Samsung C&T : Annual Audited Financial Statements

Samsung C&T Corporation

Index

December 31, 2022 and 2021

In relation to the estimation of the total contract revenue,

• We assessed the accounting policy on revenue recognition of the Company;
• We inspected documents related to major new contracts or contracts with changes in contract amount;
• We made inquiries about the progress status of major contracts and when there are any significant changes in progress, inspected the reason of such changes accordingly;
• We inspected the basis for the Group's estimation of variable consideration for contracts with delay; and
• We evaluated the design and operation of internal control over financial reporting ("ICFR") on signing of new contracts or changes in contract amount.

In relation to the estimation of the total contract costs,

• We compared the total cost actually incurred and total cost estimated for the contracts completed, and if there are any significant differences between such amounts, made inquiries about why the difference has incurred and inspected documents related thereto;
• We inspected the reasons of significant changes in estimated total contract cost for major contracts, if any;
• We confirmed whether changes in estimated total contract costs incurred if the amount of the contract has changed;
• We confirmed whether changes in estimated total contract costs incurred due to changes in construction periods;
• We made inquiries about the feasibility of some significant contracts without any changes in the total contract costs and inspected documents related thereto; and
• We evaluated the design and operation of the ICFR on the approval and changes of the estimated total contract cost.

In relation to the calculation of construction progress rate,

• We made inquiries about the reason of changes in major contracts with significant changes in the construction progress rate;
• We made inquiries about the contract progress status and the feasibility of the total contract cost estimation for the contracts without any changes in the construction progress rate;
• We compared the progress rate estimated by using the input method and the actual progress rate confirmed by other available information, and if there are any significant differences between such rates, made inquiries about the reason and inspected documents related thereto;
• We recalculated the construction progress rate by construction contract;
• We inspected documents proving that construction costs has incurred; and
• We evaluated the design and operation of the ICFR on the attribution of construction costs incurred on a contract basis.

In relation to the recoverability of unclaimed construction amounts,

• We identified contracts with significant unclaimed construction amount and made inquiries about the reason;
• We made inquiries about financial risks of the customer having ordered contracts with significant unclaimed construction amounts and inspected documents related thereto;
• We inspected contractual obligations for contracts with significant unclaimed construction amounts, such as the contractual billing conditions, conditions for paying liquidated damages, and duration of the contract;
• We made inquiries about management's basis of the estimation for the recoverability of unclaimed construction and inspected documents related thereto; and
• We evaluated the design and operation of the ICFR on the identification of impaired unclaimed construction.

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Other matter

The separate financial statements of the Company as of and for the year ended December 31, 2021 have been audited by Samil PricewaterhouseCoopers, whose report dated March 4, 2022 expressed an unqualified opinion thereon.

Responsibilities of management and those charged with governance for the separate financial statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with KIFRS, and for such internal control as management determines is necessary to enable the preparation of the separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the separate financial statements

Our objectives are to obtain reasonable assurance about whether the separate 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 KSA 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 separate financial statements.

As part of an audit in accordance with KSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, 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 for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, 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.
• 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 Company'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 separate 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

A member firm of Ernst & Young Global Limited