Page 108 - EXIM-Bank_Annual-Report-2023

EXIM BANK MALAYSIA
106 A Vision to Serve Empowering Growth Management Discussion and Analysis
ANNUAL REPORT 2023
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 We engaged our valuation and financial risk management
Bank’s derivative financial instruments are as disclosed in professionals in accordance with the requirements of International
Note 11 to the financial statements. Standard on Auditing 620: Reliance on the Work of an Auditors’
Expert to assist us in performing our audit procedures on the review
Fair valuation of the derivatives involves assessment and of valuation of derivatives and application of hedge accounting.
assumptions that are affected by expected future market Our audit focused on the following key areas:
and economic conditions, and the use of observable
and unobservable inputs and parameters in the financial (a) reviewed the critical terms of the derivative contracts;
markets, and these assessments require the application
of significant judgement and estimates. (b) tested the reasonableness of the assumptions adopted in the
valuation of derivatives, including assessing if the inputs and
The Group and the Bank also use derivatives to manage parameters used were observable in the financial markets;
exposures to interest rates, profit rates and foreign
currencies. Accordingly, the Group and the Bank apply (c) performed independent valuation of selected derivatives and
hedge accounting for hedges which meet specified compared our valuation to those performed by management;
criteria required under MFRS 9 Financial Instruments.
(d) reviewed the risk management strategies and basis of the
Refer to summary of material accounting policy economic hedges applied by the management; and
information in Note 2.4(f)(vi) and the disclosures of
derivatives valuation and hedge accounting application (e) reviewed the hedge effectiveness determined and documented
in Note 11 to the financial statements. by the management for the purpose of applying hedge
accounting.
We also considered whether the disclosures in relation to derivatives
and hedge accounting comply with the relevant disclosure
requirements.
Insurance contracts/takaful certificates liabilities and
reinsurance contract assets
Insurance contract and Takaful certificate liabilities (which We engaged our Actuarial Services professionals in accordance
comprise liabilities for remaining coverage and liabilities with the requirements of International Standard on Auditing 620:
for incurred claims) are determined based on previous Reliance on the Work of an Auditors’ Expert to assist us in performing
claims experience, existing knowledge of events, the our audit procedures on the provision for the insurance contract/
terms and conditions of the relevant insurance contracts takaful certificate and expenses liabilities. Our audit focused on the
or Takaful certificates. following key areas:

Valuation of these insurance contract/ takaful certificate (a) understood and documented the qualifications, objectivity and
liabilities involve significant judgements and estimates independence of the Appointed Actuary tasked with estimating
particularly with respect to estimation of present value of these liabilities;
future cash flows.
(b) tested the completeness and sufficiency or accuracy of data
The calculation of these liabilities involves actuarial experts used in the actuarial valuation;
in order to ensure appropriateness of discount rates,
methodology, assumptions and date used to determine (c) compared the actuarial valuation methodologies and
the estimated present value of future cashflows. assumptions against recognised actuarial practices, and with
industry data;