RWS Annual Report 2022 web - Flipbook - Page 102
Independent Auditor's Report to the Members of
RWS Holdings plc (continued)
Capitalisation and impairment of development costs (2022: £22.6m, 2021: £19.7m)
Refer to the Note 13 of the Consolidated Financial Statements (page 129).
The Group capitalises eligible costs in the development of its software products and internal systems. There is a risk of
inappropriate capitalisation of these development costs, which require significant judgement as to whether the costs meet the
capitalisation criteria per IAS 38.
Our response to the risk
Our audit procedures comprised the following:
We performed walkthroughs of the capitalised development cost process and
assessed the design effectiveness of key controls.
We selected a sample of additions to understand the nature of the costs, and
to assess whether the items have been appropriately capitalised in accordance
with IAS 38. We specifically challenged this with respect to capitalisation of
costs incurred on products already in use, in order to validate managements
judgements around whether the costs were likely to give rise to additional future
economic benefit.
Key observations communicated to
the Audit Committee
We concluded that development costs
are appropriately capitalised under
IAS 38 and that it is reasonable that no
impairment has been recorded on these
assets as at 30 September 2022.
We performed analytical procedures, including comparison of capitalization and
amortization to prior year and comparison of budgeted spend versus actuals.
Further to this, we challenged management on the useful economic life of assets
capitalised, including validating that additions are amortised over the remaining
useful life of the underlying asset to which they relate.
.We audited capitalised costs to supporting documentation including 3rd party
invoices and cash payments made where relevant. We also performed specific HR
testing to validate salary information to supporting documnetation..
We audited the Group’s disclosures in relation to capitalised development costs
made, where in the financial statements to confirm the adequacy of disclosure of
the Group’s capitalisation policy.
We assessed the impairment of assets in use and those still under development
in accordance with IAS 36 by considering whether there were any indicators of
impairment, including obsolescence of technology and changes to underlying
business and market trends.
We performed full and specific scope audit procedures over this risk area in 3
locations, which covered 100% of the risk amount.
In the prior year, our auditor’s report included a key audit matter in relation to accounting for acquisition of SDL. In the
current year, we did not identify this as a key audit matter due to the smaller quantum of acquisitions in the current year.
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RWS — Annual Report 2022
INDEPENDENT AUDITOR’S REPORT
