HSBC 2015 Annual Report Download - page 371

HSBC HOLDINGS PLC
369
Strategic Report Financial Review Corporate Governance Financial Statements Shareholder Information
2 Fees payable to KPMG and PwC for the statutory audit of the consolidated financial statements of HSBC and the separate financial statements of
HSBC Holdings. They include amounts payable for services relating to the consolidation returns of HSBC Holdings’ subsidiaries which are clearly
identifiable as being in support of the Group audit opinion. Excluded from fees are those payable to KPMG related to the transition of the audit to PwC
of $1.2m.
3 Fees payable for the statutory audit of the financial statements of HSBC’s subsidiaries, including the 2015 changes in scope and additional procedures
performed due to the technology systems and data access controls matter as described on page 328.
4 Including services for assurance and other services that relate to statutory and regulatory filings, including comfort letters and interim reviews.
5 Including other permitted services relating to advisory, corporate finance transactions, etc.
No fees were payable by HSBC to PwC or KPMG as principal auditor for the following types of services: internal audit services
and services related to litigation, recruitment and remuneration.
Fees payable by HSBC’s associated pension schemes to PwC/KPMG1
2015 2014 2013
$000 $000 $000
Audit of HSBC’s associated pension schemes 352 322 379
Audit related assurance services 55 5
Year ended 31 December 357 327 384
1 PwC became the Group’s principal auditor in 2015. KPMG was the principal auditor during 2014.
No fees were payable by HSBC’s associated pension schemes to PwC or KPMG as principal auditor for the following types of
services: audit-related assurance services, internal audit services, other assurance services, services related to corporate
finance transactions, valuation and actuarial services, litigation, recruitment and remuneration, and information technology.
In addition to the above, the estimated fees paid to PwC by third parties other than HSBC amount to $2.4m (KPMG 2014:
$3.6m; KPMG 2013: $5.3m). In these cases, HSBC is connected with the contracting party and may therefore be involved in
appointing PwC. These fees arise from services such as auditing mutual funds managed by HSBC and reviewing the financial
position of corporate concerns which borrow from HSBC.
Fees payable for non-audit services for HSBC Holdings are not disclosed separately because such fees are disclosed on a
consolidated basis for the HSBC Group.
8 Tax
Accounting policy
Income tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to
items recognised in other comprehensive income or directly in equity, in which case it is recognised in the same statement in which the
related item appears.
Current tax is the tax expected to be payable on the taxable profit for the year, calculated using tax rates enacted or substantively enacted
by the balance sheet date, and any adjustment to tax payable in respect of previous years. HSBC provides for potential current tax liabilities
that may arise on the basis of the amounts expected to be paid to the tax authorities. Current tax assets and liabilities are offset when HSBC
intends to settle on a net basis and the legal right to offset exists.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the
amounts attributed to such assets and liabilities for tax purposes. Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which
deductible temporary differences can be utilised.
Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled,
based on tax rates and laws enacted, or substantively enacted, by the balance sheet date. Deferred tax assets and liabilities are offset when
they arise in the same tax reporting group and relate to income taxes levied by the same taxation authority, and when HSBC has a legal right
to offset.
Deferred tax relating to actuarial gains and losses on post-employment benefits is recognised in other comprehensive income. Deferred tax
relating to share-based payment transactions is recognised directly in equity to the extent that the amount of the estimated future tax
deduction exceeds the amount of the related cumulative remuneration expense. Deferred tax relating to fair value re-measurements of
available-for-sale investments and cash flow hedging instruments is charged or credited directly to other comprehensive income and is
subsequently recognised in the income statement when the deferred fair value gain or loss is recognised in the income statement.