Annual Report 2023

183 2023 Annual Report Transport International Holdings Limited INDEPENDENT AUDITOR’S REPORT Key audit matters (continued) Assessing the carrying value of buses and other motor vehicles Refer to note 13 to the consolidated financial statements and the accounting policies on pages 206 to 207 and 212 to 213. The Key Audit Matter How the matter was addressed in our audit The carrying value of the Group’s buses and other motor vehicles as at 31 December 2023 totalled HK$6,082 million which accounted for 25% of the Group’s total assets as at that date. Buses and other motor vehicles mainly represent the bus fleet employed in the Group’s franchised bus operations. The estimated useful lives and residual values of buses and other motor vehicles are reviewed annually by management taking into consideration factors which include bus deployment and scrapping plans and technological changes which may affect the useful life expectancy of the assets and, therefore, could have a material impact on any impairment charge or the depreciation charge for the year. Internal and external information is reviewed by management annually to determine whether there are any indicators that the buses and other motor vehicles may be impaired. We identified assessing the carrying value of buses and other motor vehicles as a key audit matter because of its significance to the consolidated financial statements and because applying the Group’s accounting policies in this area involves the exercise of judgement by management, in particular in considering the nature, timing and likelihood of changes to factors such as bus deployment and scrapping plans and technological developments which may affect the carrying value of buses and other motor vehicles. Our audit procedures to assess the carrying value of buses and other motor vehicles included the following: – assessing the design, implementation and operating effectiveness of key internal controls over the preparation and monitoring of bus deployment and scrapping plans; – assessing the estimated useful lives and residual values of buses and other motor vehicles with reference to the Group’s historical experience, laws and regulations relating to the deployment of buses and bus deployment and scrapping plans; – discussing with management their assessment of whether any indicators of potential impairment of buses and other motor vehicles existed at the reporting date; – challenging management’s assertion that no indicators of potential impairment of buses and other motor vehicles existed at the reporting date by comparing management’s assessment of the indicators of potential impairment in the prior year with actual results for the current year and by comparing the bases of management’s current year’s assertions with our understanding of the latest developments in the franchised bus industry and market conditions.