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AUDIT CONSIDERATIONS (Title Page)

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Scope of Audit
 Consolidated Financial Statements of Conduent Incorporated and its subsidiaries (the
“Company”)
 Company's internal control over financial reporting

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Basis for Opinion

 In accordance with the standards of the Public Company Accounting Oversight Board
(United States) PCAOB

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The Audit of Consolidated Financial Statements includes:

 Performing procedures to assess the risks of material misstatement

 whether due to error or fraud
 Performing procedures that respond to those risks
 examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements.
 evaluating the accounting principles used and significant estimates
made by management
 evaluating the overall presentation of the consolidated financial
statements.

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The Audit of Internal Control over Financial Reporting includes:

 Obtaining an understanding of internal control over financial reporting

 Assessing the risk that a material weakness exists
 Testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk

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Definition of Internal Control over Financial Reporting

 A process designed to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements
 for external purposes in accordance with generally accepted accounting
principles
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This includes policies and procedures that:

 Pertain to the maintenance of records that

o in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company
 Provide reasonable assurance that transactions are recorded as necessary to permit the
preparation of financial statements
o in accordance with generally accepted accounting principles
o receipts and expenditures of the company are being made only in accordance
with the authorizations of management and directors of the company
 Provide reasonable assurance regarding the prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets

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Key Audit Matters

 Accounts or disclosures that are material to the consolidated financial statements

 Involved Challenging, subjective, or complex judgments

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Goodwill Impairment Assessment

 If the carrying amount of the unit exceeds the recoverable amount of the unit
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Impairment Testing

 Income approach
o utilizes a discounted cash flow analysis
 Market approach
o utilizes the guideline public company method

As disclosed by management, the most significant assumptions used in the goodwill analysis relate to
the long-term organic growth rates as well as the discount rates.

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The Company’s consolidated goodwill balance was $1,528 million as of December 31, 2021,
while $ 1,502 million in 2020

 As described in Notes 1 and 9 to the consolidated financial statements

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Why Goodwill Impairment Assessment is a Critical Audit Matter?

 o A significant judgment by management when determining the fair value
measurement of the reporting units
o A high degree of auditor judgment, effort, and subjectivity in performing
procedures to evaluate management’s cash flow projections and
significant assumptions related to the long-term organic growth rates
and the discount rates
o The audit effort involved the use of professionals with specialized skill
and knowledge.

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Addressing the Key Audit Matters

 Testing the effectiveness of controls relating to the Company’s goodwill impairment

assessment
 Testing management’s process for determining the fair value estimate
 Evaluating the appropriateness of the discounted cash flow analysis
 Testing the completeness, accuracy, and relevance of underlying data used in the
estimate
 Evaluating the significant assumptions used by management related to the long-term
organic growth rates and the discount rates.

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Factors to be considered in the evaluation of organic growth rates:

 The current and past performance of each reporting unit

 The consistency with external market and industry data
 Whether these assumptions were consistent with evidence obtained in other areas of
the audit