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Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Independent Auditor’s Report to the members of CIMIC Group Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of CIMIC Group Limited (“CIMIC”, or the “Company”) and its subsidiaries (the “Group”), which
comprises the Consolidated Statement of Financial Position as at 31 December 2016, the Consolidated Statement of Profit or Loss,
the Consolidated Statement of Other Comprehensive Income, the Consolidated Statement of Changes in Equity and the
Consolidated Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001
, including:
(i) giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its financial performance for
the year then ended; and
(ii) complying with Australian Accounting Standards and the
Corporations Regulations 2001
.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the
Auditor’s Responsibilities for the Audit of the Financial Report
section of this report. We are independent of the
Group in accordance with the auditor independence requirements of the
Corporations Act 2001
and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110
Code of Ethics for Professional Accountants
(the “Code”) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the
Corporations Act 2001
, which has been given to the directors of the
Company, would be in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How the scope of our audit responded to the Key Audit
Matter
Recognition of revenue and recovery of contract debtors
including recovery of Gorgon LNG Jetty and Marine Structures
Project contract debtors
Refer to Note 1(a) ‘Revenue recognition’, Note 2 ‘Revenue’ and
Note 8 ‘Trade and other receivables’.
The Group’s two largest sources of revenue are contract mining
and construction projects.
Mining revenues are derived from contracts based on the value
of work completed.
Construction revenues are derived from contracts where
revenue is recognised based on the stage of completion. This
is measured as the percentage of work performed up to the
reporting date with respect to the total anticipated contract
work to be performed. Construction revenue is recognised by
management after assessing all factors relevant to each
contract, including specifically assessing the following as
applicable:
-
Determination of stage of completion;
-
Estimation of total contract revenue and costs including the
estimation of cost contingencies;
-
Determination of contractual entitlement and assessment
of the probability of customer approval of variations and
acceptance of claims; and
-
Estimation of project completion date.
The Group recognises in contract debtors progressive valuation
of work completed as well as amounts invoiced to customers.
The recognition of these amounts is based on management’s
assessment of the expected amounts recoverable.
In November 2009, CIMIC, together with its consortium
partners (“the Consortium”), was announced as the preferred
contractor to construct the Gorgon LNG Jetty and Marine
Our procedures included, amongst others:
•
Evaluating management’s processes and controls in
respect of the recognition of revenue from contract mining
and construction. As part of this process we tested key
controls including:
-
the review process conducted at the tendering
phase by the Group’s Tender Review
Management Committee;
-
the preparation, review and authorisation of
monthly valuation reports for all contracts; and
-
the comprehensive project reviews that are
undertaken by Group management on a
quarterly basis.
•
A sample of site visits across the Group’s major divisions
and geographies to enhance our understanding of the
Group’s contracting processes, the consistency of their
application, and to discuss directly with project
management the risks and opportunities in relation to
individual contracts.
•
Selecting a sample of contracts for testing based on a
number of quantitative and qualitative factors which may
indicate that a greater level of judgement is required in
recognising revenue, including:
-
history of issues identified;
-
significant unapproved changes, variations and
claims;
-
delay risk;
-
high potential impact and high likelihood of risk
events;
-
material new contracts;
-
high value contracts; and
-
loss making contracts.
Deloitte Touche Tohmatsu
A.B.N. 74 490 121 060
Grosvenor Place, 225 George Street,
Sydney NSW 2000
PO Box N250 Grosvenor Place,
Sydney NSW 1220 Australia
DX 10307SSE
Tel: +61 (0) 2 9322 7000
Fax: +61 (0) 2 9322 7001
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