Our 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 an auditor's report that includes our 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We have;
• Obtained an understanding of the legal and regulatory framework applicable to the entity and how the entity is complying with that framework;
• Obtained an understanding of the entity's policies and procedures on compliance with laws and regulations, including documentation of any instances of non-compliance.
• Identified the laws and regulations that have significance in the context of the entity;
• Obtained an understanding of the entity's risk assessment process, including the risk of fraud;
• Assessed and evaluated the susceptibility of the entity's financial statements to material misstatement, through error and fraud;
• Implemented procedures to enable the identification and testing of unusual or unexpected journal entries;
• Evaluated the assumptions and judgements used by management within significant accounting estimates and assessed if these indicate evidence of management bias;
• Tested significant transactions, in particular the evaluation of the business rationale for any which appear unusual or outside the company's normal course of business;
• Reviewed the financial statements and tested the disclosures against supporting documentation;
• Communicated relevant matters (including those above) to all members of the audit team to ensure they understood the risks specific to the entity and the audit procedures planned to mitigate these.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.