82 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KAZIA THERAPEUTICS LIMITED CONTINUED FINANCIAL REPORT 4 consideration based on the expected timing of the milestone payments; Ensuring appropriate classification of the liabilities between current and noncurrent; and Assessing the adequacy of the relevant disclosures in the financial statements. Share-based payments Key audit matter How the matter was addressed in our audit As disclosed in Note 32, the group has recognised a share-based payment expense of $1,159,125 (2022: $1,1674,581) in the Statement of Profit and Loss and Other Comprehensive Income as at 30 June 2023 in relation to share options granted in the current and prior years which are expensed over their vesting period. Refer to note 2 and note 3 of the financial report for a description of the accounting policy and significant estimates and judgements applied to these arrangements. Share-based payments are a complex accounting area and due to the complex and judgemental estimates used in determining the fair value of the share-based payments, we consider the Group’s calculation of the share-based payment expense to be a key audit matter. To address the key audit matter, our procedures included, amongst others: Obtaining an understanding of and evaluating managements process and controls relating to share-based payment arrangements; Reviewing market announcements and board minutes to ensure all the new options granted during the year have been accounted for; Reviewing relevant supporting documentation to obtain an understanding of the contractual nature and terms and conditions of the sharebased payment arrangements; Considering whether the group used an appropriate model in valuing the option; Engaging BDO Corporate Finance to assess the reasonability of estimated fair value of the options using a relevant option valuation methodology, and assessing the valuations inputs; Assessing the mathematical accuracy of managements calculation including the allocation of the share-based payment expense over the vesting period; and Assessing the adequacy of the relevant disclosures in the financial statements.
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