Key audit matter (Continued) How we addressed the matter in our audit We have assessed the reasonableness of Group’s policy and management’s judgement for inventory obsolescence based on our understanding of the business environment and our review of the inventories’ sales patterns. We have assessed the accuracy of Group’s inventory aging as at the reporting year end, as well as tested the Group’s computation for inventory obsolescence. We have retrospectively assessed the historical accuracy of management’s assumptions and estimates applied in the provision for inventory obsolescence. We have tested the net realisable value (“NRV”) of inventories by reviewing the subsequent selling prices. For inventories that have been written down to NRV, we have performed procedures to assess whether the write-down was appropriate. We have also assessed the adequacy of the disclosures made in the financial statements. Other information Management is responsible for the other information. The other information comprises the information included in the statement by directors and the annual report, but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements 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, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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. Responsibilities of management and directors for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Act and the Singapore Financial Reporting Standards (International), and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets. In preparing the financial statements, management is responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the group or to cease operations, or has no realistic alternative but to do so. The directors’ responsibilities include overseeing the Group’s financial reporting process. MEGACHEM LIMITED ANNUAL REPORT 2025 116 INDEPENDENT AUDITOR’S REPORT To the Members of MEGACHEM LIMITED
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