Consolidated Annual Accounts 2017

2 Key Audit Matters ________________________________________________________ Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated annual accounts of the current period. These matters were addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of revenue: advertising sales See notes 3 l),13 and 19 a) to the consolidated annual accounts Key Audit Matter How the Matter was Addressed in Our Audit Advertising sales, which make up a large proportion of revenues, amount to Euros 914,578 thousand and are recognised in the income statement on airing of the commercials on television or radio. They are measured at the fair value of the consideration received or receivable, less volume discounts. To estimate volume discounts, the client's level of compliance with several business and financial variables over the course of the year is analysed, which entails a high level of judgement by Group management. Due to the significance of the amount of advertising sales and the high level of judgement associated with estimating sales volume discounts, this has been considered a key audit matter. Our audit procedures included the following: – We assessed the design and implementation of the most relevant controls established by Group management for the recognition of advertising sales revenue and sales volume discounts. We also tested the effectiveness of key controls related to the aforementioned revenue- and discount-related processes. – For a sample of commercials broadcast by the various media managed by the Group, we also obtained supporting documentation for the broadcast and the client purchase orders. – Through our meetings with key personnel from the sales department, we gained an understanding of the discounts agreed upon and the method used to calculate them. We also analysed the movement and settlement during the current year of volume discounts related to prior years' sales and compared them for consistency with the respective estimates. – We obtained confirmation from third parties of a sample of invoices reflecting trade receivables that were outstanding at the reporting date. – We assessed whether the disclosures included in the consolidated annual accounts comply with the requirements of the financial reporting framework applicable to the Group.