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Disposal of the UGN’s business in Chicago Heights, Illinois, USA
Key Audit Matter
Our response
The Group’s US-American subsidiary UGN sold its
business in Chicago Heights, Illinois, USA, on
February 2, 2016. The disposal assets had been
classified as assets held for sale as of
December 31, 2015.
The initial purchase price of CHF 44.7 million was
received in cash at the closing date of the
transaction and the post-closing purchase price
adjustment of CHF 0.4 million was settled in the
reporting period. The sale resulted in a gain of
CHF 33.2 million and the transaction is material to
the consolidated financial statements.
Our audit procedures included evaluating whether the
Group’s methodology for separating the disposed from
the retained business properly reflected the respective
sale and purchase agreement.
We critically assessed the accuracy of the separation
accounting, including directly attributable costs and the
likelihood of warranties.
Furthermore, we evaluated the appropriateness of the
disclosures and the presentation of the transaction in
the consolidated financial statements.
For further information on the disposal of the UGN’s business in Chicago Heights, Illinois, USA, refer to the
following:
—
Note 3, Change in scope of consolidation and significant transaction
Deferred Tax Assets
Key Audit Matter
Our response
The deferred tax assets recorded by the Group
amounted to CHF 35.2 million as of December 31,
2016. The tax loss carryforwards not recognized as
deferred tax assets amount to CHF 299.2 million.
The recognition of deferred tax assets depends on
several assumptions and estimates in respect of the
probability of sufficient future taxable profits, future
reversals of existing taxable temporary differences,
tax rates and the ongoing tax planning strategies.
Our audit procedures included, amongst others,
challenging the Group’s assumptions, including
evaluating the tax planning strategies and the
availability of future taxable profits. In this context, we
involved our own local and international tax specialists.
We compared key inputs used by the Group in
forecasting future profits to externally available data,
such as economic forecasts. We also analyzed the
accuracy of the Group’s own historical forecast data and
performance and assessed the sensitivity of the
outcomes to reasonably possible changes in
assumptions. We paid particular attention to the tax
planning strategies and to forecasts of future profitability
in those jurisdictions with the most significant tax loss
carryforwards.
Furthermore, we assessed whether the Group’s
disclosures appropriately reflect its tax position.
For further information on deferred tax assets refer to the following:
—
Significant accounting judgments, estimates and assumptions relating to income taxes, Note 1.2
—
Significant accounting policies, Note 1.16 Income taxes
—
Note 11, Income taxes
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Autoneum
Financial Report 2016
Consolidated Financial Statements