b'Annual Report & Accounts 2022 Mercia Asset Management PLC 71Key audit matterHow the scope of our audit addressed the key audit matterValuation ofThe Group is required by applicableWe have reviewed Managements impairment assessment of Goodwill andaccounting standards to undertake angoodwill and intangible assets.Intangibleannual impairment review of all assetsWe have considered the key assumptions and judgements used Assets (Noteincluding goodwill.in Managements impairment assessment were appropriate and 1, 13 andThe impairment assessment was requiredreasonable. These included review of the value in use calculations 14 to thefor each of the three cash generating units.as well as profitability of each CGU since inception, underlying financialThis assessment has been included as amanagement contracts and the investment track records. We statements) key audit matter due to the significancecorroborated key assumptions to financial performance of each of the goodwill and intangible assetsCGU and those of the underlying funds.balance at year end and the level ofFor amounts recognised as goodwill and intangible assets, we management judgement inherent in thehave performed sensitivity analysis to identify whether there is a impairment assessment. suitable amount of headroom before the goodwill shows signs of potential impairment. In addition, we have assessed current yearFinancial statementsperformance indicators against budgets i.e. profitability, revenue growth and other indicators such as cash on hand, net asset value to ascertain whether there were any signs of impairment.We have reviewed the reasonability of forecast cash flows by performing an assessment of the performance of the VCTs over the year based on the divisions year to date results, inquiries with Management and inspection of Board Meeting Minutes.Key observationsBased on the work performed we did not identify any indications that the carrying value of goodwill and intangible assets is inappropriate.'