BP 2015 Annual Report Download - page 100

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 2015 and of the
group’s loss 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
including FRS 101; 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.
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 2015 which comprise:
Group Parent company
Group balance sheet as at 31 December 2015. Balance sheet as at 31 December 2015.
Group income statement for the year then ended. Cash flow statement for the year then ended.
Group statement of comprehensive income for the year then ended. Statement of changes in equity for the year then ended.
Group statement of changes in equity for the year then ended. Related Notes 1 to 15 to the financial statements.
Group cash flow statement for the year then ended.
Related Notes 1 to 37 to the financial statements.
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)
including FRS 101.
Our assessment of risks of material misstatement
We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below which
were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual areas.
These matters are unchanged from those we reported in our 2014 audit opinion.
Risk Our response to the risk What we concluded to
the Audit Committee
The determination of the liabilities, contingent liabilities
and disclosures arising from the significant uncertainties
related to the Gulf of Mexico oil spill (as described on page
70 of the report of the audit committee and Notes 1 and 2 of the
financial statements).
On 2 July 2015, the group announced it had reached
agreements in principle with the United States federal
government and five Gulf states to settle all federal and state
claims arising from the incident.
The proposed Consent Decree to resolve all United States and
Gulf states natural resource damage claims and Clean Water Act
penalty claims is awaiting court approval. The United States is
expected to file a motion with the court to enter the Consent
Decree as a final settlement around the end of March, which the
court will then consider. Although there is still risk, the
agreements in principle have significantly reduced the uncertainty
associated with this element of the liability determination for 2015.
Following the agreements in principle, we concluded the
remaining uncertainties were no longer fundamental to a user’s
understanding of the financial statements and therefore we have
removed the Emphasis of Matter from our 2015 audit opinion.
There continues to be uncertainty regarding the outcome of
Plaintiffs’ Steering Committee (‘PSC’) settlements, the most
substantial category being business economic loss claims. The
8 June 2015 deadline for claims resulted in a significant number
of claims received, which have not yet been processed and
quantified. Management concluded that a reliable estimation of
the expected liability still cannot be made at 31 December 2015.
For the Gulf of Mexico oil spill the primary audit engagement
team performed the following audit procedures.
• We walked through and tested the controls designed and
operated by the group relating to the liability accounts for the
Gulf of Mexico oil spill.
• We met with the group’s legal team to understand
developments across all of the Gulf of Mexico oil spill matters
and their status. We discussed legal developments with the
group’s external lawyers and read determinations and
judgments made by the courts.
• We reviewed the agreements in principle, verifying that
specific matters were accurately reflected in the group’s
accounting and disclosures.
• With regard to PSC settlements, we engaged EY actuarial
experts to consider the analysis of available claims data
undertaken by management. We corroborated the data used
in respect of all claim categories, with specific regard to
business economic loss, this being the most complex to
estimate. Our testing included understanding and verifying
trends in the actuarial models, considering the approach in
respect of all claim categories which included comparing with
prior periods.
• We considered the accounting treatment of the liabilities,
contingent liabilities and disclosures under IFRS criteria, to
conclude whether these were appropriate in all the
circumstances.
Based on our
procedures we are
satisfied that the
amounts provided by
management are
appropriate.
We are satisfied that
management is
unable to determine
a reliable estimate
for certain
obligations as
disclosed in Note 2
of the financial
statements.
Given the
agreements in
principle signed on
2 July 2015 we
consider it
appropriate that the
Emphasis of Matter
is no longer required
in our audit opinion.
96 BP Annual Report and Form 20-F 2015
This page does not form part of BP’s Annual Report on Form 20-F as filed with the SEC.