Independent Auditor's Report To the Shareholders of Industries Qatar Q.P.S.C. Doha Qatar Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Industries Qatar QPS.C. (the "Company? and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statement of profit or loss, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies In our opinion, the accompanying consolidated financial statements present fairly, in all materialespects. the consolidated financial position of the Group as at December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Re-porting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing USAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) together with the other ethical requirements that are relevant to our audit of the Group's consolidated financial statements in Qatar, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion Key Audit Matters Key audit matters are those matters that in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Industries Qatar Report 2010 37 How our audit addressed the Key audit matter Key audit matter Our procedures in relation to revenue Revenue recognition recognition from sales made by the subsidiary and individual joint ventures are as follows: Total revenue recognized by the Group during the year amounted to QR 7,399 million Understanding and evaluating the design International Standards on Auditing require and implementation of the internal controls us to consider the risk of fraud in revenue over revenue recognition of the Group and joint venture companies recognition. There is an inherent risk of fraud given the high value of transactions and price fluctuations of the products affecting the Understanding, evaluating and testing revenue recognized for the year. the Group and joint venture companies' revenue accounting policies against the As disclosed in note 9, the Group's share of requirements of IFRSs, our understanding the combined results from the joint ventures of the business and related industry (QAPCO and QAFAC) of QR. 1065 million for practice the year ended December 31, 2020 represents 53% of profit for the year of the Group Reviewing the terms of the revenue contracts of the Group and joint venture The results of operations of these joint ventures companies with their customers. of OR 364 million for the year ended December 31, 2020 represent 8% of the sales revenue Performing test of details to verify occur generated by these joint ventures, rence and accuracy of revenue transactions on a sample basis. The majority of the subsidiaries and joint ventures sales are made to one customer Performing substantive analytical proce "Qatar Chemical and Petrochemical Marketing dure for each of the revenue streams and and Distribution Company" ("Muntajat identify any significant deviations from the expectations based on the understanding According to the revenue recognition policy, of each of the revenue streams business revenue from sale of products is recognized process and procedures. when the Group companies have transferred the control of the products to the customer at Obtaining and inspecting on a sample basis, the point of delivery, where terms of delivery a confirmation including the statements of are specified in the contracts. the major customer of the Group and joint venture companies, and agreeing them to We identified the recognition of revenue the accounting records as a key audit matter, because of the high values of individual shipments. The potential Evaluating the disclosures relating to errors in the timing and accuracy of revenue revenue to determine if they are in recognition at the Group, subsidiary and joint compliance with the requirements of IFRSs. venture company level could result in material misstatements in the financial statements of the Group when it recognises revenue and its share of each joint venture's net income under the equity method of accounting 38 Industriestart Key audit matter How our audit addressed the Key audit matter Revenue recognition (continued) The following notes to the consolidated financial statements contain the relevant Information related to the above discussed matters. Note 3 - Significant Accounting Policies Note 4 - Critical Judgments and Keys Sources of Estimation Uncertainty Note 9 - Investments in Joint Ventures Note 26 - Revenue Acquisition of Qatar Fertiliser Company P.S.C. ("QAFCO) Our audit procedures relating to this acquisition included the following: During the year, the Group obtained control . We evaluated the control over the of QAFCO, which was previously classified as accounting for the acquisition to determine an investment in an equity accounted joint if they had been appropriately designed venture. Control was assumed through the and implemented expiry of the previous joint venture agreement Consequently, the Group assumed the power to We challenged the Group's conclusion that appoint and remove the majority of the board they had obtained control, as defined by of directors of the entity. The relevant activities IFRS 10 Consolidated Financial Statements, are determined by the board of directors based of QAFCO. We assessed the Group's ability on simple majority votes. There was no change to direct the relevant activities of the In the relative shareholding at that point and entity through review of the relevant legal no consideration was paid. documentation, discussion with the Group's executive management, observation of As a result of obtaining control, IFRS 3 the interaction between the Group and Business Combinations requires acquisition management of the entity and consulted accounting to be applied which includes the with our internal IFRS specialists need to determine the fair value of deemed . We engaged our internal valuation consideration and the fair value of the acquired specialists to perform an independent assets and liabilities at the acquisition date. assessment of the fair values of the Management engaged a third-party specialist deemed consideration and identifiable to provide an independent valuation of the assets acquired and liabilities assumed on deemed consideration and assets and liabilities the acquisition date, specifically relating acquired to the valuation and identification of any intangible assets and the resultant goodwill The accounting for this acquisition is complex which was recognised. and involves judgement. Given the complexity there is a risk of inappropriate accounting and therefore misleading presentation in the consolidated financial statements, Industries Gate 19 How our audit addressed the Key audit matter Key audit matter