BP 2014 Annual Report Download - page 95

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 financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2014 and of the
group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
• the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the group financial
statements, 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 on the group financial statements we have considered the adequacy of the disclosure in Note 2 to the financial statements
concerning the provisions, future expenditures which cannot be reliably estimated and other contingent liabilities related to the claims, penalties and
litigation arising from the Gulf of Mexico oil spill. The total amount that will ultimately be paid by BP in relation to all obligations arising from this
significant event is subject to significant uncertainty and the ultimate exposure and cost to BP is dependent on many factors, including but not limited
to, the determinations of the Courts and Regulatory authorities in the US. Significant uncertainty exists in relation to the amount of claims that will
become payable by BP and the amount of fines that will be levied on BP (including any ultimate determination of BP’s culpability based on negligence,
gross negligence or wilful misconduct). The outcome of litigation and the cost of the longer term environmental consequences of the oil spill are also
subject to significant uncertainty. For these reasons it is not possible to estimate reliably the ultimate cost to 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
We have audited the financial statements of BP p.l.c. for the year ended 31 December 2014 which comprise the Group income statement, the Group
statement of comprehensive income, the Group statement of changes in equity, the Group and Parent Company balance sheets, the Group and Parent
Company cash flow statements, the Parent Company statement of total recognized gains and losses and the related notes. The financial reporting
framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards
(IFRS) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
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 90, the directors are responsible for the preparation of the
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 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 and parent company’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, weread
all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements andto
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 determination of the liabilities, contingent liabilities and disclosures arising from the significant uncertainties related to the Gulf of Mexico oil spill
(See AC and AP)*;
• the significant decline in oil and gas prices since late 2014 has the potential for a material impact on the carrying value of the group’s assets. We
reconsidered our risk assessment at the year end to recognise this significant development (See AC and AP)*;
• the estimate of oil and gas reserves and resources which has a significant impact on impairment tests, depreciation, depletion & amortisation and
decommissioning provisions (See AC and AP)*;
• unauthorized trading activity within the Integrated Supply and Trading function and the potential impact on revenue (See AC)*;
• BP’s ability to exercise significant influence over Rosneft and the consequent accounting for the interest in Rosneft using the equity method
(See AC and AP)*;
1. The maintenance and integrity of the BP p.l.c website is the responsibility of BP p.l.c.; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented
on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
* These risks are discussed in other areas of this report as noted by the following key:
AC – see Audit Committee Report on pages 64 to 67.
AP – see Financial statements—Note 1 Significant accounting policies, judgements, estimates and assumptions on pages 100 to 110.
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 2014 91