Avex Inc. TSE:7860
Avex : FY2022 Audited Financial Statements
Source: MarketScreener
Avex Inc. and
Consolidated Subsidiaries
Consolidated Financial Statements for the Year Ended March 31, 2022, and Independent Auditor's Report
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of Avex Inc.:
Opinion
We have audited the consolidated financial statements of Avex Inc. and its consolidated subsidiaries (the "Group"), which comprise the consolidated balance sheet as of March 31, 2022, and the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, all expressed in Japanese yen.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of March 31, 2022, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of the Code of Professional Ethics in Japan, and we have fulfilled our other ethical responsibilities as auditors. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the current period. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.
Judgment regarding the recoverability of deferred tax assets
The key audit matter and | How the key audit matter was |
the basis of our determination | addressed in the audit |
In the Group's consolidated balance sheet as of | In examining the appropriateness of |
March 31, 2022, deferred tax assets were | management's judgment related to the |
recorded for ¥3,777 million. As described in | recoverability of deferred tax assets based on |
Note 13, "Income Taxes," to the consolidated | future sales plans, market trends, and the timing of |
financial statements, the amount of deferred tax | the subsidence of COVID-19, we performed the |
assets that were determined to be recoverable | following audit procedures, among others: |
before being offset against deferred tax liabilities | • We tested the design and operating |
was ¥4,664 million, which consisted of total | |
deferred tax assets of ¥8,173 million, valuation | effectiveness of controls over the accounting |
allowance for loss carried forward for tax purposes | division's evaluation process of deferred tax |
of ¥1,938 million and valuation allowance for the | assets specifically regarding the recoverability of |
sum of deductible temporary differences and | deferred tax assets based on profit plans |
others of ¥1,570 million. Additionally, in Note 3, | approved by the Board of Directors and other |
"Significant Accounting Estimates," to the | decision-making bodies, and the approval of the |
consolidated financial statements, the details of | evaluation, which is performed by a supervising |
accounting estimates are described as follows. | personnel. |
The recoverability of deferred tax assets is | • In order to assess the appropriateness of future |
determined considering the future taxable income | estimates of taxable income, we performed the |
based on profitability, tax planning and the | following procedures. |
scheduling of the years in which deductible | • We compared the estimates of taxable income |
temporary differences are expected to be utilized | |
in the future. | for previous years with the actual results, and |
evaluated whether there was any bias in the | |
Future taxable income based on profitability is | Group's estimates and the accuracy of the |
estimated mainly on the basis of the Group's future | Group's business plan development. |
business plans, which involve significant | |
assumptions such as future sales plans, market | • We evaluated whether appropriate approvals |
trends and the timing of when COVID-19 will | were obtained for the future business plan on |
subside. As stated in Note 2, "Summary of | which future estimates of taxable income will be |
Significant Accounting Policies, aa. Additional | based. |
information-accounting estimates related to the | |
COVID-19 outbreak," to the consolidated financial | • Regarding sales plans for live performances and |
statements, management has assumed that the | events in future business plans and market |
impact of the COVID-19 pandemic will gradually | trends in the live entertainment market, we |
subside. These assumptions are subject to | inquired of management, including the impact of |
uncertainty and management's determination of | COVID-19 and the forecast of recovery. |
these assumptions has a material impact on the | |
amount of deferred tax assets. | • We evaluated whether management's |
For the above reasons, we have determined the | assumptions were evaluated based on past |
results, and considered the impact of COVID-19, | |
appropriateness of management's judgment on the | and the government's restrictions on holding |
recoverability of deferred tax assets based on | events. |
future sales plans, market trends and the timing of | • Regarding the appropriateness of the corporate |
when COVID-19 subside as a key audit matter. | |
classification, the appropriateness of the | |
valuation allowance, and the scheduling of the | |
fiscal year in which the future utilization of the | |
deductible temporary difference and others is | |
expected, we evaluated the reasonableness by | |
inspecting the relevant materials and making | |
relevant inquires and others. |
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Other Information
Other information comprises the information included in the Group's disclosure documents accompanying the audited consolidated financial statements, but does not include the consolidated financial statements and our auditor's report thereon.
We determined that no such information existed and therefore, we did not perform any work thereon.
Responsibilities of Management and the Audit and Supervisory Committee for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern in accordance with accounting principles generally accepted in Japan and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Audit and Supervisory Committee is responsible for overseeing the Directors' execution of duties relating to the design and operating effectiveness of the controls over the Group's financial reporting process.
Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards generally accepted in Japan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks. The procedures selected depend on the auditor's judgment. In addition, we obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain, when performing risk assessment procedures, an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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- Evaluate whether the overall presentation and disclosures of the consolidated financial statements are in accordance with accounting principles generally accepted in Japan, as well as the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the Audit and Supervisory Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Audit and Supervisory Committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with it all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Audit and Supervisory Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Group which is required to be disclosed pursuant to the provisions of the Certified Public Accountants Act of Japan.
August 2, 2022
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