Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 86 87 87 Donaco International Limited / 2017 Annual Report Donaco International Limited / 2017 Annual Report 86 Independent Auditor’s Report to the Members of Donaco International Limited Independent Auditor’s Report to the Members of Donaco International Limited 65 Key Audit Matter How we addressed the key audit matter  Assessed the appropriateness of the currency used in the model. The cash flow forecast is calculated in the Thai Baht (THB) and translated to the US Dollar (USD) at the valuation date.  Together with our valuation specialists, assessed reasonableness of the key assumptions used, being revenue growth rate, discount rate, terminal growth rate and discount for lack of marketability.  Together with our valuation specialists, tested the mathematical accuracy and components of the model that supports the impairment assessment.  Checked the sensitivity of the impairment assessment by focusing on the discount for lack of marketability and THB/USD translation rate.  Evaluated the adequacy of the judgments and sources of estimation uncertainty disclosures in the consolidated financial report. Obligatory payments (Note 7) Key Audit Matter How we addressed the key audit matter The consolidated entity paid monthly obligation payments to the government of Cambodia in respect of its casino business in Cambodia. These payments are made in accordance with practices previously agreed with the Ministry of Economy and Finance of Cambodia (“MOEF”) and as the Casino Law which is to cover taxation of gaming activities in Cambodia has yet to be promulgated. We determined this to be a key audit matter given the inherent nature of this matter. Our group audit procedures included the following:  Held discussions with the component auditor and management, and researched the tax obligation in respect of the casino business in Cambodia to gain an understanding of the obligatory payments.  Obtained correspondence with the MOEF relevant to gaming and non-gaming obligation payments and conditions attached to the income tax liabilities (obligation payments).  Obtained a legal confirmation on the following: (a) There is no Casino Law in respect of casino taxes has been promulgated. (b) The obligatory payment comprised of fixed gaming tax and fixed non-gaming tax. (c) DNA Star Vegas Co. Limited is under a Lump Sum tax regime on its gaming and non-gaming earnings until a new law on gambling is passed. 66 Key Audit Matter How we addressed the key audit matter  Checked the payments of monthly obligatory payments to the bank transfer slips.  Evaluated the adequacy of disclosure in the consolidated entity’s financial report. The disclosures in Note 7 have been enhanced. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar2.pdf .This description forms part of our auditor’s report.