BP 2015 Annual Report Download - page 97

Corporate governance
Directors’ statements
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
The directors are required by the UK Companies Act 2006 to prepare
financial statements for each financial year that give a true and fair view of
the financial position of the group and the parent company and the financial
performance and cash flows of the group and parent company for that
period. Under that law they are required to prepare the consolidated
financial statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and applicable
law and have elected to prepare the parent company financial statements
in accordance with applicable United Kingdom law and United Kingdom
accounting standards (United Kingdom generally accepted accounting
practice). In preparing the consolidated financial statements the directors
have also elected to comply with IFRSs as issued by the International
Accounting Standards Board (IASB).
In preparing those financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently.
• make judgements and estimates that are reasonable and prudent.
• present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information.
• provide additional disclosure when compliance with the specific
requirements of IFRS is insufficient to enable users to understand the
impact of particular transactions, other events and conditions on the
group’s financial position and financial performance.
• state that applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the parent
company financial statements.
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
group and company and enable them to ensure that the consolidated
financial statements comply with the Companies Act 2006 and Article 4 of
the IAS Regulation and the parent company financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding
the assets of the group and company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Having made the requisite enquiries, so far as the directors are aware,
there is no relevant audit information (as defined by Section 418(3) of the
Companies Act 2006) of which the company’s auditors are unaware, and
the directors have taken all the steps they ought to have taken to make
themselves aware of any relevant audit information and to establish that
the company’s auditors are aware of that information.
The directors confirm that to the best of their knowledge:
• the consolidated financial statements, prepared in accordance with IFRS
as issued by the IASB, IFRS as adopted by the EU and in accordance
with the provisions of the Companies Act 2006, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the group.
• the parent company financial statements, prepared in accordance with
United Kingdom generally accepted accounting practice, give a true and
fair view of the assets, liabilities, financial position, performance and
cash flows of the company.
• the management report, which is incorporated in the strategic report
and directors’ report, includes a fair review of the development and
performance of the business and the position of the group, together
with a description of the principal risks and uncertainties that they face.
C-H Svanberg
Chairman
4 March 2016
Risk management and internal control
Under the UK Corporate Governance Code, the board is responsible for the
company’s risk management and internal control systems. In discharging
this responsibility, the board through its governance principles, requires the
group chief executive to operate the company with a comprehensive
system of controls and internal audit to identify and manage the risks that
are material to BP. In turn, the board, through its monitoring processes,
satisfies itself that these material risks are identified and understood by
management and that systems of risk management and internal control are
in place to mitigate them. These systems are reviewed periodically by the
board, have been in place for the year under review and up to the date of
this report and are consistent with the requirements of principle C.2 of the
Code.
The board has processes in place to:
• assess the principal risks facing the company.
• monitor the company’s system of internal control (which includes the
ongoing process for identifying, evaluating and managing the principal
risks).
• review the effectiveness of that system annually.
Non-operated joint arrangements and associates have not been dealt with
as part of this board process.
A description of the principal risks facing the company, including those that
could potentially threaten its business model, future performance, solvency
or liquidity, is set out in Risk factors on page 53. During the year, the board
undertook a robust assessment of the principal risks facing the company.
The principal means by which these risks are managed or mitigated are set
out in Our management of risk on page 51.
In assessing the risks faced by the company and monitoring the system of
internal control, the board and the audit, safety, ethics and environment
assurance, Gulf of Mexico and geopolitical committees requested,
received and reviewed reports from executive management, including
management of the business segments, corporate activities and functions,
at their regular meetings. A report by each of these committees, including
its activities during the year, is set out on pages 68 to 74.
During the year, the committees also met with management, the group
head of audit and other monitoring and assurance functions (including
group ethics and compliance, safety and operational risk, business
integrity, group control, group legal and group risk) and the external auditor
as appropriate. Responses by management to incidents that occurred
were considered by the appropriate committee or the board.
A joint meeting of the audit and safety, ethics and environment assurance
committees in January 2016 carried out an annual review of the
effectiveness of the system of internal control. In considering this system,
the committees noted that it is designed to manage, rather than eliminate,
the risk of failure to achieve business objectives and can only provide
reasonable, and not absolute, assurance against material misstatement or
loss.
This review included a report from the group head of audit which
summarized group audit’s consideration of the design and operation of
elements of BP’s system of internal control over significant risks arising in
the categories of strategic and commercial, safety and operational and
compliance and control and considered the control environment for the
group. The report also highlighted the results of internal audit work
conducted during the year and the remedial actions taken by management
in response to failings and weaknesses identified. Where failings or
weaknesses were identified, the board was satisfied that these were or
are being appropriately addressed by the remedial actions proposed by
management.
A statement regarding the company’s internal controls over financial
reporting is set out on page 244 (Additional disclosures, Controls and
procedures).
This page does not form part of BP’s Annual Report on Form 20-F as filed with the SEC.
BP Annual Report and Form 20-F 2015 93