Acquisition of Qatar Fertiliser Company Our audit procedures relating to this acquisition P.S.C. ("QAFCO") (continued included the following: We assessed the competence, capabilities, In addition, the acquisition involves significant independence and objectivity of man- judgements and estimates in relation to the fair value of the deemed consideration and agement's independent specialist and particularly the allocation of the purchase verified their qualifications consideration to goodwill and separately identified intangible assets. We discussed the scope of work with management's independent Specialist Any misstatement made in the valuation of the to determine if there were any matters deemed consideration and acquired assets and affecting their independence and liabilities gives rise to an equal misstatement in objectivity and to confirm if any scope goodwill limitations were imposed upon them. Consequently as a result of the details . We determined if the valuation techniques mentioned in the three preceding paragraphs, used were consistent with industry norms. we have identified this as a key audit matter. We determined if the deemed considera- The following notes to the consolidated tion and identifiable assets acquired and financial statements contain the relevant liabilities assumed were appropriately information related to the above discussed valued in all material respects We evaluated the presentation and Note 3 - Significant Accounting Policies disclosure of this transactions in the Group Note 4 - Critical Judgments and Keys Sources consolidated financial statements against of Estimation Uncertainty the requirements of IFRSS Note 10 - Business combination Note 19 - Acquisition non-controlling interest of a subsidiary matter: . 40 Industri Ontar- Key audit matter How our audit addressed the Key audit matter Recently published Executive Regulations Our audit procedures included the following: (the "New ERs") to the Income Tax Law No 24 of 2018 Weassessed the designandimplementation of controls over accounting for taxation As discussed in note 4, on December 11, 2019, the Tax Authority published the Executive We reviewed the New ER's and agreements Regulations to the Income Tax Law No 24 of in principle and obtained an understanding 2018 (the "New Tax Law) in the official Gazette of the Group's accounting policies in revoking the previous executive regulations. addressing the tax, legal and regulatory Consequently, the following changes have requirements been made affecting listed companies We considered the accounting treatment -The tax exemptions do not apply to the share of the tax expense, liabilities, settlements, of profits attributable to companies that are and contingent liabilities and disclosures of owned wholly or partly by the State, whether Group companies and joint ventures in the directly or indirectly, and that are engaged Group consolidated financial statements in Petroleum Operations or operating in the against the requirements of IFRSs and Petrochemical Industry. The tax exemption consulted with our internal IFRS specialists where necessary. available to companies listed on the capital markets is not applicable to their components We discussed open matters with the Management received a signed Memorandum Group's tax and regulatory teams. of Understanding (MOU) between Qatar . We read legal opinions and other relevant Petroleum, General Tax Authority and Ministry documents supporting management's of Finance. The MoU details the tax reporting conclusions on these matters, where and payment implications applicable to the available. components of certain companies listed on Qatar Exchange We involved our internal tax specialists to assess the liabilities recorded in We identified the change in Tax Laws and respect of items under discussion with related MOU as a key audit matter as the tax authorities by reviewing the Group's calculation and accounting for the Group's tax current year correspondence and assessing position under these regulations is complex management's judgements on any involves judgement and is subject to challenge provisions. by the tax authorities. . We assessed the related disclosures in the The following notes to the consolidated consolidated financial statements against financial statements contain the relevant the requirements of IFRSs. information related to the above discussed matters. Note 3 - Significant Accounting Policies Note 4 - Critical Judgments and Keys Sources of Estimation Uncertainty Note 25-Income Tax Note 32 - Contingent liabilities Industries Gatarina Report 2020 41 Other Information Management is responsible for the other information. The other information comprises the Board of Directors' Report but does not include the consolidated financial statements and our auditor's report thereon, which we obtained prior to the date of this auditor's report, and the Annual Report, which is expected to be made available to us after that date. Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the complete Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs and applicable provisions of Qatar Commercial Companies Law, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group's financial reporting process. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISA's, we exercise professional judgement and maintain professional scepticism throughout the audit. We also Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risk, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud may involve collusion, forgery, Intentional omission, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal controls. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report . However, future events or conditions may cause the Group to cease to continue as a going concern Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Hew 5 Challenges in Audit -- of Industries Qatar's -pendent Auditor's Report ur homework read Industries Qatar's intendent Auditor's Report. Answer the 5 questions below We will discuss the Report and your answers in Tuesday, November 8th's class This form will record your name, please fill your name. 1. What are the auditor's responsibilities for conducting the audit of the consolidated financial statements? 2. Who conducted industries Qatar's Independent Audit? 1 3. According to the audit report what are Managements Responsibilities for the Consolidated Financial Statements? 4. Under what audit standards were Industries Qatar's audit prepared. 5. Does the audit report provide an opinion on the annual report or Board of Directors Report? Microsofos 11/7/2021