Westgold Resources Limited Annual Report 2020

108 Westgold Resources Limited Annual Report 2020 Financial Report Independent Auditor’s Report continued A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation PT:DA:WGX:046 We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Repor t section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. 1. Depreciation and amortisation of assets Why significant How our audit addressed the key audit matter As at 30 June 2020, the Group had capitalised mine properties and development costs, property, plant and equipment, capitalised exploration and evaluation expenditure and right-of-use assets totaling $551.2 million (refer to Notes 16, 17, 18 and 19 of the financial report). Calculating depreciation and amortisation requires considerable judgement and estimation in relation to reserves and resources (used as the denominator in a “units-of-production” calculation) of the mines and the assessment of future costs (included in the numerator in a “units-of-production calculation) required to extract these reserves and resources for each underground mine. Accordingly, this creates a risk the depreciation and amortisation rates are inappropriate, resulting in the expense profile that does not reflect the pattern of consumption of the assets’ future economic benefits. This was considered to be a key audit matter due to the judgment and estimation involved. We evaluated the assumptions and methodologies used by the Group in their calculation of the depreciation and amortisation. Our audit procedures included the following: • Assessed the qualifications, competence and objectivity of the Group’s internal experts, the work of whom, formed the basis of the Group’s estimates on the reserves and resources and the future costs used in the amortisation calculation. • Assessed the application of reserves and resources in the amortisation and depreciation model ensuring that these are consistent with the latest published statement. • Assessed the reasonableness of the future costs included in the calculation with reference to historical costs incurred and mine plans approved by the Group’s internal experts. • Evaluated the classification of costs to ensure that they are capitalised under the correct asset class and subsequently assigned to the appropriate amortisation profile. • Evaluated the consistency of application of the Group’s amortisation and depreciation methodology on its mine properties and capital development assets across the mine sites. • Tested the mathematical accuracy of the depreciation and amortisation models. • Assessed the adequacy of the Group's disclosures relating to depreciation and amortisation.