Noxopharm Limited 54 42 INVESTMENT IN NYRADA Area of focus How our audit addressed it The investment includes two instruments, being: — Ordinary shares, that are carried at fair value based on their quoted value on the Australian Securities Exchange (ASX); and — Performance shares, that are carried at fair value based on a Monte Carlo simulation method. The directors employed an independent specialist to appraise the fair valuation of the performance shares at balance date. This matter was considered a Key Audit Matter due to the fair value assumptions applied. — Recalculating the fair value gain taken to the profit or loss during the period; and — Assessed the reasonableness of key inputs into the fair valuation provided by the expert engaged by management. We further assessed the adequacy of disclosures in relation to the investment in the notes to the financial report. Research & Development Receivable and Revenue Area of focus How our audit addressed it During the financial year and as disclosed in note 4, the Group recorded income of $5.368m related to the FY22 R&D tax incentive, of which $5.003m relates to the current financial year. Included in the current year is an amount of $365k relating to the additional FY21 R&D expenditures subsequently claimed over what was accrued for the period ended 30 June 2021. The income was recognised in accordance with the Group’s accounting policy. As at 30 June 2022, an income tax R&D receivable of $5.0m is recorded on balance sheet as disclosed in note 8. Despite there being a history of the claims being received there remains a risk that the R&D receivable is overstated with expenses inappropriately included in the claim and revenue therefore overstated, or expenses included within both the R&D and other government grant claims therefore allowing the Group to “double-dip”. This matter was considered a Key Audit Matter due to the complexity and judgement applied in calculating the R&D claim. Our audit procedures included: — Income from the R&D claim were tested substantively to ensure it was recognised correctly as per AASB 120 and the Group’s accounting policy; — Performed substantive testing of R&D expenditure incurred and employment payroll costs which are included in the FY22 R&D claim; — The R&D tax incentive claim workings were assessed by our specialist William Buck R&D team for its appropriateness with respect ATO guidelines to consider if expenditure is deemed eligible; and — Vouched the prior period receivable amount to cash at bank in relation to the FY21 expenditure. We assessed the adequacy of the financial statement disclosures concerning the Groups accounting policies with respect to the current claim and the disclosure within the notes to the financial report. Other Information The directors are responsible for the other information. The other information comprises the information in the Directors’ Report but does not include the financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report, and the annual report, which is expected to be made available to us after this date
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