Peachtree 2015 Annual Report Download - page 101

The Sage Group plc | Annual Report & Accounts 2015 99
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Independent auditor’s report to the members of The Sage Group plc
Our opinion on the financial statements
In our opinion:
– The Sage Group plc’s Group financial statements and Parent company financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Parent company’s affairs as at 30 September 2015 and of the Group’s profit for the year then ended;
– the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
– the Parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
– the financial statements 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.
What we have audited
The Sage Group plc’s financial statements comprise:
Group Parent company
Consolidated balance sheet as at 30 September 2015 Company balance sheet as at 30 September 2015
Consolidated income statement for the year then ended Company accounting policies
Consolidated statement of comprehensive income for the year then ended Related notes 1 to 9 to the financial statements
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 17 to the financial statements
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and IFRSs as adopted
by the European Union. The financial reporting framework that has been applied in the preparation of the Parent company financial statements is
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
Overview of our audit approach
Risks of material misstatement – Revenue recognition.
– Carrying value of goodwill.
– Accounting for taxation.
Audit scope – We performed an audit of the complete financial information of 6 components and audit procedures
on specific balances for a further 6 components.
– The components where we performed full or specific audit procedures accounted for 90% of adjusted
Profit before tax* and 90% of Revenue.
Materiality – Overall Group materiality is £16.9m which represents 5% of adjusted Profit before tax*.
* Profit before tax adjusted for non-recurring items as defined in ‘The application of materiality’ section of this report
Our assessment of risk of material misstatement
We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation of
resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below which
were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual areas.
Risk Our response to the risk
What we concluded to the
Audit and Risk Commiee
Revenue recognition
Refer to the Audit Commiee Report
(page 70); and Notes 1 and 3.1 of the
Group financial statements.
The Group has reported revenues of
£1,435.5m (2014: £1,353.5m). We
focussed on the recognition of revenue
as the timing of revenue recognition
and its presentation in the income
statement are subject to inherent
complexities in the soware industry.
Management undertook a review of
revenue recognition practices across
the Group which resulted in changes
in the accounting policies for a number
of revenue related items as set out in
Note 1.
The primary audit team assessed whether the revised revenue recognition
policies are appropriate and in accordance with IFRS given the nature of the
products and services and the manner in which these are provided by the
Group to its customers. Component audit teams:
– confirmed that the analysis on which the consideration by the primary
audit team was based was consistent with the group’s actual business
practices; and
– performed audit procedures to test the completeness and accuracy of
revenue amounts to be adjusted in respect of their location.
For significant revenue streams at each full and specific scope audit location:
– We performed walkthroughs of each significant class of revenue
transactions and assessed the design effectiveness of key controls. For a
number of components we tested the operating effectiveness of controls;
– For products and services where the risks and rewards are transferred
over a period of time, we tested a sample of transactions to ensure that
the amount of revenue was accurately calculated based on the state of
completion of the contract and appropriately recognised;
Following our audit procedures on
the underlying fact paerns and
technical analysis supporting
management’s conclusions from
its review of revenue recognition
practices across the Group, we
agreed with the amount of and
nature of the resulting adjustments
that have been recorded by
management, both in the
current year and in the prior
year comparatives.
We concluded that revenue
recognised in the year, and deferred
as at 30 September 2015, is
materially correct on the basis of our
procedures performed both at group
and by component audit teams.