b'Mercia Asset Management PLC75Annual Report and Accounts 2021Key audit matter How the scope of our audit addressed the key audit matterrevenue recognition details(note 1 and 3 to the We have performed an assessment of the accounting treatments for the various revenue streams financial statements) to check if these are in line with the requirements of the applicable accounting standards.Revenue is earned through the following ways: A sample of fund management fees due from the limited partnerships were recalculated based Fund management fees, on the underlying LPA agreements in place between the general partner and the fund. Initial management fees, Portfolio director fees,In relation to the Enterprise Investment Scheme funds, a sample of annual management fees, Share offer fees,custodian fees and initial management fees from investors, were recalculated using the investment Performance fees, memorandums and commitments were agreed to custodian reports, where applicable.Custodian fees and Business services fees (other revenue).In relation to the fund management fees from the VCT funds, a recalculation was performed based on the NAV and applying the novation agreement principles. There is a risk that fund management and performanceInitial management fees and portfolio director fees were sampled and agreed to the signed fees are not calculated orfunding agreement to ensure they were recognised in the correct periodrecognised in accordance with theStrategic report Governanceaccounting policies and theAll VCT share offering promotor fees were recalculated based on the approved issue of equity relevant Limited Partnershipduring the year and the underlying agreements in place.Agreements or investment management agreements. A sample of performance fees were recalculated based on the underlying agreement and agreed to invoice or subsequent receipt. We also confirmed that these were correctly accrued in the In respect of initial managementcurrent period.fees and portfolio directorsfees there is a risk that these areKey observationsnot recorded in the correctBased on the procedures performed we consider that revenue has been recognised appropriately.Financial statementsperiods in accordance with the requirements of applicable accounting standards. In respect of share offer and custodian fees there is a risk that these are not correctly calculated.Due to the risks attaching to the various revenue streams, we considered revenue recognition to be a key audit matter'