National Grid 2014 Annual Report Download - page 79

Strategic Report Corporate Governance Financial Statements Additional Information
Report on the financial statements
Our opinion
In our opinion:
• the financial statements, defined below, give a true and fair view
of the state of the Group’s and of the Company’s affairs as at
31 March 2014 and of the Group’s profit and cash flows for the
year then ended;
• the Group financial statements have been properly prepared
inaccordance with International Financial Reporting Standards
(IFRSs) adopted by the EU;
• the Company financial statements have been properly prepared
in accordance with United Kingdom Generally Accepted
Accounting Practice (UK GAAP); 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.
This opinion is to be read in the context of what we say in the
remainder of this report.
Separate opinion in relation to IFRSs as issued by
theIASB
As explained in the Basis of preparation to the financial
statements, the Group, in addition to applying IFRSs as adopted
by the EU, has also applied IFRSs as issued by the IASB.
In our opinion the Group financial statements comply with IFRSs
as issued by the IASB.
What we have audited
The Group financial statements and Company financial statements
(the financial statements), which are prepared by National Grid plc,
comprise:
• the Consolidated income statement and Consolidated
statement of comprehensive income for the year then ended;
• the Consolidated statement of changes in equity for the year
then ended;
• the Consolidated statement of financial position and Company
balance sheet as at 31 March 2014;
• the Consolidated statement of cash flows for the year then
ended;
• the Consolidated and Company Basis of preparation; and
• the notes to the Consolidated financial statements and the
notes to the Company financial statements, which include
explanatory and supplementary information.
We have not audited the Unaudited commentary that is included
with the financial statements.
The financial reporting framework that has been applied in the
preparation of the Group financial statements comprises
applicable law and IFRSs as adopted by the EU. The financial
reporting framework that has been applied in the preparation
ofthe Company financial statements comprises applicable law
and UK GAAP.
Certain disclosures, including Directors’ Remuneration, required
by the financial reporting framework have been presented
elsewhere in the Annual Report and Accounts (the Annual Report),
rather than in the notes to the financial statements. These are
cross-referenced from the financial statements and are identified
as audited.
What an audit of financial 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
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 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, we read all the financial and non-financial information
inthe Annual Report 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.
Overview of our audit approach
Materiality
We consider an item material if, in our judgement, it is likely to have
an impact on the economic decisions of the Company members
to whom this opinion is addressed.
We set certain thresholds for materiality. These helped us to
determine the nature, timing and extent of our audit procedures
and to evaluate the effect of potential misstatements, both
individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the Group financial statements as a whole (overall materiality) to
be £126m whichrepresents approximately 5% of profit before tax,
exceptional items,remeasurements and stranded cost recoveries,
which wehave determined to be the relevant measure of
underlying business performance.
We reported all misstatements greater than £6m identified by our
audit to the Audit Committee.
Overview of the scope of our audit
The Group is structured along four business segments being
UKElectricity Transmission, UK Gas Transmission, UK Gas
Distribution and US Regulated with activities falling outside these
business segments included in Other activities.
In establishing the overall approach to the Group audit, we
determined the type of work that needed to be performed at the
reporting units, within these business segments, by us, as the
Group engagement team, or component auditors within PwC UK
and from other PwC network firms 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 business segments to be able to conclude whether
sufficient appropriate audit evidence had been obtained as a basis
for our opinion on the Group financial statements as a whole.
Accordingly, we identified that UK Electricity Transmission, UK Gas
Transmission, UK Gas Distribution and US Regulated required an
audit of their complete financial information due to their size.
Independent
auditors’ report
to the Members of National Grid plc
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