BP 2014 Annual Report Download - page 245

Changes in internal control over financial reporting
There were no changes in the group’s internal controls over financial
reporting that occurred during the period covered by the Form 20-F that
have materially affected or are reasonably likely to materially affect our
internal controls over financial reporting.
Principal accountants’ fees and services
The audit committee has established policies and procedures for the
engagement of the independent registered public accounting firm,
Ernst & Young LLP, to render audit and certain assurance and tax
services. The policies provide for pre-approval by the audit committee of
specifically defined audit, audit-related, tax and other services that are not
prohibited by regulatory or other professional requirements. Ernst &
Young are engaged for these services when its expertise and experience
of BP are important. Most of this work is of an audit nature. Tax services
were awarded either through a full competitive tender process or
following an assessment of the expertise of Ernst & Young relative to
that of other potential service providers. These services are for a fixed
term.
Under the policy, pre-approval is given for specific services within the
following categories: advice on accounting, auditing and financial
reporting matters; internal accounting and risk management control
reviews (excluding any services relating to information systems design
and implementation); non-statutory audit; project assurance and advice
on business and accounting process improvement (excluding any
services relating to information systems design and implementation
relating to BP’s financial statements or accounting records); due diligence
in connection with acquisitions, disposals and joint arrangements
(excluding valuation or involvement in prospective financial information);
income tax and indirect tax compliance and advisory services; employee
tax services (excluding tax services that could impair independence);
provision of, or access to, Ernst & Young publications, workshops,
seminars and other training materials; provision of reports from data
gathered on non-financial policies and information; and assistance with
understanding non-financial regulatory requirements. BP operates a two-
tier system for audit and non-audit services. For audit related services,
the audit committee has a pre-approved aggregate level, within which
specific work may be approved by management. Non-audit services,
including tax services, are pre-approved for management to authorize per
individual engagement, but above a defined level must be approved by
the chairman of the audit committee or the full committee. The audit
committee has delegated to the chairman of the audit committee
authority to approve permitted services provided that the chairman
reports any decisions to the committee at its next scheduled meeting.
Any proposed service not included in the approved service list must be
approved in advance by the audit committee chairman and reported to
the committee, or approved by the full audit committee in advance of
commencement of the engagement.
The audit committee evaluates the performance of the auditors each
year. The audit fees payable to Ernst & Young are reviewed by the
committee in the context of other global companies for cost
effectiveness. The committee keeps under review the scope and results
of audit work and the independence and objectivity of the auditors.
External regulation and BP policy requires the auditors to rotate their lead
audit partner every five years. (See Financial statements – Note 34 and
Audit committee report on page 64 for details of fees for services
provided by auditors.)
Directors’ report information
This section of BP Annual Report and Form 20-F 2014 forms part of, and
includes certain disclosures which are required by law to be included in,
the Directors’ report.
Indemnity provisions
In accordance with BP’s Articles of Association, on appointment each
director is granted an indemnity from the company in respect of liabilities
incurred as a result of their office, to the extent permitted by law. These
indemnities were in force throughout the financial year and at the date of
this report. In respect of those liabilities for which directors may not be
indemnified, the company maintained a directors’ and officers’ liability
insurance policy throughout 2014. During the year, a review of the terms
and scope of the policy was undertaken. The 2013 policy was extended
into 2014 and subsequently renewed during 2014 into 2015. Although
their defence costs may be met, neither the company’s indemnity nor
insurance provides cover in the event that the director is proved to have
acted fraudulently or dishonestly. In addition, each director of the
company’s subsidiaries which subsidiaries are trustees of the group’s
pension schemes, is granted an indemnity from the company in respect
of liabilities incurred as a result of such a subsidiary’s activities as a
trustee of the pension scheme, to the extent permitted by law. These
indemnities were in force throughout the financial year and at the date of
this report.
Financial risk management objectives and policies
The disclosures in relation to financial risk management objectives and
policies, including the policy for hedging, are included in Our
management of risk on page 46, Liquidity and capital resources on page
211 and Financial statements – Notes 27 and 28.
Exposure to price risk, credit risk, liquidity risk and cash flow risk
The disclosures in relation to exposure to price risk, credit risk, liquidity
risk and cash flow risk are included in Financial statements – Note 27.
Important events since the end of the financial year
Disclosures of the particulars of the important events affecting BP which
have occurred since the end of the financial year are included in the
Strategic report as well as in other places in the Directors’ report.
Likely future developments in the business
An indication of the likely future developments of the business is
included in the Strategic report.
Research and development
An indication of the activities of the company in the field of research and
development is included in Our strategy on page 13.
Branches
As a global group our interests and activities are held or operated through
subsidiaries*, branches, joint arrangements*or associates*
established in – and subject to the laws and regulations of – many
different jurisdictions.
Employees
The disclosures concerning policies in relation to the employment of
disabled persons and employee involvement are included in Corporate
responsibility – Employees on page 44.
Employee share schemes
Certain shares held by the Employee Share Ownership Plan trusts
(ESOPs) carry voting rights. Voting rights in respect of such shares are
exercisable via a nominee.
Greenhouse gas emissions
The disclosures in relation to greenhouse gas emissions are included in
Corporate responsibility – Environment and society on page 42.
Disclosures required under Listing Rule 9.8.4R
The information required to be disclosed by Listing Rule 9.8.4R can be
located as set out below:
Information required Page
(1) Amount of interest capitalized 123
(2) – (14) Not applicable
Cautionary statement
This document contains certain forecasts, projections and forward-
looking statements – that is, statements related to future, not past
events – with respect to the financial condition, results of operations and
businesses of BP and certain of the plans and objectives of BP with
respect to these items. These statements may generally, but not always,
be identified by the use of words such as ‘will’, ‘expects’, ‘is expected
to’, ‘aims’, ‘should’, ‘may’, ‘objective’, ‘is likely to’, ‘intends’, ‘believes’,
‘anticipates’, ‘plans’, ‘we see’ or similar expressions. In particular, among
other statements, (1) certain statements in the Chairman’s letter (pages
6-7), the Group chief executive’s letter (pages 8-9), the Strategic report
Additional disclosures
*Defined on page 252. BP Annual Report and Form 20-F 2014 241