Company: CSCIF
Filing Date: 2025-04-09
Form Type: 20-F
Source: 0001641172-25-003456
Chunk: 219

Company: COSCIENS Biopharma Inc.
Filing Date: 2025-04-09
Form: 20-F
Item: Item 18
Chunk 219
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 audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the 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 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 financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the 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 financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 
Inventory costing
 
As described further in Note 2 to the financial statements, inventories are valued at the lower of cost and net realizable value. Costs of inventory include costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present condition and location. Costs of conversion include direct costs (material and labour) and indirect costs (fixed and variable production overheads). Fixed overheads are allocated based on normal capacity. We identified the inventory costing as a critical audit matter.
 
The principal consideration for our determination that the inventory costing is a critical audit matter is that there are significant judgments utilized by management in their methodology for allocating indirect costs, including overhead costs to inventory. This, consequently, necessitated considerable auditor judgment, subjectivity, and effort in conducting audit procedures and evaluating audit evidence. As of December 31, 2023, inventory amounted to $4,008,901 of which work in progress and finished goods to which indirect costs are allocated totalled $3,131,057.
 
Our audit procedures related to the inventory costing included the following, among others:
 

●             We obtained an understanding of and tested management’s process for developing the costing model          
                                                 and overhead allocations;                                              
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●   We assessed the accuracy, completeness and reasonableness of the costs included in the costing model,               
    including the allocation of indirect costs to obtain assurance that capitalized costs were appropriate and complete