidated entity’s experts.
In obtaining sufficient audit evidence, we:
• assessed the competence and objectivity
of both the Group’s internal and external
experts involved in the estimation process;
• assessed the reasonableness of the
assumptions and ensured it was consistent
with our knowledge of the Group and
industry;
• evaluated the adequacy of the expert’s
work;
• understood the Group’s decommissioning
and restoration estimation processes;
• tested the consistency in the application of
principles and assumptions to other areas
of the audit such as reserves estimation
and impairment testing;
• tested the mathematical accuracy of the
net present value calculations and discount
rate applied; and
• reconciled the calculations to the financial
report prepared by internal and external
experts.