Annual Report 2019

ANNUAL REPORT 2019 147 INDEPENDENT AUDITOR’S REPORT KEY AUDIT MATTERS (continued) Key audit matter How our audit addressed the key audit matter Revenue recognised from sales of properties We identified revenue recognition as a key audit matter as it is quantitatively significant to the consolidated statement of profit or loss. There are judgments involved in determining the appropriate point at which to recognise revenue from sales of properties and whether the Group should recognised the revenue from sales of properties over time or at a point in time. The impact of transition to HKFRS 15 on retained profit at 1 April 2018 was disclosed to note 2 to the consolidated financial statements. Revenue from sales of property is recognised when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the property underlying the particular performance obligation is transferred to the customer. As disclosed in note 4, revenue from sales of properties is recognised over time when the Group’s performance under a sales contract does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date; otherwise the revenue is recognised at a point in time when the buyer obtains control of the completed property. The Group recognised revenue of HK$3,755 million for the year ended 31 March 2019. Our procedures in relation to revenue recognised from sales of properties included: • Assessing management’s process and control over the appropriate point in time at which revenue from sales of properties is recognised and whether the Group should recognised the revenue from sales of properties over time or at a point in time; • Assessing the enforceability right to payment by checking to the terms of contracts, on a sample basis, and the applicable laws governing the contracts; • E v a l u a t i n g t h e r e a s o n a b l e n e s s o f t h e management’s estimation of the budgeted contract revenue and budgeted contract costs, on a sample basis, by checking to contracts and supporting document for revenue from sales of properties recognised over time; • Assessing the accuracy of the calculation of the stage of completion based on accumulated actual cost incurred to date over the total budgeted cost, on a sample basis; and • Evaluating the terms set out in the sales and purchase agreements, on a sample basis, for the revenue from sales of properties recognised at the point in time and obtaining evidence regarding the delivery of completed properties, i nc l ud i ng , whe r e r e l e v an t , c omp l e t i on certificates and delivery notices, to assess whether the control of the completed properties have been transferred to the buyers and the Group has present right to payment.