FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ASTON MARTIN LAGONDA GLOBAL HOLDINGS PLC CONTINUED S KEY AUDIT MATTERS TR Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period A TE and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which G I had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters C R were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on E these matters. P O R Key observations communicated T Risk Our response to the risk to the Audit Committee Revenue Recognition – We confirmed the existence and the design effectiveness of controls Our audit procedures did not (2023: £1,632.8m; 2022: £1,381.5m) within the sales process, paying particular attention to those around identify evidence of material G O Refer to the Audit Committee Report (pages cut-off and bill and hold transactions. misstatements in revenue VE 98-101); Accounting policies (pages 148 to – For a sample of sales transactions, we considered the terms per the recognition arising from the R 149); and Note 3 of the Consolidated Financial contracts and deliveries to ensure revenue has been recognised in risk of cut-off, bill and hold or NAN Statements (page 157) accordance with IFRS 15 and is recorded in the correct period. management override through – For a sample of bill and hold sales we have confirmed the vehicle was journal entries. C There is a risk that revenue is overstated due completed before year end by obtaining the signed quality check E to errors in cut-off, including bill and hold documentation. For that sample we also confirmed the transfer of arrangements whereby revenue is recognised control had occurred by confirming the transaction directly with the F I on a completed vehicle before delivery is third-party dealer and by obtaining the customer requests to hold the NAN made to the customer based on the customer’s vehicles on their behalf. C request. – We performed physical verification on the finished vehicles and agreed IAL In the current year the business and industry these to either the inventory or the bill and hold listings. We ensured for S a sample of vehicles the manufacturing process was complete and that has experienced supply chain challenges and as T the vehicle was not double counted in revenue and inventory. A a result there is an increased risk that revenue T – We performed cut-off testing by tracing a sample of transactions E is recognised ahead of the vehicle build being M around the period end to third party delivery note documentation. E complete. N – We performed data analytical procedures of the double entries in the T There is also a risk of overstatement of revenue general ledger to test the postings from Revenue to Cash, correlating S through inappropriate manual journal entries. the cash conversion of sales. We investigated and obtained evidence for any unusual items identified. F – We performed journal testing procedures to identify unusual journal U R entry postings. We obtained audit evidence for unusual and/or material T H revenue journals. E R – We performed audit procedures over this risk area in the full and INF specific scope locations. Capitalisation and amortisation – We confirmed the existence and the design effectiveness of controls Our audit procedures did not OR M of development costs (Net book value around the intangibles process and in particular around the approval of identify evidence of material A T of capitalised development costs: £848.4m, capitalised development expenditure. misstatement in the amounts of I ON 2022: £843.9m) – For a sample of costs capitalised we confirmed that the costs incurred development costs capitalised in were; capitalised against the correct project; measured correctly; the year or through inappropriate (Amounts capitalised in the year: £268.5m, eligible for capitalisation, and the timing of the expense capitalisation manual journal entries. 2022: £232.0m) (Amortisation charge: was appropriate. £264.0m, 2022: £221.4m) – For a sample of projects we compared the actual spend against the Our audit procedures did not Refer to Accounting policies (page 150); budgeted spend to ensure the projects continue to meet the IAS 38 identify evidence of material and Note 12 of the Consolidated Financial criteria for capitalisation and remain commercially viable. misstatement of the amortisation Statements (page 165) – For capitalised development costs we confirmed the amortisation charge for development costs recorded in the period. There is a risk that costs are capitalised which period was aligned to the period over which commercial benefits are do not meet the criteria set out within IAS 38 or expected to be received and is consistent with the Group’s business that the amortisation period is inappropriate. plan. – We considered the appropriateness of the amount/percentage of costs There is also a risk of overstatement of which are transferred between models as a result of the carry over capitalised development costs through carry across principle (‘COCA’). inappropriate manual journal entries. – We recalculated the amortisation recognised to confirm this was in line with expectations. – We performed journal testing procedures to identify unusual journal entry postings. We obtained audit evidence for any unusual journals related to capitalised development costs. – We performed full scope audit procedures over this risk area in one location, which covered 100% of the risk amount. ASTON MARTIN LAGONDA ANNUAL REPORT AND ACCOUNTS 2023 136