Icon Energy Limited Annual Report 2017

Key Audit Matter How we addressed the Key Audit Matter Consideration of Impairment for Capitalised Exploration and Evaluation Expenditure Refer to Note 8 ‘Exploration and Evaluation Expenditure’ Exploration assets must also be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. As at 30 June 2017 the Group recorded an impairment loss of $1.48 million in the consolidated statement of profit and loss and other comprehensive income. This matter is considered a key audit matter due to the high degree judgement required by the directors to assess whether impairment indicators are present for the specified tenements held and the high value of the capitalised deferred exploration expenditure. The conditions and assessment undertaken in relation to impairment are disclosed in the G roup’s accounting policy in Notes 8 and 25(o) of the financial report. Our procedures included, but not limited to:  Conducting discussions with management regarding the criteria used in the impairment assessment and ensuring that this is in line with AASB 6 Exploration for and Evaluation of Mineral Resources and that recognition of impairment identified is in accordance with AASB 136 Impairment of Assets ;  Reviewing evidence of activities carried out and management intentions for the area of interests the Group holds to corroborate the impairment assessment made; and  Evaluating and challenging key assumptions adopted by the directors that support the position formed on impairment for exploration and evaluation expenditure. Valuation of Restoration Provision Refer to Note 10 ‘Restoration Provision’ As at 30 June 2017, the Group has a liability of $5.2 million relating to the estimated cost of rehabilitation, decommissioning and restoration relating to areas disturbed during exploration activities and not yet rehabilitated. The restoration provision represents the present value of estimated costs for future restoration of land explored. The rehabilitation liability is reviewed and re- measured in line with changes in observable assumptions, timing and the latest estimates of the costs to be incurred based on area of disturbance. This area is a key audit matter as the determination of the restoration liability involves a level of complexity. Our procedures included, but not limited to:  Reviewing the procedures employed by the Group for the calculation of the 30 June 2017 site restoration for appropriateness against the requirements of AASB 137 Provisions, Contingent Liabilities and Contingent Assets;  Evaluating the approach adopted by the directors and m anagement’s expert in determining the value of the restoration provision, through review of the cost elements used in the estimated rehabilitation for each well and comparison to previous provision raised; and  Considering provision movements during the year to ensure they were consistent with our understanding of the Group’s activities during that period. INDEPENDENT AUDITOR'S REPORT continued FINANCIAL REPORT 36 ICON ENERGY ANNUAL REPORT 2017