Barclays 2013 Annual Report Download - page 273

Independent Auditors’ Report to the members
of Barclays PLC
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 Parent
Company’s affairs as at 31 December 2013 and of the Group’s and
Parent Company’s profit and cash flows for the year then ended;
 have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
 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.
What we have audited
The Group financial statements and Parent Company financial
statements (the financial statements) for the year ended 31 December
2013, which are prepared by Barclays PLC, comprise:
 the Consolidated and Parent balance sheets as at 31 December 2013;
 the Consolidated and Parent income statements and related
Consolidated statement of comprehensive income for the year then
ended;
 the Consolidated and Parent statements of changes in equity and
statements of cash flows for the year then ended; and
 the related notes to the financial statements, which include a
summary of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in their
preparation comprises applicable law and IFRSs as adopted by the
European Union.
Certain disclosures required by the financial reporting framework have
been presented in the Risk review and Financial review sections of 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
Parent 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 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 misstatements both individually and on the financial
statements as a whole.
Based on our professional judgment, we determined overall materiality
for the Group financial statements as a whole to be £310m. Overall
materiality was determined through taking 5% of profit before taxation
adjusted for own credit, the provision for payment protection insurance
redress payments and claims management costs, the provision for
interest rate hedging products redress and claims management costs,
goodwill impairment and costs to achieve Transform. The removal of
these items mitigates undue volatility in determining our materiality.
Although our audit was designed to identify material misstatements,
we agreed with the Board Audit Committee that we would report to
them uncorrected misstatements greater than £15m, as well as
misstatements below that threshold that, in our view, warranted
reporting for qualitative reasons.
Overview of the scope of our audit
When determining the scope of our audit we considered the internal
organisation of the Group and we sought to determine a scope of audit
work that optimised the coverage of risks, balances and transactions.
The Group has eight operating segments: UK Retail and Business
Banking, Europe Retail and Business Banking, Africa Retail and Business
Banking, Barclaycard, Investment Bank, Corporate Banking, Wealth and
Investment Management and Head Office and Other Operations.
For the purposes of planning our audit, we identified eight separate
components in the Group, being entities and business activities for
which the Group prepares financial information. This component
analysis was broadly consistent with the Group’s operating segments;
except that we identified Barclaycard UK (which is part of the
Barclaycard segment) and Absa Retail and Business Banking (which is
part of the Africa Retail and Business Banking segment) as separate
components. Therefore the components for the purposes of our audit
were UK Retail and Business Banking, Europe Retail and Business
Banking, Absa Retail and Business Banking, Barclaycard UK, Investment
Bank, Corporate Banking, Wealth and Investment Management and
Head Office & Other Functions (the components).
In establishing our overall approach to audit the Group, we considered
the significance of these components to the financial statements. We
also separately considered our assessment of risk within each
component, the overall coverage of our procedures across the Group,
as well as the risk associated with less significant components not
brought into the normal scope of our audit.
We determined the type of work that needed to be performed for each
component by us in relation to components within the UK, or by other
PwC network firms operating under our instruction in relation to
components outside the UK. Where the work was performed by other
firms, we determined the level of involvement we needed to have in the
audit work of those components 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.
Of the eight components, we performed an audit of the complete
financial information of the Investment Bank, Barclaycard UK and Absa
Retail and Business Banking either because that was required due to
their size and their risk characteristics or due to the alignment of local
reporting timetables with that of the Group. We also carried out specific
audit procedures on certain financial statement line items in each of
the remaining five components.
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