BT 2014 Annual Report Download - page 121

118 Financial statements
United Kingdom opinion
Report of the independent auditors to the
members of BT Group plc (consolidated)
Report on the consolidated nancial statements
Our opinion
In our opinion the group nancial statements, dened below
• give a true and fair view of the state of the group’s aairs as at
31 March 2014 and of the group’s prot and cash ows for the
year then ended
• have been properly prepared in accordance with International Financial
Reporting Standards (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.
This opinion is to be read in the context of what we say in the remainder
of this report.
Separate opinion in relation to IFRS as issued by the IASB
As explained in note 1 to the nancial 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 group nancial statements comply with IFRS as issued
by the IASB.
What we have audited
The group nancial statements, which are prepared by BT Group plc,
comprise
• the group balance sheet as at 31 March 2014
• the group income statement and statement of comprehensive
income for the year then ended
• the group statement of changes in equity and cash ow statement
for the year then ended and
• the notes to the group nancial statements, which include a summary
of signicant accounting policies and other explanatory information.
The nancial reporting framework that has been applied in their
preparation comprises applicable law and IFRS as adopted by the
European Union.
Certain disclosures required by the nancial reporting framework
havebeen presented elsewhere in the Annual Report & Form 20-F
2014 (theAnnual Report’), rather than in the notes to the nancial
statements. These are cross-referenced from the nancial statements
and are identied as audited.
What an audit of Ƭnancial statements involves
We conducted our audit in accordance with International Standards
on Auditing (UK and Ireland) (ISAs (UK & Ireland)’). An audit involves
obtaining evidence about the amounts and disclosures in the nancial
statements sucient to give reasonable assurance that the nancial
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 signicant accounting estimates made by
the directors and
• the overall presentation of the nancial statements.
In addition, we read all the nancial and non-nancial information in
the Annual Report to identify material inconsistencies with the audited
group nancial 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.
Overview of our audit approach
Materiality
We set certain thresholds for materiality. These helped us to determine
the nature, timing and extent of our audit procedures and to evaluate
the eect of misstatements, both individually and on the nancial
statements as whole.
Based on our professional judgement, we determined materiality for the
group nancial statements as a whole to be £110m (2012/13 £100m),
which is an average of 5% of prot before tax for the current year and
the previous three years. We used average prot before tax to reduce the
potential volatility in the measure year on year.
We agreed with the
Audit & Risk Committee that we would report to
them misstatements identied during our audit above £5m as well as
misstatements below that amount that, in our view, warranted reporting
for qualitative reasons.
Overview of the scope of our audit
The group nancial statements are a consolidation of the group’s
reporting units, which include operating businesses and centralised
functions.
In establishing the overall approach to the group audit, we determined
the type of work that needed to be performed at reporting units by
us, as the group engagement team, or component auditors from
other PwC network rms operating under our instruction. Where
the work was performed by component auditors, we determined the
level of involvement we needed to have in the audit work at those
reporting units to be able to conclude whether sucient appropriate
audit evidence had been obtained as a basis for our opinion on the
consolidated nancial statements as a whole.
For three reporting units, an audit of the complete nancial information
was performed. In a further four reporting units, specic audit
procedures on revenue and receivables, purchases and payables,
cash and provisions were performed. This, together with additional
procedures performed on centralised functions and at the group level,
gave us the evidence we needed for our opinion on the consolidated
nancial statements as a whole. Our audit procedures covered over
80% of the group’s revenue and prot before tax.
Areas of particular audit focus
In preparing the nancial statements, the directors made a number of
subjective judgements, for example in respect of signicant accounting
estimates that involved making assumptions and considering future
events that are inherently uncertain. We primarily focused our work
in these areas by assessing the directors’ judgements against available
evidence, forming our own judgements, and evaluating the disclosures
inthe nancial statements.
In our audit, we tested and examined information, using sampling and
other auditing techniques, to the extent we considered necessary to
provide a reasonable basis for us to draw conclusions. We obtained audit
evidence through testing the eectiveness of controls, substantive
procedures or a combination of both.
We considered the following areas to be those that required particular
focus in the current year. This is not a complete list of all risks or areas
of focus identied by our audit. We discussed these areas of focus with
the
Audit & Risk Committee . The matters that they considered to be
signicant issues in relation to the nancial statements are set out on
page84.