Barclays 2015 Annual Report Download - page 251

home.barclays/annualreport Barclays PLC Annual Report 2015 I 249
Area of focus How our audit addressed the area of focus
Provision for
uncertain tax
positions
We focused 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 268 to 270.
Our tax specialists examined the correspondence between the Group
and the relevant tax authorities and between the Group and its 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 the provisions made by
Directors.
As set out in the financial statements, since the settlement of the
Group’s tax position is subject to future negotiation with various tax
authorities, the calculations of the provisions are subject to inherent
uncertainty. In our view, the provisions were within a reasonable range of
outcomes in the context of that uncertainty.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough
work to be able to give an opinion on the financial statements as a
whole, taking into account the geographic structure of the Group, the
accounting processes and controls, and the industry in which the Group
operates.
Component scoping
In response to the Group’s move to a more legal entity focused reporting
structure, we revised our audit scope to reflect this. Consequently, our
assessment of components of the Group focused primarily on the
Group’s legal entities, rather than its operating segments as in previous
years.
The following legal entities were deemed to be significant components
of the Group, and were subject to an audit of their complete financial
information:
 Barclays Bank PLC
 Barclays Africa Group Ltd.
 Barclays Capital Inc. and
 Barclays Capital Securities Ltd.
These components accounted for 86% of Group Total Income and 94%
of Group Total Assets.
Sub-component scoping
The Barclays Bank PLC and Barclays Africa Group Ltd. entities are
themselves consolidations of individually distinct sub-components
(namely the business units disclosed in the segmental analysis note of
the Financial Review on page 225), which in turn consolidate their own
sub-components.
We therefore assessed what audit work was necessary in each of these
sub-components, based on their financial significance to the relevant
legal entity, for the purposes of the Group audit. At this sub-component
level, we performed a combination of full scope audits and audits of
specific financial statement line items (namely investments in joint
ventures and associates) in order to achieve the desired level of audit
evidence.
We also performed an audit of costs to achieve, taxation and each of the
adjusting items disclosed in the Consolidated Summary Income
Statement in the Financial Review on page 220, namely:
 Own credit
 Gain on US Lehman acquisition assets
 Gain on valuation of a component of the defined retirement benefit
liability
 Provisions for UK customer redress
 Provisions for ongoing investigations and litigation including Foreign
Exchange
 Losses on sale relating to the Spanish, Portuguese and Italian
businesses.
These audit procedures, together with the audits performed at the
Barclays Capital Inc. and Barclays Capital Securities Ltd. components,
gave us coverage over 69% of Group Total Income and 81% of Group
Total Assets. We also performed Group level analytical procedures and
testing of Group-wide controls that enabled us to determine that we did
not need to obtain further audit evidence over the remaining population.
Involvement with component auditors
We determined whether the work would be performed by us (in relation
to activity within the UK) or by other PwC network firms operating under
our instruction (in relation to activity outside the UK). The most
significant overseas territories are the US and South Africa.
Where work was performed by component auditors from other network
firms, our involvement in that work included visits to the component
auditors including New York and Johannesburg by members of the
Group and component engagement teams, review of the results of their
audit procedures including the nature, timing and extent of the work
impacting the Group audit opinion and frequent communications by
the Group engagement team to corroborate that our audit plan was
appropriately executed. The nature, timing and extent of the work
impacting the Group audit opinion is set and monitored in the UK, with
input from the overseas team at the risk assessment stage.
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