Tesco 2015 Annual Report Download - page 77

Our opinion
In our opinion, Tesco PLC’s Group financial statements (the
‘financial statements’):
• give a true and fair view of the state of the Group’s affairs
as at 28 February 2015 and of its loss and cash flows for
the 53 week period (the ‘period’) then ended;
• have been properly prepared in accordance with International
Financial Reporting Standards (‘IFRSs’) as adopted by the
European Union; and
• have been prepared in accordance with the requirements of
the Companies Act 2006 and Article 4 of the IAS Regulation.
What we have audited
Tesco PLC’s financial statements comprise:
• the Group balance sheet as at 28 February 2015;
• the Group income statement and the Group statement
of comprehensive income for the period then ended;
• the Group cash flow statement for the period then ended;
• the Group statement of changes in equity for the period then
ended; and
• the notes to the financial statements, which include a
summary of significant accounting policies and other
explanatory information.
Certain required disclosures have been presented elsewhere
in the Annual Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial
statements and are identified as audited.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
IFRSs as adopted by the European Union.
Our audit approach
Overview
Materiality
Overall Group materiality for 2014/15 was £50 million, which
was based on applying professional judgement, taking into
consideration a number of profit based measures and the overall
scale of the business. Overall Group materiality in 2013/14 was
£150 million.
Audit scope
We conducted audit work over the complete financial information
for 13 components across the UK, Europe and Asia. In addition
specified procedures were carried out at the Group’s shared
service centre in Bangalore.
The components that were part of our audit scope as set out
above accounted for 99% (2013/14: 92%) of Group profit before
tax before restructuring and other one off items and the reversal
of commercial income recognised in previous periods.
Areas of focus
The following were areas of focus for our audit:
• recognition of commercial income;
• commercial income – impact on prior years;
• impairment of property, plant and equipment;
• inventory;
• impairment of investments in associated undertakings;
• provisions and reserves in Tesco Bank;
• management override of controls; and
• compliance with laws and regulations.
The scope of our audit and our areas of focus
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (‘ISAs (UK and Ireland)’).
We designed our audit by determining materiality and assessing
the risks of material misstatement in the financial statements.
In particular, we looked at where the directors made subjective
judgements, for example in respect of significant accounting
estimates that involved making assumptions and considering
future events that are inherently uncertain. As in all of our audits,
we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias
by the directors that represented a risk of material misstatement
due to fraud.
The risks of material misstatement that had the greatest effect
on our audit, including the allocation of our resources and effort,
are identified as ‘areas of focus’ in the table below. We have also
set out how we tailored our audit to address these specific areas
in order to provide an opinion on the financial statements as a
whole, and any comments we make on the results of our procedures
should be read in this context. This is not a complete list of all risks
identified by our audit.
75Tesco PLC Annual Report and Financial Statements 2015
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Independent auditors’ report to the members of Tesco PLC