Page 47 & 142 - Kesko Annual Report: Financial Review 2019

The report details the methods by which the company monitors their inventories to minimise the occurrence of inventory obsolescence.

"The Group regularly reviews inventories for obsolescence and turnover, and for possible reduction of net realisable value below cost, and records an impairment as necessary. Such reviews require assessments of future demand for products. Possible changes in these estimates may cause changes in inventory measurement in future periods." (p. 47)

"The Group regularly reviews inventories for obsolescence and turnover, and for possible reduction of net realisable value below cost, and records an impairment as necessary. Such reviews require assessments of future demand for products.

The cost of finished goods comprises all costs of purchase including freight. Inventory cost is adjusted by vendor allowances. The Group uses judgment to what extent allowances clauses laid out in purchase agreements are fulfilled at the financial statements period end date.

In our audit we focused on the assessment of net realisable value and underlying assumptions. In addition, we focused on assessment of fulfilment of vendor agreement clauses at the financial statements period end date.

In our evaluation of the Group reviews on inventory net realisable value, we walked through monitoring

processes over inventory obsolescence and turnover and processes of net realisation calculation. We identified key controls and tested efficiency of those.

We reviewed on a sample basis inventory write-off calculations and reconciled source data to inventory

accounting. We tested by sample basis formulas of valuation reports to ensure that formulas lead to the

correct result. " (p. 142)