My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditor that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), I exercise professional judgement and maintain professional scepticism throughout the audit.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which my procedures are capable of detecting irregularities, including fraud is detailed below:
I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.
I ensured the engagement team had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
I obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations I considered in this context were the Companies Act 2006 and Taxation legislation.
I assessed the extent of compliance with the laws and regulations identified above, through enquiries of management and inspecting correspondence with HM Revenue & Customs. Remaining alert for instances of non-compliance throughout the audit. I responded to these risks by enquiring of management about their own identification and assessment of the risks including enquiries of management about their own identification and assessment of the risks of irregularities, performing analytical procedures to identify unusual transactions, sample testing journals and investigation the rationale behind significant or unusual transactions, and reviewing estimates for bias. Also agreeing the financial statement disclosures to underlying supporting documentation.
I assessed the susceptibility of the company's financial statements to material misstatement in respect of fraud, by making enquiries of management as to where they considered there was susceptibility to fraud, and knowledge of actual, suspected and alleged fraud. I considered the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
I made enquiries of management as to the existence of actual or potential litigation and claims.
Owing to the inherent limitations of an audit, there is an unavoidable risk that I may not have detected some material misstatements in the financial statements, even though I have properly planned and performed our audit in accordance with auditing standards. I am not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations. These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions, collusion or the provision of intentional misrepresentations.
A further description of my responsibilities for the audit of the financial statements is located on the Financial Reporting
Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of my Report of the Auditor.