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76 BT Group plc Annual Report & Form 20-F
UNITED STATES OPINION
Report of Independent Registered Public Accounting
Firm to the Board of Directors and Shareholders of BT
Group plc
We have completed an integrated audit of BT Group plc’s
31 March 2007 consolidated financial statements and of its
internal control over financial reporting as of 31 March 2007
and audits of its 31 March 2006 and 31 March 2005
consolidated financial statements in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Our opinions, based on our audits, are presented
below.
Consolidated financial statements
In our opinion, the accompanying group income statements and
the related group balance sheets, group statements of cash
flows and group statements of recognised income and expense
present fairly, in all material respects, the financial position of BT
Group plc and its subsidiaries at 31 March 2007 and 2006, and
the results of their operations and their cash flows for each of
the three years in the period ended 31 March 2007, in
conformity with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. These financial
statements are the responsibility of the company’s management.
Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these financial statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit of
financial statements includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statements presentation. We believe that our
audits provide a reasonable basis for our opinion.
As discussed in the accounting policies section in the financial
statements, the group adopted IAS 32 and IAS 39 at 1 April
2005 prospectively.
IFRSs as adopted by the European Union vary in certain
significant respects from accounting principles generally
accepted in the United States of America. Information relating
to the nature and effect of such differences, as restated, is
presented in the United States Generally Accepted Accounting
Principles note to the consolidated financial statements (note 35).
Internal control over financial reporting
Also, in our opinion, management’s assessment, included in
Managements’ Evaluation of the Effectiveness of Internal Control
as set out in the first three paragraphs of Internal Control over
financial reporting in Report of the Directors, Corporate
governance of the Form 20-F, that the group maintained
effective internal control over financial reporting as of 31 March
2007 based on criteria established in Internal Control – Revised
Guidance for Directors on the Combined Code as issued by the
Financial Reporting Council (the Turnbull criteria), is fairly stated,
in all material respects, based on those criteria. Furthermore, in
our opinion, the company maintained, in all material respects,
effective internal control over financial reporting as of 31 March
2007, based on criteria established in the Turnbull criteria. The
company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on management’s assessment
and on the effectiveness of the company’s internal control over
financial reporting based on our audit.
We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects.
An audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial
reporting, evaluating management’s assessment, testing and
evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider
necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance
with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
16 May 2007
Financial Statements Report of the independent auditors