Company: LILA
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001712184-25-000031
Chunk: 142

Company: Liberty Latin America Ltd.
Filing Date: 2025-02-19
Form: 10-K
Item: Item 9C
Chunk 142
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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of impairment of goodwill with the Company’s Liberty Puerto Rico reportable segment

As discussed in Notes 4 and 8 to the consolidated financial statements, the Company tests for impairment of goodwill at least annually and whenever facts and circumstances indicate that the carrying value of a reporting unit might exceed its fair value. The fair value of the reporting unit was measured using an income approach, utilizing a discounted cash flow. As of December 31, 2024, the goodwill balance was $2,981 million and the Company recorded impairments totaling $516 million.

We identified the assessment of impairment of goodwill for the reporting unit within the Company’s Liberty Puerto Rico reportable segment as a critical audit matter. There was a high degree of subjective auditor judgment required in assessing the Company’s key assumptions in measuring the fair value. For the reporting unit, the key assumptions were projected revenues, projected direct costs, projected operating expenses, projected capital expenditures, discount rates and terminal growth rates. 

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For the reporting unit, the valuation was sensitive to minor changes in these inputs which could have a significant impact on the estimated fair value.  Additionally, the audit effort associated with this estimate required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s assessment of impairment of goodwill. These include controls over the:

•development of assumptions over projected revenues, projected direct costs, projected operating expenses, projected capital expenditures, and

•selection of the discount rates and terminal growth rates assumptions used to develop the estimate.

We performed procedures to test the projected revenues, projected direct costs,