PANDORA Annual Report 2017

P A N D O R A A N N U A L R E P O R T 2 0 1 7 S T A T E M E N T S C O N T E N T S 1 1 5 TAXATION The Group has extensive international operations and in the normal course of business, Management makes judgements and estimates in determining the recognition of income taxes, deferred taxes and provisions for uncertain tax positions. In Thai- land, the Group is subject to Board of Investment agreements (BOIs), where many, but not all, types of net income are tax-exempt, and therefore, changes in profit allocation could significantly impact the Group’s consolidated tax expense. In addition the US tax reform changes the tax envi- ronment in one of the Group´s largest markets specific affecting the recognised deferred tax asset in 2017. On this basis, taxation was a matter of most significance in our audit. Additional details on income taxes are provided in section 2.5 of the consolidated financial statements, to which we refer. Our procedures in relation to recognition of in- come taxes, deferred taxes and provisions for un- certain tax positions included assessing the Group’s processes for recording and continual re-assessment of provisions for uncertain tax po- sitions. Our procedures also covered evaluating the assumptions applied by Management in de- termining the recognition and measurement of income taxes and deferred taxes while taking into account relevant correspondence with tax author- ities and third parties. Our own tax specialists per- formed an assessment of the Group’s correspond- ence with relevant tax authorities in order to consider the completeness of the tax provisions. We also assessed the assumptions used, taking into consideration our own tax specialists’ knowl- edge and experience. In addition, we assessed relevant opinions obtained by Management from third parties related to the requirements for tax exemptions under BOIs in Thailand. Further, we evaluated the disclosures provided by Management in the consolidated financial statements and the Parent Company financial statements to applicable accounting standards. S TAT EMENT ON THE MANAGE - MENT ’ S R E V I EW Management is responsible for the Management’s review. Our opinion on the financial statements does not cover the Management’s review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial state- ments, our responsibility is to read the Management’s review and, in doing so, consider whether the Management’s review is materially inconsistent with the financial statements or our knowledge obtained during the audit, or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the Management’s review provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we con- clude that the Management’s review is in accord- ance with the financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the Management’s review. MANAGEMENT ’ S R E S PONS I B I L I T I E S FOR THE F I NANC I A L S TAT EMENT S Management is responsible for the preparation of consolidated financial statements and Parent Company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so. AUD I TOR ’ S R E S PONS I B I L I T I E S FOR THE AUD I T OF THE F I NANC I A L S TAT EMENT S Our objectives are to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit conducted in accordance with ISAs and additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material mis- statement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropri- ate to provide a basis for our opinion. The risk of not detecting a material misstatement result- ing from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresenta- tions or the override of internal control. I NDE P ENDENT AUD I TOR S ’ R E PORT ( CONT I NUED )