Common use of Critical Audit Matters Clause in Contracts

Critical Audit Matters. The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated 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. As described in Note 13 to the consolidated financial statements, the Preferred Distribution Rate Reset Option of the Partnership's Series A preferred units is an embedded derivative that is bifurcated from the related host contract and recorded at fair value. The fair value, as of December 31, 2022, was $189 million, and is recorded in other long-term liabilities and deferred credits. Management determines the fair value based on a Monte Carlo valuation model that estimates the fair value of the Series A preferred units with and without the Preferred Distribution Rate Reset Option. This model relies on assumptions for forecasts for the ten-year U.S. Treasury rate, the Partnership's common unit price, and default probabilities which impact timing estimates as to when the option will be exercised. The principal considerations for our determination that performing procedures relating to the fair value of the Preferred Distribution Rate Reset Option is a critical audit matter are the significant judgment by management when developing the fair value estimate of the Preferred Distribution Rate Reset Option using the Monte Carlo valuation model. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the Monte Carlo valuation model and management's significant assumption related to forecasts for the ten-year U.S. Treasury rate. Also, the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the fair value of the Preferred Distribution Rate Reset Option, including the appropriateness of the Monte Carlo valuation model, the significant assumption, and data used in developing the fair value estimate. These procedures also included, among others

Critical Audit Matters. The critical audit matter matters communicated below is a matter are matters arising from the current period audit of the consolidated financial statements that was were communicated or required to be communicated to the audit committee and that (i) relates relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter matters below, providing a separate opinion opinions on the critical audit matter matters or on the accounts or disclosures to which it relatesthey relate. As described in Note 13 2(z) and Note 17 to the consolidated financial statements, the Preferred Distribution Rate Reset Option Company’s balance of goodwill allocated to reporting units under the Digital Media and Entertainment Segment as of March 31, 2020 was RMB58,673 million. During the year ended March 31, 2020, the Company recorded an impairment charge of RMB576 million on goodwill allocated to one of those reporting units. Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company has elected to first perform a qualitative assessment to determine whether the two-step quantitative goodwill impairment testing is necessary. In the qualitative assessment, the Company considers factors such as macroeconomic conditions, industry and market considerations, overall financial performance of the Partnership's Series A preferred units is an embedded derivative that is bifurcated from the related host contract and recorded at fair value. The fair value, as of December 31, 2022, was $189 millionreporting units, and other specific information related to the operations, business plans and strategies of the reporting units, including consideration of the impact of the COVID-19 pandemic. Based on the qualitative assessment, if it is recorded in other long-term liabilities and deferred credits. Management determines the fair value based on a Monte Carlo valuation model more likely than not that estimates the fair value of the Series A preferred units with and without the Preferred Distribution Rate Reset Option. This model relies on assumptions for forecasts for the ten-year U.S. Treasury ratea reporting unit is less than its carrying amount, the Partnership's common unit price, and default probabilities which impact timing estimates as to when the option will be exercisedquantitative impairment test is performed. The principal considerations for our determination that performing procedures relating to the fair value of impairment assessment on goodwill allocated to reporting units under the Preferred Distribution Rate Reset Option Digital Media and Entertainment Segment is a critical audit matter are the that there was significant judgment and estimation by management when developing performing the fair value estimate of the Preferred Distribution Rate Reset Option using the Monte Carlo valuation model. This qualitative assessment, which in turn led to a high degree of auditor judgment, subjectivity, subjectivity and effort in performing procedures and evaluating audit evidence relating to the Monte Carlo valuation model and factors considered in management's significant assumption related to forecasts for the ten-year U.S. Treasury rate. Also, the audit effort involved the use of professionals with specialized skill and knowledge’s qualitative assessment. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s impairment assessment on goodwill allocated to reporting units under the fair value Digital Media and Entertainment Segment, including controls over management’s evaluation of the Preferred Distribution Rate Reset Option, including factors considered in the appropriateness of the Monte Carlo valuation model, the significant assumption, and data used in developing the fair value estimatequalitative assessment. These procedures also included, among others, testing management’s qualitative assessment, which included evaluating the factors considered by management, such as macroeconomic conditions, industry and market considerations, overall financial performance of the reporting units, implied value of the reporting units with reference to quoted market price of comparable companies, and other specific information related to the operations, business plans and strategies of the reporting units, including consideration of the impact of the COVID-19 pandemic.

Critical Audit Matters. The critical audit matter matters communicated below is a matter are matters arising from the current period audit of the consolidated financial statements that was were communicated or required to be communicated to the audit committee and that (i) relates relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter matters below, providing a separate opinion opinions on the critical audit matter matters or on the accounts or disclosures to which it relatesthey relate. As described in Note 13 8 to the consolidated financial statements, goodwill is tested for impairment at a level of reporting referred to as a reporting unit. A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and regularly reviewed by segment management. Management tests goodwill to determine whether an impairment has occurred at least annually (as of June 30) and on an interim basis if it is more likely than not that a reporting unit’s fair value is less than its carrying value. During the Preferred Distribution Rate Reset Option first quarter of 2020, the Partnership's Series A preferred units is ’s market capitalization declined significantly driven by macroeconomic and geopolitical conditions that occurred in 2020, including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, that resulted in expected decreases in future cash flows for certain assets, which was a triggering event that required management to perform a quantitative impairment test as of March 31, 2020. As a result of this quantitative impairment test as of March 31, 2020, the Partnership recorded an embedded derivative that is bifurcated from impairment loss of $2,515 million and the related host contract and recorded at fair value. The fair value, consolidated goodwill balance was $0 as of December 31, 20222020. In the quantitative test, was $189 million, and is recorded in other long-term liabilities and deferred credits. Management determines the fair value based on a Monte Carlo valuation model that estimates management compares the fair value of the Series A preferred units reporting unit with and without the Preferred Distribution Rate Reset Optionrespective book values, including goodwill, by using an income approach based on a discounted cash flow model. This model relies on approach requires management to make long-term forecasts of future revenues, expenses and other expenditures. Those forecasts require the use of various assumptions for forecasts for the ten-year U.S. Treasury rateand estimates, the Partnership's common unit pricemost significant of which are net revenues (total revenues less purchases and related costs), operating expenses, general and default probabilities which impact timing estimates as to when administrative expenses and the option will be exercisedweighted average cost of capital. The principal considerations for our determination that performing procedures relating to the fair value goodwill impairment assessment of the Preferred Distribution Rate Reset Option Partnership’s reporting units is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate measurement of the Preferred Distribution Rate Reset Option using the Monte Carlo valuation model. This in turn led to reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions relating to the Monte Carlo valuation model weighted average cost of capital; and management's significant assumption related to forecasts for the ten-year U.S. Treasury rate. Also, (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of reporting units. These procedures also included among others (i) testing management’s process for developing the fair value of the Preferred Distribution Rate Reset Option, including estimates; (ii) evaluating the appropriateness of the Monte Carlo valuation model, discounted cash flow models; (iii) testing the significant assumption, completeness and accuracy of underlying data used in developing the fair value estimatemodels; and (iv) evaluating the reasonableness of the weighted average cost of capital assumptions used by management. These procedures also included, among othersProfessionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the discounted cash flow models and evaluating the reasonableness of the weighted average cost of capital assumption.