Company: AZN
Filing Date: 2025-02-18
Form Type: 20-F
Source: 0001104659-25-014750
Chunk: 9

Company: ASTRAZENECA PLC
Filing Date: 2025-02-18
Form: 20-F
Item: Item 18
Chunk 9
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 tax liabilities and evaluating management’s process for estimating the possible outcomes of each tax liability; ii) obtaining the status and results of tax audits and discussions with the relevant tax authorities; iii) testing the completeness and accuracy of underlying data used in the estimate; iv) evaluating the reasonableness of key judgements related to the outcome of tax audits and tax liabilities using the most likely amount or expected value depending on the resolution of the uncertainty; and v) evaluating the sufficiency of the Group’s disclosures where no tax liability is recognised. Professionals with specialised skill and knowledge were used to assist in evaluating the method used by management to measure accruals for tax contingencies, and to evaluate management’s key judgements with respect to the outcome of tax audits considering the technical merits of tax treatments and advice, if any, received from the Group’s external advisors.
Valuation of defined benefit obligations (in the UK and Sweden)
As described in the Group Accounting Policies and Note 22 to the consolidated financial statements, the Group and most of its subsidiaries offer post-retirement pension plans which cover the majority of its employees. Several of these plans are defined benefit, where benefits are based on employees’ length of service and linked to their salary. As at 31 December 2024 the Group had defined benefit obligations of $6,100 million in the UK and Sweden. Qualified independent actuaries have updated the actuarial valuations under IAS 19 for the major defined benefit schemes operated by the Group to 31 December 2024. In respect of defined benefit plans, obligations are determined using the projected unit credit method and are discounted to present value by reference to market yields on high quality corporate bonds. Given the extent of the assumptions used to determine the value of scheme liabilities, these are considered to be significant estimates. The assumptions which had the most material impact on the results of the Group were mortality rate (for the UK scheme only), discount rates and inflation levels (for both the UK and Sweden schemes).
The principal considerations for our determination that performing procedures relating to the valuation of defined benefit obligations in the UK and Sweden is a critical audit matter are the significant judgement made by management in determining the discount rate, inflation and mortality rates (UK) assumptions. This in turn led to a high degree of auditor judgement and subjectivity in applying procedures relating to these assumptions. In addition, the audit effort involved the use of professionals with specialised skill and knowledge to assist in performing these procedures and evaluating audit evidence.

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Addressing the matter involved performing procedures and evaluating audit evidence