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exercise judgment with respect to the projections of future operating performance and the assessment of future plans. The determination of key assumptions with respect to the projections directly affects the impairment of investments in subsidiaries and loans to subsidiaries.
I gained an understaning of and assessed the key assumptions used for the preparation of business plans and the estimation of future cash flows by gaining an understanding of the procedures undertaken to determine the key assumptions, checking the assumptions against information from both internal and external sources and comparing past cash flow projections to actual operating results in order to evaluate the exercise of management judgment in estimating the cash flow projections. I also evaluated the discount rate applied by the management through analysis of the finance costs of the Group and of the industry, tested the calculation of the realisable values of the assets using the selected financial model and considered the impact of changes in key assumptions on those realisable values, especially changes in the discount rate and long-term revenue growth rates. Moreover, I reviewed the disclosures made with respect to the impairment assessment for investments in subsidiaries and loans to subsidiaries.
Deferred tax asset from unused taxable losses
As at 31 December 2016, the Group had deferred tax asset from unused taxable losses amounting to Baht 200 million, representing 4 percent of total assets. The Group disclosed its accounting policy and details relating to the deferred tax asset in Note 25 to the financial statements. A deferred tax asset is recognised when it is highly probable that the Group’s taxable profit will be sufficient to allow utilisation of the deferred tax asset in the future. Determining whether there will be sufficient future taxable profit to utilise taxable losses requires significant management judgment with respect to the preparation of business plans and projections of future taxable profit based on approved business plans. Therefore, there is a risk with respect to the amount of deferred tax asset.
I gained an understanding of the key related controls over the preparation and the approval of the estimates of future taxable profit for the purpose of deferred tax asset recognition by making enquiry of responsible executives and gaining an understanding of the designed controls. I assessed the estimates of future taxable profit by checking the required information and key economic assumptions used in the projections against information from both internal and external sources, with consideration of information and assumptions that directly affect revenue growth and gross profit margin. Furthermore, I compared the past projections with actual taxable profits to assess the exercise of management judgment in estimating the taxable profits. I also tested the calculation of future taxable profit based on the above information and assumptions, and considered the effects of changes to key assumptions on the projected future taxable profits, especially in respect of long-term revenue growth. In addition, I reviewed the disclosures made with respect to temporary differences and unused taxable losses for which deferred tax asset was not recognised by the Group.
Other Matter
The consolidated financial statements of Mono Technology Public Company Limited and its subsidiaries and the separate financial statements of Mono Technology Public Company Limited for the year ended 31 December 2015 were audited by another auditor of our firm who expressed an unqualified opinion on those statements, but drew attention to the matter regarding the change in recognition of the cost of spectrum license, under his report dated 19 February 2016, expressed an unqualified opinion on those financial statements.
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