Marks and Spencer 2015 Annual Report Download - page 90

88
MARKS AND SPENCER GROUP PLC
FINANCIAL STATEMENTS
In our opinion
>
The part of the Directors’ Remuneration
Report to be audited has been properly
prepared in accordance with the
Companies Act 2006.
>
The information given in the Strategic
Report and the Directors’ Report for the
fi nancial year for which the fi nancial
statements are prepared is consistent
with the fi nancial statements.
Audit components
We performed a full scope audit on
components representing 99% of
the Group’s revenue and 95% of the
Group’s profi t before tax and 76%
of the Group’s net assets.
At the parent entity level we also tested the
consolidation process and carried out
analytical procedures to confi rm our
conclusion that there were no signifi cant risks
of material misstatement of the aggregated
fi nancial information of the remaining
components not subject to a full audit.
We visited all signifi cant
components during the year
The most signifi cant component of
the Group is its retail business in the
United Kingdom, which accounts for 89%
of the Group’s revenue, 91% of the Group’s
operating profi t and 50% of the Group’s
net assets. The Group audit team performs
the audit of the UK business without
the involvement of a component team.
During the course of our audit, the Group
audit team conducted 16 distribution
centre and 27 retail store visits in the UK
to understand the current trading
performance and, at certain locations,
perform tests of internal controls and
validate levels of inventory held.
Since this was our fi rst year as the Group’s
auditor, we visited each of the eight
signifi cant locations outlined above at
least once. Each component was visited
during our transition, planning and risk
assessment process, in order for a senior
member of the Group audit team to
obtain a thorough understanding of the
operations, risks and control environments
of each component. For more signifi cant
or complex components, we conducted a
second visit during the audit to review the
component auditor’s working papers and
attend key meetings with component
management.
Going forward, we will follow a programme
of planned visits that has been designed so
that a senior member of the Group audit
team visits each of the locations where
the Group audit scope was focused at
least once every two years, and the most
signifi cant of them at least once a year.
In years when we do not visit a signifi cant
component we will include the component
audit team in our team briefi ng, discuss
their risk assessment, and review
documentation of the fi ndings from
their work.
In addition to our visits in these locations,
senior members of each component
audit team attended a two-day training
programme hosted by the Group audit
team covering topics which included
understanding the business and its core
strategy, a discussion of the signifi cant
risks and workshops on our planned
audit approach.
Analytical procedures
Specifi c audit procedures
Full audit
Full scope audit
components
1%
0%
99%
2%
3%
95%
7%
17%
76%
REVENUE PROFIT BEFORE TAX NET ASSETS
Scope of audit
Our Group audit was scoped by obtaining
an understanding of the Group and its
environment, including Group-wide
controls, and assessing the risks of material
misstatement at the Group level. The
Group has retail operations in 59 countries,
of which 17 are wholly-owned businesses,
two are joint ventures, and 40 operate
under franchise agreements (in addition
to two wholly-owned businesses which
also operate franchise agreements in
those territories).
Based on that assessment, we focused our
Group audit scope primarily on the audit
work at eight wholly-owned locations:
United Kingdom, Republic of Ireland, Czech
Republic, Greece, Turkey, India, China and
Hong Kong. All of these were subject to a
full audit. These locations represent the
principal business units and account for
99% of the Group’s revenue and 95% of
the Group’s profi t before tax and 76% of
the Group’s net assets. They were also
selected to provide an appropriate basis
for undertaking audit work to address
the risks of material misstatement
identifi ed above. Whilst we audit the
revenues received by the Group from
franchise operations, which account for
3% of the Group’s revenue, we do not audit
the underlying franchise operations.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
INDEPENDENT AUDITOR’S REPORT
CONTINUED