Melbana Energy Limited Annual Report 2022

Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the year ended 30 June 2022. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How Our Audit Addressed the Key Audit Matter Farm-out arrangement- Cuba Block 9 During the period, the group has incurred $ 48,239,178 exploration for and evaluation on mineral resources as part of its farm-out arrangement with Sonangol. Under this agreement, Melbana funds 15% with a 30% ownership. Of the total expenditure, Melbana funded and capitalised $ 7,235,877 during the current period by its 15% share of the agreement. In addition, Melbana incurred capitalised cost of $869,492. As at 30 June 2022, $3,648,597 was receivable from Sonangol. During our audit, we analysed agreements in respect to this transaction, assessed internal reporting and substantiated transactions on a sample basis. We questioned management on treatment and challenged their assessment. Our audit included performing the following:  assessed accounting treatment of significant transactions;  reviewed disclosures within the financial report;  reviewed mathematical accuracy of calculations.  reviewed farm-out reporting and communication between Melbana and Sonongol.  completed substantive tests of detail on expenditure incurred during the period. Cash and Cash Equivalents Cash and cash equivalents totalling $35,570,347 is a significant balance to the group. We do not consider cash and cash equivalents to be at a high risk of significant misstatement, or to be subject to a significant level of judgement. However, due to the materiality in context to the financial statements as a whole, they are considered to be an area of risk in our overall audit strategy. We have evaluated disclosure and assessed controls implemented by management during the process of our audit. This included:  documenting and assessing the processes and controls in place to record cash transactions;  testing and sampling payments to determine they were bona fide payments, were properly authorised and recorded in the general ledger; and  confirm all cash holdings to independent third-party confirmations. 52 Independent Auditor’s Report continued 52 Melbana Energy Limited Annual Report 2022