ANNUAL REPORT 2021-22
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ANNUAL REPORT 2021-22
ANNUAL REPORT 2021-22
33
Opinion
Auditor-General
Independent Auditor's Report to the Board of Directors
Power Generation Corporation
Page 1 of 5
I have audited the financial report of Power Generation Corporation (the Corporation), which comprises
the statement of financial position as at 30 June 2022, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of cash flows for the year
then ended, notes to the financial report including a summary of significant accounting policies, and the
Directors' declaration.
In my opinion, the accompanying financial report of Power Generation Corporation is in accordance
with Australian Accounting Standards and the Government Owned Corporations Act 2001, including:
• giving a true and fair view of the Corporation's financial position as at 30 June 2022 and of its
financial performance for the year ended on that date; and
■ complying with Australian Accounting Standards.
Basis for Opinion
I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report
section of my report.
I am independent of the Corporation in accordance with the Government Owned Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110
Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to my audit of the financial report in Australia. I have also fulfilled my other ethical
responsibilities in accordance with the Code.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
opinion.
Key Audit Matters
Key audit matters are those matters that, in my professional judgement, were of most significance in
my audit of the financial report of the current period. These matters were addressed in the context of
my audit of the financial report as a whole, and in forming my opinion thereon, and I do not provide a
separate opinion on these matters.
Key Audit Matter
Audit scope response to the Key Audit Matter
Carrying value of property, plant and equipment and calculation of impairment
Property, plant and equipment totalling
$343.656 million, as disclosed in Note 10 to
the financial statements, represents a
significant balance.
A net asset impairment of $5.319 million
disclosed in the statement of profit or loss
and other comprehensive income
represents a significant balance.
My audit procedures included but were not limited to:
• obtaining an understanding of the key controls
associated with the preparation of the valuation
models used to assess the recoverable amount of the
assets within each cash generating unit;
• assessing the consistency of the forecast cash flow to
the Board approved five year financial plan
documented within the latest Statement of Corporate
Intent;
Auditor-General
Key Audit Matter
Significant management judgement is
applied in determining the value in use of
property, plant and equipment and any
related impairment adjustment attributable
to each cash generating unit.
The valuation of property, plant and
equipment is a key audit matter due to the
complexity in the evaluation of the
recoverable amount of the assets which
requires significant judgement in
determining the key assumptions
supporting the expected future cash flows
of the Corporation, the utilisation of the
relevant assets and the useful lives of
property, plant and equipment.
The utilisation and useful life of each asset
can change significantly as a result of
technical innovations or other events.
Page 2 of 5
Audit scope response to the Key Audit Matter
■ checking, on a sample basis, the mathematical
accuracy of the cash flow forecast and impairment
model and the appropriateness of the inclusion of the
specific cash flows in accordance with the Accounting
Standards;
performing sensitivity analyses to stress test the key
assumptions used in the valuation model around key
drivers such as growth rates and discount rates and
considering the impact on the recoverable amount
from changes in these key assumptions especially in
view of the impact of the current economic conditions
on the cash flow projections and growth rates;
reviewing the useful lives of assets as determined by
management;
reviewing the qualifications and independence of the
specialists appointed by the Corporation to undertake
the Weighted Average Cost of Capital calculation; and
■ reviewing the Corporation's framework for determining
the recoverable amount relevant to each cash
generating unit.
Estimation and valuation of Decommissioning
The provision associated with the Ron
Goodin Power Station decommissioning of
$5.771 million, as disclosed in Note 15 to
the financial statements, represents a
significant balance.
The estimation of future decommissioning
costs requires significant judgement as
decommissioning is an evolving activity and
there is limited historical precedent against
which to benchmark estimated future costs.
Provision
My audit procedures included but were not limited to:
■ assessing the annual review and confirmation of the
estimated costs of decommissioning determined by
the Corporation's contractor engaged for the project,
• reviewing the consistency in the application of the
current year's principles and assumptions to the prior
year and to the Corporation's accounting policy, as
described in Note 1(q) to the financial statements;
* reviewing the calculation of the present value of
expected future payments of the provision using a
pre-tax discount rate that reflect current market
assessment of time value of money and the risks
specific to the liability, and
■ checking the mathematical accuracy of the provision
calculation and the correct treatment of the movement
in the Corporation's books.
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