Barclays 2014 Annual Report Download - page 43

barclays.com/annualreport Barclays PLC Annual Report 2014 I 41
Significant financial statement reporting issues
Assumptions and estimates or judgements are an unavoidable and
significant part of the financial reporting process and are studied
carefully by the Committee ahead of the publication of Barclays’ full
and half-year results announcements and interim management
statements. With appropriate input, guidance and challenge from
the external auditor, the Committee examined in detail the main
judgements and assumptions made by management, any sensitivity
analysis performed and the conclusions drawn from the available
information and evidence, with the main areas of focus during the year
set out below.
Area of focus Reporting issue Role of the Committee Conclusion/action taken
Conduct provisions
(see Note 27 to the
financial statements)
Barclays makes certain assumptions
and estimates, analysis of which
underpins provisions made for the
costs of customer redress, such as for
Payment Protection Insurance (PPI)
and Interest Rate Hedging Products
(IRHP)
Q Scrutinised reports from
management setting out statistical
analysis of the current level of
provisioning against prevailing
trends, claims experience against
existing provisions, the projections
underlying estimates, including any
uncertainties regarding future
claims volumes and the potential
expected range of future claims,
and an analysis of associated costs,
including referrals to the Financial
Ombudsman
Q The Committee kept PPI claims
experience and future claims profile
under close scrutiny ahead of the
announcements of Barclays’
financial results. Having assessed
the information available, including
discussing current projections as
appropriate with the Group Finance
Director and the external auditor,
the Committee supported taking
additional provisions for PPI redress
at the half-year (£900m), third
quarter (£170m) and full year
(£200m), bringing the total
additional provision for 2014 to
£1,270m
Q The Committee also concluded
that no additional provision was
required for IRHP redress at the
half-year and that the provision
could be reduced at the third
quarter, based on the level of
settled claims. It concluded that the
provision remaining at the full year
continued to be appropriate
Legal, competition
and regulatory
provisions
(see Notes 27 and 29
to the financial
statements)
Barclays makes judgements in respect
of provisions for legal, competition
and regulatory matters
Q Evaluated advice received on the
status of current legal, competition
and regulatory matters, including
any potential for settlement,
management’s estimate of the level
of provisions required and the
adequacy of the provisions on the
basis of available information and
evidence
Q The Committee agreed that a
provision of £500m should be taken
in the third quarter of the year in
connection with investigations into
foreign exchange by certain
regulatory authorities, having
concluded that this represented the
current best estimate given the status
of discussions with regulatory
authorities at that time. Having
reviewed the information available to
determine what could be reliably
estimated, the Committee agreed that
the provision at the full year should be
set at £1,250m for certain aspects of
ongoing investigations involving
certain authorities and litigation
relating to Foreign Exchange. The
Committee also considered and
concurred with the disclosure to be
published in respect of the status of
the ongoing investigations and
litigation. Further information may be
found on pages 307 and 308.
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