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PANDORA ANNUAL REPORT 2016
138 • STATEMENTS
matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks
of material misstatement of the consolidated financial statements and the parent company financial statements. The results
of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit
opinion on the accompanying consolidated financial statements and the parent company financial statements
Revenue and sales return
Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer
and it is measured at fair value of the expected consideration to be received, less rebates, discounts, sales taxes, duties and
expected sales returns. Revenue recognition and measurement of the related expected sales returns was a matter of most
significance in our audit due to the inherent risk in the estimates and judgements which Management makes in the normal
course of business as to timing of revenue and measurement of expected sales returns. Details on revenue recognition and
expected sales returns are provided in sections 2.1 and 3.5 of the consolidated financial statements and in section 3.6 of the
parent company financial statements, to which we refer.
Our procedures in relation to revenue recognition and measurement of expected sales returns included considering
the Group’s accounting policies for revenue recognition, including those related to expected sales returns, and assessing
compliance of policies with applicable accounting standards. We identified and assessed internal controls related to the
timing of revenue recognition and measurement of expected sales returns. We tested the effectiveness of the Group’s internal
controls in relation to calculation of expected sales returns and timing of revenue recognition. On a sample basis, we tested
sales transactions taking place at either side of the balance sheet date as well as credit notes issued after the balance sheet
date to assess whether those transactions were recognised in the correct period. We assessed the key assumptions applied
by Management regarding expected sales returns based on our knowledge of the business and by reviewing the supporting
documentation prepared by Management. Furthermore, we evaluated the disclosures provided by Management in the
consolidated financial statements and the parent company financial statements to applicable accounting standards.
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
Thailand, 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. 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 income taxes, deferred taxes and provisions for uncertain tax positions
included assessing the Group’s processes for recording and continual re-assessment of provisions for uncertain tax positions.
Our procedures also covered evaluating the assumptions applied by Management in determining the recognition and
measurement of income taxes and deferred taxes while taking into account relevant correspondence with tax authorities and
third parties. Our own tax specialists performed an assessment of the Group’s correspondence 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’ knowledge 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.
STATEMENT ON THE MANAGEMENT´S REVIEW
Management is responsible for the Management’s review. Our opinion on the consolidated financial statements and the
parent company financial statements does not cover the Management’s review, and we do not express any assurance
conclusion thereon.