INDEPENDENCE GROUP NL ANNUAL REPORT 2017

94 Recoverability of Deferred Tax Assets Key audit matter How the matter was addressed in our audit At 30 June 2017, the Group has $251m (2016: $219m) of deferred tax assets recognised. Australian Accounting Standards require deferred tax assets to be recognised only to the extent that it is probable that sufficient future taxable profits will be generated in order for the benefits of the deferred tax assets to be realised. These benefits are realised by reducing tax payable on future taxable profits. This was a key audit matter due to the quantum of the accumulated losses as well as the judgments behind preparing forecasts to demonstrate the future utilisation of these losses in accordance with the requirements of Australian Accounting Standards. Significant judgement is required to assess whether there will be sufficient future taxable profits to utilise the recognised deferred tax assets, and given the high value of the balance, such judgements can have a significant impact on the financial statements. We assessed the Group’s ability to utilise the deferred tax assets by obtaining the latest Board approved cash flow budget and assessed the forecasted taxable profits over the relevant utilisation period which includes the life of mines. Our work included but was not limited to the following procedures: · Evaluating whether the forecasts have been appropriately adjusted for the differences between accounting profits to taxable profits; · Comparing the latest Board approved budget to historical performance to assess the consistency and accuracy of the Group’s budgeting processes; · Assessing whether the latest Board approved cash flow budget is consistent with life of mine; · Challenging management’s key assumptions in the cashflow budget and forecasts; and · Assessing whether deferred tax assets had been appropriately recognised in the financial report as at 30 June 2017 based on the extent to which they can be recovered by future taxable profits. We Assessed the adequacy of related disclosures in Note 5 to the financial statements. Other information The directors are responsible for the other information. The other information comprises the unaudited information contained in the Directors’ Report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us after that date. 124 — IGO ANNUAL REPORT 2017