BP 2013 Annual Report Download - page 121

Consolidated financial statements of the BP group
Independent auditor’s report on the Annual Report and Accounts to the members of BP p.l.c.
Opinion on the financial statements
In our opinion the consolidated financial statements:
• give a true and fair view of the state of the group’s affairs as at 31 December 2013 and of its profit for the year then ended;
• have been properly prepared in accordance with IFRS as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation.
Emphasis of matter – significant uncertainty over provisions and contingencies related to the Gulf of Mexico oil spill
In forming our opinion we have considered the adequacy of the disclosures made in Note 2 to the financial statements concerning the provisions,
future expenditures for which reliable estimates cannot be made and other contingencies related to the Gulf of Mexico oil spill significant event. The
total amounts that will ultimately be paid by BP in relation to all obligations relating to the incident are subject to significant uncertainty and the ultimate
exposure and cost to BP will be dependent on many factors. Furthermore, significant uncertainty exists in relation to the amount of claims that will
become payable by BP, the amount of fines that will ultimately be levied on BP (including any determination of BP’s culpability based on any findings of
negligence, gross negligence or wilful misconduct), the outcome of litigation and arbitration proceedings, and any costs arising from any longer-term
environmental consequences of the oil spill, which will also impact upon the ultimate cost for BP. Our opinion is not qualified in respect of these
matters.
Separate opinion in relation to IFRS as issued by the International Accounting Standards Board
As explained in Note 1 to the consolidated financial statements, the group in addition to applying IFRS as adopted by the European Union, has also
applied IFRS as issued by the International Accounting Standards Board (IASB). In our opinion the consolidated financial statements comply with IFRS
as issued by the IASB.
What we have audited
The consolidated financial statements of BP p.l.c for the year ended 31 December 2013 comprise the group income statement, the group statement of
comprehensive income, the group statement of changes in equity, the group balance sheet, the group cash flow statement and the related notes 1 to
38. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS)
as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of directors’ responsibilities set out on page 116, the directors are responsible for the preparation of the
consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the
consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require
us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
policies are appropriate to the group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-
financial information in the Annual Report and Accounts to identify material inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Our assessment of risks of material misstatement
We identified the following risks that have the greatest effect on the overall audit strategy; the allocation of audit resource; and in directing the efforts
of the audit engagement team:
• the significant uncertainties over provisions and contingencies related to the Gulf of Mexico oil spill;
• the impact of the estimation of the quantity of oil and gas reserves on impairment testing, depreciation, depletion and amortization and
decommissioning provisions;
• unauthorized trading activity;
• BP’s ability to exercise significant influence over Rosneft and the consequent accounting for the interest in Rosneft using the equity method; and
• the fair value accounting on the acquisition of the equity interest in Rosneft.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial
statements. For the purposes of determining whether the financial statements are free from material error, we define materiality as the magnitude of
an omission or misstatement that, individually or in the aggregate, in light of the surrounding circumstances, could reasonably be expected to influence
the economic decisions of the users of the financial statements.
When establishing our overall audit strategy, we determined the magnitude of uncorrected and undetected misstatements that we judged would be
material for the financial statements as a whole. We determined materiality for the group to be $1 billion (2012 $1 billion). Our evaluation of materiality
requires professional judgement and necessarily takes into account qualitative as well as quantitative (i.e. profit before taxation in the group income
statement) considerations implicit in the definition. This materiality provided a basis for identifying and assessing the risk of material misstatement and
determining the nature, timing and extent of further audit procedures.
This page does not form part of BP’s Annual Report on Form 20-F as filed with the SEC.
Financial statements
BP Annual Report and Form 20-F 2013 117