Barclays 2013 Annual Report Download - page 276

Areas of particular audit focus
Area of focus How the scope of our audit addressed the area of focus
Provision for uncertain
tax positions
We focussed on this area because the Group is
subject to taxation in many jurisdictions and, in many
cases, the ultimate tax treatment is uncertain and is
not determined until resolved with the relevant tax
authority. Consequently, the directors make
judgements about the incidence and quantum of tax
liabilities which are subject to the future outcome of
assessments by the relevant tax authorities and
potentially associated legal processes.
See Note 10 to the financial statements on
pages 294 and 297.
We examined the correspondence between the Group
and both the relevant tax authorities and the Group’s
external advisers. We examined the matters in dispute
and used our knowledge of the law of the relevant tax
jurisdictions and other similar taxation matters to assess
the available evidence and consider whether the
provisions are appropriate.
IT systems and controls We focussed on this area because the Group’s
financial accounting systems are heavily dependent
on complex IT systems which are the subject of
continuing development and improvement.
We assessed and tested the design and operating
effectiveness of the directors’ controls over the continued
integrity of the IT systems that are relevant to financial
reporting. We examined the governance framework for
the Group’s IT organisation and the controls over program
development and changes, access to programs and data
and IT operations, including compensating controls
where required. Where necessary we also carried out
direct tests of certain aspects of the security of the
Group’s IT systems including access and segregation
of duties.
Risk of fraud in
revenue recognition
We focussed on this area because ISAs (UK & Ireland)
presume there is a risk of fraud in revenue
recognition as a result of the potential for
management bias in order to achieve planned results.
We assessed and tested the design and operating
effectiveness of the controls over the occurrence,
accuracy and timing of revenue recognised in the financial
statements. We also focused on the instances of material
judgement by the directors and by management and on
those parts of the accounting processes which require
manual intervention. We incorporated unpredictability
into our testing.
Risk of management
override of internal
controls
We focussed on this area because ISAs (UK & Ireland)
require that we consider the risk of management
override of internal controls.
We tested key reconciliations and manual journal entries
incorporating unpredictability into our approach.
We considered whether there was evidence of bias by the
directors or by management in the significant accounting
estimates and judgements relevant to the financial
statements.
We also assessed the overall control environment of the
Group, including the arrangements for staff to “whistle-
blow” inappropriate actions, and interviewed senior
management and the Group’s internal audit function.
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274 Barclays PLC Annual Report 2013
Independent Auditors’ report continued