Page 101 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCING FINANCIAL
TO SERVE TO LEAD GROWTH SUSTAINABILITY GOVERNANCE STATEMENTS 99

InDEPEnDEnT auDITORS’ REPORT
to the members of Export-Import Bank of malaysia Berhad
(Incorporated in malaysia)

Key audit matters (cont’d.)

Risk area and rationale Our response

Valuation of derivatives and hedge accounting
The carrying amount and nature of the Group’s and the Bank’s We engaged our valuation and financial risk management
derivative financial instruments are as disclosed in Note 11 to professionals in accordance with the requirements of
the financial statements. International Standard on Auditing 620: Reliance on the Work
of an Auditors’ Expert to assist us in performing our audit
Fair valuation of the derivatives involves assessment and procedures on the review of valuation of derivatives and
assumptions that are affected by expected future market application of hedge accounting. Our audit focused on the
and economic conditions, and the use of observable and following key areas:
unobservable inputs and parameters in the financial markets,
and these assessments require the application of significant (a) reviewed the critical terms of the derivative contracts;
judgement and estimates.
(b) tested the reasonableness of the assumptions adopted
The Group and the Bank also use derivatives to manage in the valuation of derivatives, including assessing if
exposures to interest rates, profit rates and foreign currencies. the inputs and parameters used were observable in the
Accordingly, the Group and the Bank apply hedge accounting financial markets;
for hedges which meet specified criteria required under (c) performed independent valuation of selected derivatives
MFRS 9 Financial Instruments. and compared our valuation to those performed by
management;
Refer to summary of significant accounting policies in
Note 2.4(f)(vi) and the disclosures of derivatives valuation (d) reviewed the risk management strategies and basis of
and hedge accounting application in Note 11 to the financial the economic hedges applied by the management; and
statements.
(e) reviewed the hedge effectiveness determined and
documented by the management for the purpose of
applying hedge accounting. We also considered whether
the disclosures in
We also considered whether the disclosures in relation to
derivatives and hedge accounting comply with the relevant
disclosure requirements.

Insurance contract/Takaful certificate and expense liabilities

Insurance contract and Takaful certificate liabilities (which We engaged our Actuarial Services professionals in
comprise premium/contribution liabilities and claims liabilities) accordance with the requirements of International Standard on
and expense liabilities are determined based on previous Auditing 620: Reliance on the Work of an Auditors’ Expert to
claims experience, existing knowledge of events, the terms assist us in performing our audit procedures on the provision
and conditions of the relevant Insurance policies or Takaful for the insurance contract/takaful certificate and expenses
certificates. liabilities. Our audit focused on the following key areas:
Estimates of insurance contract/Takaful certificate and (a) understood and documented the qualifications,

expense liabilities have to be made for both the expected objectivity and independence of the Appointed Actuary
ultimate cost of claims reported at the reporting date, and tasked with estimating these liabilities;
for the expected ultimate cost of claims incurred but not yet
reported (“IBNR”) at the reporting date. The estimation of (b) tested the completeness and sufficiency or accuracy of
the provision for these liabilities are sensitive to various data used in the actuarial valuation;
factors and uncertainties.
(c) compared the actuarial valuation methodologies and
assumptions against recognised actuarial practices, and
with industry data;