Page 179 - Pakistan Oilfields Limited - Annual Report 2021

S.No. Key Audit Matters How the matter was addressed in our audit
(iii) Recognition of Revenue
(Refer note 4.25 and 26 to the consolidated
financial statements)
The Group is engaged in the production and Our audit procedures in relation to the matter,
sale of oil and gas resources. amongst others, included the following:
The Group recognised net sales during the • Assessed the design, implementation and
year from the sale of crude oil, natural gas operating effectiveness of the relevant key internal
and POLGAS/CAPGAS – Refill of cylinders controls over revenue recognition from the sale of
amounting to Rs 17,940 million, Rs 11,714 products;
million and Rs 6,992 million respectively. • Performed test of details on sample basis for sales
Revenue is recognised when control of the transactions by inspecting respective invoices,
products has transferred, being when the delivery challans and acknowledgement of
products are delivered to the customer, customers;
and there is no unfulfilled obligation that • Checked on sample basis, notifications of OGRA
could affect the customer’s acceptance of for natural gas and POLGAS/CAPGAS prices.
the product. Revenue is measured at the For POLGAS/CAPGAS, also checked on sample
fair value of the consideration to which the basis Group’s mechanism for the calculation of
Group expects to be entitled in exchange price based on OGRA’s notification. Performed,
for transferring good/ services. Effect of on a sample basis, recalculation of crude oil and
adjustments, if any, arising from revision in natural gas prices in accordance with applicable
sale prices is reflected as and when the prices petroleum policies / agreements/ decision of
are finalised with the customers and / or Economic Coordination Committee of the Cabinet;
approved by Government of Pakistan. • Where pricing is provisional / sales agreement not
We considered this as key audit matter due finalised, (a) reviewed correspondence with the
to the significance of the amounts requiring customers and relevant government authorities
significant time and resource to audit due during the year and held discussions with the
to magnitude, inherent risk of material Group; (b) inspected term sheets etc; and (c)
misstatement and revenue being a key checked price recorded is in line with applicable
economic indicator of the Group. petroleum policy / agreed with the customers;
• Assessed sales transactions on either side of the
statement of financial position date to assess
whether they are recorded in relevant accounting
period;
• Performed analytical procedures to analyse
variation in the price and quantity sold during the
year;
• Tested journal entries related to revenue
recognized during the year based on identified
risk criteria; and
• Assessed the appropriateness of disclosures made
in the financial statements.

ANNUAL REPORT 2021 177