ACCOUNTING FOR SHARE BASED PAYMENTS Area of focus Refer also to notes 2 and 17 How our audit addressed it The Group actively encourages its employees, key management personnel and other contracting parties to be aligned with overall shareholder value through share-based payment arrangements in accordance with AASB 2 Share-based Payment. Its share-based payment arrangements in periods leading up to and for the year ended 30 June 2023 took the form of share options and performance rights which were granted and issued in prior financial years. These arrangements have some complexity in their calculation, namely around the following: — The determination of their grant date, which sets the value of the share-based payment arrangement; — Applying a valuation model that is appropriate in the context of the vesting terms of the arrangement, particularly concerning any market and non-market based vesting terms; — Applying inputs into the valuation models, particularly concerning the determination of expected volatility calculations; and — Assessing the appropriateness of the vesting charge of each share-based payment arrangement taken to the profit or loss during the year. This is a key audit matter due to the complexities and judgements involved, and also due to the vesting charges concerning key management personnel remuneration are recorded in the Remuneration Report, which accompanies these financial statements. For the year ended 30 June 2023 there were no new share-based payment arrangements; however vesting charges continued to accrue to the profit or loss in-respect of prior period share-based payment arrangements. These also impacted disclosures in the Remuneration Report and in Related Party transaction arrangements. As such, our audit procedures involved: — Rolling forward share-based payment arrangements from the prior year; — Ensuring that none of these arrangements were modified by examining board minutes, public announcements and through our discussions with management; and — Recomputing the vesting charge applied from those arrangements. We also confirmed that these existing share-based payment arrangements were appropriately disclosed in the financial report and Remuneration Report. RESEARCH AND DEVELOPMENT RECEIVABLE AND REVENUE Area of focus Refer also to notes 2, 6 and 7 How our audit addressed it During the financial year and as disclosed in note 6, the Group recorded R&D grant revenue of $1,429,905 for the year ended 30 June 2023, of which $1,309,407 relates to the FY23 R&D tax incentive and is also recognised as a receivable in note 7. The income was recognised in accordance with the Group’s accounting policy. Our audit procedures included: — Income from the R&D claim was tested substantively to confirm 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 FY23 R&D claim; — The R&D tax incentive claim workings were prepared by an expert engaged by
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