NVFH 2020 Integrated Annual Report

Key audit matter
Goodwill assessment (Consolidated financial statements) –
note 7
The carrying value of goodwill amounted to R87,008,312,
arising from acquisitions by the Group.
Goodwill is tested for impairment annually. The value in use is
assessed using discounted cash flow models. As disclosed in
note 7 to the financial statements, there are a number of key
sensitive judgements and estimates made in determining
the inputs into these models which include growth rates and
discount rates. As a result we have identified impairment
testing of goodwill as a key audit matter. There was no
impairment of goodwill in the current year.
How our audit addressed the key audit matter
The audit procedures we performed included, amongst
others, the following:
• We assessed the design and implementation of
key controls in the goodwill impairment process
performed by management.
• We evaluated the determination of CGU’s based
on our understanding of how management monitors
the Group’s operations and makes decisions about
groups of assets that generate independent cash
flows.
• We assessed the mathematical accuracy of the
calculations within the impairment models.
• We reviewed the impairment models for compliance
with ISA 36 Impairments Assets.
• We used our internal valuation experts to assist us
in evaluating the reasonability of assumptions and
methodologies used in the forecast models. We
have challenged management, primarily on their
key assumptions to which the impairment test is most
sensitive.
• We furthermore challenged the reasonability of the
forecasts applied by management by comparing
the accuracy of their prior year projects to the
current year actual and obtaining and corroborating
explanations for significant variations between the
current year and forecasts.
• We evaluated the adequacy and appropriateness
of the presentation and disclosures relating to the
impairment assessments of goodwill including the
respective key valuation assumption used in the
consolidated financial statement in accordance with
International Financial Reporting Standards.
NVest Financial Holdings Limited | INTEGRATED ANNUAL REPORT 2020 69