ANNUAL INTEGRATED REPORT 2021
106
00
ANNUAL INTEGRATED REPORT 2021 | AXTEL
Ethics Standards Board for Accountants' Code of Ethics for Professional
Accountants ("IESBA Code") and with the ethical requirements that
are relevant to our audit of the consolidated financial statements in
accordance with the Ethics Code issued by the Mexican Institute of
Public Accountants ("IMCP Code"), and we have fulfilled our other
ethical responsibilities in accordance with the IESBA Code and with
the IMCP Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Other Matters
The accompanying consolidated financial statements have been
translated from Spanish to English for the convenience of readers.
Key Audit Matter
The key audit matter is the matter that, in our professional judgment,
is of most significance in our audit of the 2021 consolidated financial
statements. This matter was addressed in the context of our audit
of the consolidated financial statements, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Assessment of Tests of Impairment of Intangible Assets with
Definite Useful Life and Goodwill
As described in Note 3 and 12 to the consolidated financial statements,
the Company performs annual impairment tests to the intangible
assets with a definite useful life and goodwill.
We have identified the evaluation of intangible assets with definite
useful life and goodwill as a key audit matter, mainly due to the
fact that impairment tests involve the application of judgments and
significant estimates by the Company's management in determining
the assumptions, premises, cash flows, budgeted income, and the
selection of discount rates used to estimate the recoverable value
of the cash generating unit ("CGU"), besides the relevance of the
balance for the consolidated financial statements of the Company,
which is made up of goodwill of $322,782 thousand pesos, and
intangible assets with a definite useful life of $977,422 thousand
pesos. This requires a high level of judgement, an important increase
in the level of audit effort and the incorporation of our expert
valuation specialists.
We performed the following audit procedures on the following
significant assumptions that the Company considered when
estimating future projections to evaluate the recovery value of
intangible assets with definite useful lives and goodwill, among
others; projections of income and expenses, expected gross and
operating profit margins, discount rate, the industry growth rate,
income projections, discount rate, comparison of the expected gross
profit margin, projected flows. As follows:
► We tested the design and implementation of the controls on the
determination of the recovery value and the assumptions used.
► We evaluated with the assistance of our valuation specialists,
the reasonableness of the i) methodology for determining the
recovery value of intangible assets with definite useful lives and
goodwill and ii) we challenge the financial projections, comparing
them with the performance and historical trends of the business
=View entire presentation