Genetic Signatures

67 Existence and valuation of inventory Key audit matter How the matter was addressed in our audit As disclosed in Note 9, the Group held inventory with a carrying value of $12,134,000 as at 30 June 2021 which represented approximately 22% of the Group’s total assets. Inventory valuation and existence was considered a key audit matter due to the significant value of these assets in the Consolidated Statement of Financial Position, the various locations that inventory was held, in addition to the key estimates and judgements applied by management in assessing the net realisable value (‘NRV’) of inventory. Our audit procedures for addressing this key audit matter included, but were not limited to, the following: • Observed the inventory count procedures at key locations around the year-end and performed detailed test counts and compared these to the underlying inventory records. • Evaluated the assumptions applied by management’s in assessing potential obsolescence for near-expiry and slow- moving inventory by comparing to recent sales experience and the ageing of inventory. • Analysed inventory turnover by product group in comparison to prior periods and to expectations. • Reviewed management’s processes and estimates for calculating the overhead and labour costs included within manufactured finished goods inventory. • Performed various analytical procedures in relation to inventory including an analysis of monthly gross margins and inventory turnover, comparing to prior years and expectations. • Tested a sample of inventory items on hand to initial supplier invoices and subsequent sales invoices to ascertain whether inventory was being correctly recognised at the lower of cost and NRV. Revenue recognition Key audit matter How the matter was addressed in our audit As disclosed in Note 2, the Group recognised revenue of $28,284,000 during the financial year ended 30 June 2021 (2020: $11,263,000). Due to the significant increase in revenue during the year and the overall significance of revenue to the Group as a key performance indicator, we considered this area to be a key audit matter. To determine whether revenue was appropriately accounted for and disclosed within the financial statements, we performed, amongst others, the following audit procedures: • Critically evaluated the revenue recognition policies for all material revenue sources including reviewing any new sales agreements entered during the year to identify any variable consideration / multiple performance obligation arrangements to ensure revenue was recognised in accordance with accounting standard AASB 15 Revenue from Contracts with Customers. Level 11, 1 Margaret St Sydney NSW 2000 Australia Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES LIMITED As lead auditor of Genetic Signa ures Limited for the year ended 30 June 2020, I declare that, to the best of my knowledg and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the period. Martin Coyle Director BDO Audit Pty Ltd Sydney, 28 Au us 2020