KENANGA ANNUAL REPORT 2017

Key audit matters (Cont’d.) Risk Area and Rationale Our Response Goodwill MFRS 136 requires the Group to annually test the amount of goodwill for impairment. This annual impairment test was significant to the preparation of financial statements because the assessment process is complex and highly judgmental and is based on assumptions that are affected by expected future market or economic conditions. Relevant details have been disclosed in Note 3.4(e)(i) (Summary of significant accounting policies, Note 4(i) (Significant accounting estimates and judgments) and Note 18 (Intangible assets) to the financial statements. Our audit procedures included, among others, evaluating the assumptions and methodologies used by the Group, in particular those relating to the projected revenue and expense growths, and applicable discount rates. We reviewed the adequacy of the Group’s disclosures in the financial statements about those assumptions to which the outcome of the impairment test is most sensitive, that is, those that have the most significant effect on the determination of the recoverable amount of goodwill. Information Other than the Financial Statements and Auditors’ Report Thereon The directors of the Bank are responsible for the other information. The other information comprises the Directors’ Report and the annual report, but does not include the financial statements of the Group and of the Bank and our auditors’ report thereon. The annual report is expected to be made available to us after the date of this auditors’ report. Our opinion on the financial statements of the Group and of the Bank does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Group and of the Bank, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Bank or our knowledge obtained in the audit or otherwise appears to be materially misstated. If based on the work we have performed on the other information that we have obtained prior to the date of this auditors’ report, 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 on the Directors’ Report. When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the Directors of the Bank and take appropriate action. Responsibilities of Directors for the Financial Statements The directors of the Bank are responsible for the preparation and fair presentation of the financial statements of the Group and of the Bank that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Bank that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Group and of the Bank, the directors are responsible for assessing the Group’s and the Bank’s ability to continue as going concerns, 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 the Bank or to cease operations, or have no realistic alternative to do so. Kenanga Investment Bank Berhad 84 independent auditors’ report to the Members of Kenanga Investment Bank Berhad (Incorporated in Malaysia)