Page 135 - Pakistan Oilfield Limited - Annual Report 2022

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Annual Report 2022

S.No. Key Audit Matters How the matter was addressed in our audit
model which involves estimation of future cash • Checked, on sample basis the reasonableness of
flows. This estimation is inherently uncertain and the input data provided by the management to
requires significant judgement on both future cash the independent external investment advisor, to
flows and the discount rate applied to the future supporting evidence;
cash flows.
• Assessed the reasonableness of cash flow
In view of significant management judgement projections, challenging and performing audit
involved in the estimation of value in use we procedures on assumptions such as growth rate,
consider this as a key audit matter. future revenue and costs, terminal growth rate
and discount rate by comparing the assumptions
to historical results, budgets and comparing the
current year’s results with prior year forecast and
other relevant information;

• Checked mathematical accuracy of cash flows
projection;

• Performed independently a sensitivity analysis in
consideration of the potential impact of reasonably
possible upside or downside changes in key
assumptions;
• Checked quoted price of investment in NRL as
of June 30, 2022 with publicly available stock
exchange data; and
• Assessed the adequacy of the Company’s
disclosures in the financial statements in this
respect.
(iii) Recognition of Revenue Our audit procedures in relation to the matter, amongst
others, included the following:
(Refer note 4.24 and 22 to the financial statements)
• Assessed the design, implementation and
The Company is engaged in the production and operating effectiveness of the relevant key internal
sale of oil and gas resources.
controls over revenue recognition from the sale of
The Company recognised net sales during the year products;
from the sale of crude oil, natural gas and POLGAS
– Refill of cylinders amounting to Rs 29,718 million, • Performed test of details on sample basis for sales
Rs 12,269 million and Rs 9,673 million respectively. transactions by inspecting respective invoices,
delivery challans and acknowledgement of
Revenue is recognised when control of the customers;
products has transferred, being when the
products are delivered to the customer, and there • Checked on sample basis, notifications of OGRA
is no unfulfilled obligation that could affect the for natural gas and POLGAS prices. For POLGAS,
customer’s acceptance of the product. Revenue also checked on sample basis Company’s
is measured at the fair value of the consideration mechanism for the calculation of price based on
to which the Company expects to be entitled in OGRA’s notification. Performed, on a sample basis,
exchange for transferring good/ services. Effect recalculation of crude oil and natural gas prices in
of adjustments, if any, arising from revision in accordance with applicable petroleum policies /
sale prices is reflected as and when the prices are agreements / decision of Economic Coordination
finalised with the customers and / or approved by Committee of the Cabinet;
Government of Pakistan.