Company: FRHC
Filing Date: 2025-06-13
Form Type: 10-K
Source: 0000924805-25-000012
Chunk: 24

Company: Freedom Holding Corp.
Filing Date: 2025-06-13
Form: 10-K
Item: Item 8
Chunk 24
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 and commission income from brokerage services as a critical audit matter due to the existence of these internalized trades which are settled through prime brokers or clearing firms. These internalized trades increase the complexity of the application of the requirements for revenue recognition under ASC 606, Revenue from 

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Contracts with Customers (“ASC 606”) and ASC 940 Financial Services: Brokers and Dealers (“ASC 940”) specifically as to whether the Group has satisfied its performance obligations for these customers at the trade date when revenue is recognized and determining if the Group is acting as an agent for its customers or as a principal in these transactions. Furthermore, the internalized trades involve a significant volume of transactions which increase the risks of overstatement of fee and commission income from brokerage customers.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included: 

•We evaluated the terms of the relevant agreements with customers and we considered if the conditions for revenue recognition in ASC 606 and ASC 940 were satisfied at the trade date which is when revenue is recognized for these internalized trades. Furthermore, we evaluated if the Group is acting as an agent or principal in these transactions.

•We tested a sample of transactions placed both by customers and institutional brokerage customer and how these transactions are reflected in the omnibus accounts. We tested that the revenue recognition for these contracts was in accordance with the requirement in ASC 606 and ASC 940. 

•With the assistance of our professionals with expertise in IT, we identified the significant systems used to process fee and commission income from brokerage customers and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

•We tested automated controls within the fee and commission income from brokerage customers stream, including as well as the controls designed to ensure the accuracy of the income. 

•We tested automated controls over trading acceptance and operation of the omnibus accounts.

•We tested samples of transactions recorded to confirm the existence of the customer and the occurrence and existence of the relevant transactions in our sample.

•We tested other internal controls within fee and commission income from brokerage customers stream, including controls designed to reconcile the income from the source document to the general ledger. 

•We performed substantive testing, for a sample of transactions, we agreed the amounts of revenue recognized to source documents and tested the mathematical accuracy of the recorded revenue.

/s/ Deloitte LLP

Almaty, Kazakhstan

June 13, 2025

We have served as the Group's auditor since 202