NTUC Income AR 2017

Valuation of investment properties The key audit matter The Group owns a portfolio of investment properties comprising commercial, industrial and residential properties. These investment properties are carried at fair values as determined by independent professional valuers. The valuation process involves significant judgement in determining the appropriate valuation methodology to be used, and in estimating the underlying assumptions to be applied. The valuations are sensitive to key assumptions applied in deriving future cash flows such as the capitalisation rates, discount rates and terminal yield rates; where a change in the assumptions can have a significant impact to the valuation. How was the matter addressed in our audit We assessed whether the fair values of the investment properties are reasonable by performing the following procedures: • Inquired and assessed management’s basis of determining fair values of investment properties; • Evaluated the competency and objectivity of the independent property valuers; • Assessed the appropriateness and reasonableness of the valuation methodologies and key assumptions used by the independent property valuers such as the capitalisation rates, discount rates, rental growth rates and estimated rental rates; • Reviewed management’s computation and accounting treatment of fair value changes; and • Assessed the adequacy of disclosures in the financial statements in describing the inherent degree of subjectivity and key assumptions in the estimates. Findings The Group has a process in appointing and instructing valuers, and in reviewing, challenging and accepting their valuations. The valuers are members of generally-recognised professional bodies for valuers and have considered their own independence in carrying out their work. The valuation methodologies used are in line with generally accepted market practices and the key assumptions used are within the range of market data. We also found that the disclosures on the fair value measurement (Note 4(f)) to be appropriate. Other information Management is responsible for the other information. The other information comprises information included in the annual report but does not include the financial statements and our auditors’ report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. INDEPENDENT AUDITORS’ REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 ANNUAL REPORT 2017 NTUC INCOME INSURANCE CO-OPERATIVE LIMITED 34