NTUC Income AR 2018

Valuation of other financial assets (Refer to Note 4(f) and 11 to the financial statements) The key audit matter The Group’s investment portfolio represents more than 87% of its total assets. Of the financial instruments that are carried at fair value in the Group’s consolidated financial statements as at 31 December 2018, the areas that involved significant judgment were the valuation of unquoted funds, debts and equities, representing approximately 6% of the Group’s total investments. These financial instruments are classified as Level 3 in the fair value hierarchy, where their fair values are measured using unobservable inputs such as the net asset value of the investee companies. How was the matter addressed in our audit We assessed whether fair values of the Level 3 financial instruments are reasonable by performing the following procedures: • Discussed with management on the valuation approaches for these Level 3 instruments to assess the appropriateness of the basis of valuations; • Reviewed management’s sensitivity analysis in respect of the key assumptions used to assess the impact, if any, to the valuation; • Obtained independent confirmations to ascertain the reliability of inputs used in the valuations; • Evaluated the reliability of valuation approaches used in the valuation of unquoted equities and funds by performing look-back procedures to compare prior year inputs to the investees’ audited financial statements; and • Assessed the adequacy of disclosures in the financial statements on the fair value measurement basis. Findings The valuation methods applied are in line with generally accepted market practices and the valuations are consistent with recent transacted prices or external net assets valuation reports. We also found that the disclosures on fair value measurement (Note 4(f)) to be appropriate. Independent Auditors’ Report For the Financial Year Ended 31 December 2018 34 HAND IN HAND