Affin Bank Berhad | Annual Report 2020

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (continued) Key audit matters (continued) Collective assessment • Choosing the appropriate collective assessment models and assumptions for the measurement of ECL such as expected future cash flows and forward-looking macro-economic factors as disclosed in Note 51 Financial Risk Management – credit quality of financial assets 422 ORGANISATION EXECUTIVE SUMMARY CORPORATE GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF AFFIN BANK BERHAD (Incorporated in Malaysia) Company No: 197501003274 (25046-T) How our audit addressed the key audit matters (continued) Collective assessment Where ECL was calculated on a collective basis, our testing, on a sample basis, included the following: • Assessed the methodologies inherent within the collective assessment ECL models applied against the requirements of MFRS 9 • We re-performed the bucketing of loans into delinquency buckets (loans impairment migration) and re-computed the Probability of Default • We agreed the loans recoveries data for Loss Given Default to supporting evidence • Assessed and considered the reasonableness of forward- looking forecasts assumptions, taking into consideration of the economic uncertainty arising from Covid-19. • Assessed and tested the identification and calculation of overlay adjustments to the ECL due to the impact of Covid-19. • We re-performed the calculation of ECL and agreed the results to the general ledger. We also checked the accuracy of posting of impairment allowance to the general ledger.