01 02 03 Financial Statements 04 The table below illustrates the coverage obtained from the work we performed: 2018 2017 No. Revenue Profit4 Total Assets No. Revenue Profit4 Total Assets Full scope1 3 89% 86% 89% 3 93% 97% 96% Specific scope 2 1 7% 7% 7% – – – – Full and Specific scope coverage 4 96% 93% 96% 3 93% 97% 96% Remaining components3 4% 7% 4% 1 7% 3% 4% Total reporting components 5 100% 100% 100% 4 100% 100% 100% 1.We audited the complete financial information. 2.We audited specific accounts within these components. The audit scope of these components may not have included testing of all significant accounts of the components but will have contributed to the coverage of significant accounts tested for the Group. 3.We performed other procedures, including analytical review and testing of consolidation journals and intercompany eliminations to respond to any potential risks of material misstatement to the Group financial statements. 4.Profit before non-recurring items and tax. Changes from the prior year In 2018 we changed the scope of JSC Insurance Co Imedi L from ‘other procedures’ to ‘specific scope’ due to its risk profile and relative size in the Group. Involvement with component teams In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the primary audit engagement team, or by component auditors from EY Georgia operating under our instruction. For the two full scope components and the only specific scope component, where the work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole. During the current year’s audit cycle, we held an audit team event led by the Senior Statutory Auditor, where the primary audit team and the component teams considered the audit risk and strategy. The primary audit team continued to follow a programme of planned visits that has been designed to ensure that the audit is executed and delivered in accordance with the planned approach and to confirm the quality of the audit work undertaken. The Senior Statutory Auditor is based in the United Kingdom, but since Group management and operations reside in Georgia, the primary audit team operates as an integrated primary team including members from the United Kingdom and Georgia. During the current year’s audit cycle, visits were undertaken by the primary audit team to the component teams in Georgia. The Senior Statutory Auditor visited Georgia six times during the current year’s audit and there was regular interaction between team members in the UK and Georgia. These visits involved discussing the audit approach with the Georgian members of the integrated primary team and the component teams and any issues arising from their work, meeting with Group and local management, attending planning and closing meetings and reviewing key audit working papers on risk areas. The primary team interacted regularly with the component teams throughout the audit, reviewed key working papers and ere resposbleor the scope and directioof the audit process. This, togeter with the additional procedures perormed at Group level, gave us appropriate evidence for our opinion on the Group financial statements. Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group to be GEL 2.8 million (2017: GEL 2.5 million), which is 5% (2017: 5%) of profit before tax and non- recurring items. We believe that profit before tax and non-recurring items best represents the recurring results of the operations of the Group and as such provides us an appropriate basis for determining the nature, timing and extent of further audit procedures. • Profit before tax – GEL 53.9m Starting Basis • Non-recurring items – GEL 2.2m Adjustments • Totals GEL 56.1m profit before tax and non-recurring items Materiality • Materiality of GEL 2.8m (5% of materiality basis) 117