RWS AR 23 Final Single pages - Flipbook - Page 84
Audit Committee Report (continued)
SIGNIFICANT JUDGEMENTS
Carrying value of goodwill
Identi昀椀cation of the issues deemed to be signi昀椀cant takes
place following open, frank and challenging discussion
between the Audit Committee members, with input
from the CFO, the external auditor, the Group Financial
Controller and other relevant personnel.
The Group considers the carrying value of goodwill at a
minimum on a half yearly basis, and also when there is an
indicator of impairment. Management prepared a paper
which concluded that there were indicators of impairment
for the Language and Content Technology CGU. The
impairment amount was quanti昀椀ed as £62.4m.
The Audit Committee considered the following signi昀椀cant
matters during the course of the 昀椀nancial year. In all
cases, papers were presented to the Audit Committee
by management, setting out relevant facts, material
accounting estimates and the judgements associated
with them. The Committee satis昀椀ed itself that the
disclosures in relation to accounting judgements and key
sources of estimation were appropriate and obtained,
from the external auditor, an independent view of the
issues and risks. The Committee is satis昀椀ed that the
judgements made are reasonable and appropriate
disclosures have been included in the accounts.
Capital allocation
The Group has a strategy to optimise utilisation of cash
resources and return capital to shareholders where
appropriate. The Group’s capital and dividend policy
includes both dividends and share repurchases as tools
for capital distribution to shareholders.
Papers submitted to the committee have detailed the
Group’s progressive approach to dividend policy and the
Committee has considered and reviewed the accounting
and disclosure of the Share Repurchase Programme and
challenged key assumptions including the su昀케ciency of
the Groups distributable reserves to support the policy.
Capitalised software development
The Audit Committee has reviewed reports on
the capitalisation policies and procedures for
internally developed software. The papers submitted
considered detail of individual products, features
and enhancements to products, together with the
incremental economic value-add to support the addition
to intangible assets. Speci昀椀cally, the Committee has
considered whether the capitalisation policy enables
the Group to meet the criteria set out under IAS 38
and is su昀케cient to enable identi昀椀cation of costs to be
capitalised and costs to be expensed, such as support
and maintenance expenditure.
The Audit Committee reviewed this paper which included
challenging the key assumptions: revenue growth rates,
forecasting accuracy, cash 昀氀ow projections and discount
rates. The Committee agreed that the assessment of
the impairment charge was consistent with the Group’s
value-in-use models and re昀氀ective of the signi昀椀cant
rise in discount rates due to macroeconomic factors.
The Group has recognised the £62.4m impairment in
administrative expenses during the period. No impairment
was recognised in the prior year. See Notes 2 and 12 to the
昀椀nancial statements for further information.
Revenue recognition
The Audit Committee has continued to receive and review
reports on the standard processes in place around
revenue recognition. Management’s paper covered
whether service revenue is recognised at a point in time
or over time. It was concluded that point in time revenue
recognition be reserved for the completion of 昀椀lings
revenues in IP Services and the recognition of perpetual/
term licence revenue in Technology and for other services
provided, the revenue is recognised over time.
The Committee discussed and challenged management’s
papers, satisfying itself that a consistent approach had
been applied to determine revenue recognised in 2023.
The Audit Committee has reviewed the disclosures
provided in the FY23 昀椀nancial statements in relation to
revenue recognition policy and to the signi昀椀cant estimates
and judgements policy on Note 2.
Uncertain tax provisions
The Group recognises a provision for uncertain tax
positions within the 昀椀nancial statements.
The Committee has reviewed management’s
consideration of uncertain tax provisions and understood
the involvement of experts in the preparation and
determination of these provisions.
The Committee has reviewed movements in the key
uncertain tax position provisions that have been
recognised and understood the basis for the recognition
of any new provisions made during the year.
The Committee discussed and challenged management’s
papers satisfying itself that a consistent approach had been
applied to the identi昀椀cation and recognition of provisions in
respect of uncertain tax positions recognised in 2023.
The Committee has reviewed the disclosures provided in
relation to taxation in Note 9 and the signi昀椀cant estimates
and judgements policy in Note 2.
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RWS Holdings plc — Annual Report 2023 GOVERNANCE REPORT
