BT 2015 Annual Report Download - page 143

141
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements Additional information
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Refer to page 102 udit  is oittee eport pae 150 ote
2 – Critical accounting estimates and key judgements) and page 166
ote 1  ntanible assets
As at 31 March 2015, goodwill relating to the BT Global Services cash
eneratin unit U aounted to 109 out of a total oodwill
balance of £1,396m. The directors have prepared an impairment
assessment that is based on a value in use calculation of the
BT Global Services CGU.
We focused on the impairment assessment for BT Global Services as
the assessent is sensitive to chanes in assuptions in particular
the long term growth rate, the discount rate and the assumptions
underlin future operatin cash ows.
e areed the cash ow forecasts used in the ipairent odel to
Board approved forecasts. We considered the directors’ expectations
in respect of aterial contract activit includin new business and
contract renewals) and planned operational improvements and
whether these were appropriatel reected in the cash ow forecasts.
e copared actual historical cash ow results for the  lobal
Services CGU with previous forecasts and determined whether any
dierences fall within an acceptable rane.
We independently calculated a weighted average cost of capital by
ain reference to aret data and verified the lon ter rowth
rate to market data.
e assessed the sucienc of the sensitivit analsis perfored b
thedirectors and performed further sensitivity analyses, primarily
focused on chanes in operatin cash ows.
e considered the disclosures in note 1 of the financial stateents
and assessed them as appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough
wor to be able to ive an opinion on the financial stateents as a
whole, taking into account the geographical structure of the group, the
accounting processes and controls, and the industry in which the group
operates.
he roups accountin process is structured around a finance function
in each of the reporting units. These are responsible for their own
accountin records and controls and report to the head oce finance
team in London through an integrated consolidation system.
In establishing the overall approach to the group audit, we determined
the type of work that needed to be performed at reporting units by
us, as the group engagement team, or component auditors from other
w networ firs operatin under our instruction. here the wor
was performed by component auditors, we determined the level of
involvement we needed to have in the audit work at those reporting
units to be able to conclude whether sucient appropriate audit
evidence had been obtained as a basis for our opinion on the group
financial stateents as a whole.
or three reportin units UK tal and eran an audit of the
coplete financial inforation was perfored. n a further four
reportin units specific audit procedures on revenue and receivables
purchases and payables, cash and provisions were performed.
This,together with additional procedures performed on centralised
functions and at the group level, gave us the evidence we needed for our
opinion on the consolidated financial stateents as a whole.
The group engagement team performed the audit of the UK reporting
unit. The group team visited Italy and Germany and conference calls
were held with these teams on a regular basis. The group engagement
team was also involved in the audits of the four reporting units for
which specific audit procedures were perfored throuh a cobination
of visits and conference calls.
The reporting units within the scope of our group audit procedures
accounted for over 0 of the roups revenue and profit before ta.
Materiality
he scope of our audit was inuenced b our application of aterialit.
We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of
our audit and the nature, timing and extent of our audit procedures and
to evaluate the eect of isstateents both individuall and on the
financial stateents as a whole.
Based on our professional judgement, we determined materiality for the
financial stateents as a whole as follows
Overall group materiality 10 011 110
How we determined it verae of  of profit before ta for
the current year and the previous three
years.
Rationale for benchmark
applied
e used an averae of profit before ta
for the current year and previous three
years to reduce volatility in the measure
year on year.
We agreed with the Audit & Risk Committee that we would report to
the isstateents identified durin our audit above  011
£5m) as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the directors’
statement, set out on page 130, in relation to going concern.
We have nothing to report having performed our review.
As noted in the directors’ statement, the directors have concluded
that it is appropriate to prepare the financial stateents usin the
going concern basis of accounting. The going concern basis presumes
that the group has adequate resources to remain in operation, and
that the directors intend it to do so, for at least one year from the
date the financial stateents were sined. s part of our audit we
have concluded that the directors’ use of the going concern basis
isappropriate.
However, because not all future events or conditions can be predicted,
these statements are not a guarantee as to the group’s ability to
continue as a going concern.