Impairment of Cash Generating Unit (CGU)
Accounting standards require the capitalised cost of cash generating units to be reviewed for impairment to assess whether the amount is fully recoverable from future cash flows. Management has prepared a discounted cash flow analysis showing the present value of each of its CGUs. In preparing these analyses, judgement on a number of factors is required including: iron ore final indexed prices; AUD/USD exchange rates; uncertainties around future operating and capital expenditures; and the discount rate used. In performing the impairment test for one of its CGUs (CGU X), management has prepared a discounted cash flow analysis showing that the present value of the discounted cash flow is $30.5 million compared with the capital value of the CGU on the balance sheet of $30.37 million. Accordingly, management has deemed the CGU not to be impaired.	The company's discounted cash flow model to determine the recoverable amount of each of the company's CGU was reviewed, including: methodologies for management judgements; logic of the discounted cashflow model; and mathematical accuracy. We also employed an independent expert to judgements made regarding: forecast operating and capital expenditure; future iron ore price estimates; AUD/USD exchange rates. We also reviewed the choice of discount rate by assessing the cost of capital of the company and comparing the rate to market data and industry research. In reviewing the model used to assess impairment of CGU X we found that assumptions about the future cashflows are very aggressive and are unlikely to be achieved in the short to medium term due to a decline in demand for iron ore in the Chinese market. Accordingly, the, the future cashflows from CGU X, according to our model, are expected to be approximately $30.19 million.
Auditor's view	We believe that an impairment charge of $180,000 should be recorded in the financial statements for CGU X.
Management's view	Management disagrees with our assessment stating that since it is initiating a strong sales drive into other overseas markets, it is confident of achieving the future cash flow targets.

because management has not adjusted for the difference => a brief explanation of this fact and what has to happen in the financial statements