Page 198 - Pakistan Oilfield Limited - Annual Report 2022

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PAKISTAN OILFIELDS LIMITED

S.No. Key Audit Matters How the matter was addressed in our audit
(iii) Recognition of Revenue
(Refer note 4.25 and 25 to the consolidated financial
statements)
The Group is engaged in the production and sale of Our audit procedures in relation to the matter, amongst
oil and gas resources. others, included the following:
The Group recognised net sales during the year • Assessed the design, implementation and
from the sale of crude oil, natural gas and POLGAS/ operating effectiveness of the relevant key internal
CAPGAS – Refill of cylinders amounting to Rs 29,718 controls over revenue recognition from the sale of
million, Rs 12,269 million and Rs 10,978 million products;
respectively.
• Performed test of details on sample basis for sales
Revenue is recognised when control of the products transactions by inspecting respective invoices,
has transferred, being when the products are delivery challans and acknowledgement of
delivered to the customer, and there is no unfulfilled customers;
obligation that could affect the customer’s
acceptance of the product. Revenue is measured • Checked on sample basis, notifications of OGRA
at the fair value of the consideration to which for natural gas and POLGAS/CAPGAS prices. For
the Group expects to be entitled in exchange for POLGAS/CAPGAS, also checked on sample basis
transferring good/ services. Effect of adjustments, if Group’s mechanism for the calculation of price
any, arising from revision in sale prices is reflected based on OGRA’s notification. Performed, on a
as and when the prices are finalised with the sample basis, recalculation of crude oil and natural
customers and / or approved by Government of gas prices in accordance with applicable petroleum
Pakistan. policies / agreements / decision of Economic
Coordination Committee of the Cabinet;
We considered this as key audit matter due to the
significance of the amounts requiring significant • Where pricing is provisional / sales agreement not
time and resource to audit due to magnitude, finalised, (a) inspected correspondence with the
inherent risk of material misstatement and revenue customers and relevant government authorities
being a key economic indicator of the Group. during the year and held discussions with the
Group; (b) inspected term sheets etc; and (c)
checked price recorded is in line with applicable
petroleum policy / agreed with the customers;
• Assessed sales transactions on either side of the
consolidated 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 consolidated financial statements.