How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to forecasts of future net sales and earnings and the selection of the royalty rates and discount rates
36 The Procter & Gamble Company
for the Shave Care reporting unit and the Gillette brand included the following, among others:
• We tested the effectiveness of controls over goodwill and indefinite lived intangible assets, including those over the determination of fair value, such as controls related to management’s development of forecasts of future net sales and earnings, and the selection of royalty rates, and discount rates.
• We evaluated management’s ability to accurately forecast net sales and earnings by comparing actual results to management’s historical forecasts.
• We evaluated the reasonableness of management’s forecast of net sales and earnings by comparing the forecasts to:
• Historical net sales and earnings.
• Underlying analysis detailing business strategies and growth plans including consideration of the effects related to the COVID-19 pandemic.
• Internal communications to management and the Board of Directors.
• Forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer companies.
• With the assistance of our fair value specialists, we evaluated the net sales and earnings growth rates, royalty rates, and discount rates by:
• Testing the source information underlying the determination of net sales and earnings growth rates, royalty rates, and discount rates and the mathematical accuracy of the calculations.
• Developing a range of independent estimates for the discount rates and comparing those to the discount rates selected by management.
/s/ Deloitte & Touche LLP
Cincinnati, Ohio
August 6, 2021
We have served as the Company’s auditor since 1890.
The Procter & Gamble Company 37
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of The Procter & Gamble Company