Strategic Report
Governance Report
Financial Statements
Other Information
How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. The group comprised 16 legal entities across the UK and Channel Islands during the reporting period. We conducted audit testing over 6 legal entities, including 2 entities in the Channel Islands,one of which is audited by PwC Channel Islands under our instruction and oversight. Across these legal entities, 3 were considered financially significant due to their contribution to the group’s results, and were subject to an audit of their complete financial information. One legal entity was scoped in due to a statutory audit being performed over their financial information therefore this was leveraged for group coverage. We performed audit testing on specific FSLIs for two more legal entities on a judgemental risk based criteria. Together with the audit procedures performed at the group level on the consolidation, our audit work gave us the evidence we needed for our opinion on the financial statements as a whole. A significant proportion of the group’s trading, operational and financial processes are based in the UK resulting in the majority of the audit procedures being performed by the group audit team in the UK. The group audit team issued instructions to PwC Channel Islands for the legal entity, Brooks Macdonald International Fund Management Limited (BMIFML), because that entity’s trading, operational and financial processes are based in the Channel Islands. We received inter-office reporting from PwC Channel Islands with respect to their audit of BMIFML and performed appropriate oversight of their audit work.
The audit of the company Financial Statements was performed entirely by the group audit team in the UK, leveraging on the work performed on the group audit where appropriate with additional audit procedures performed on other company specific balances.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements - group
Financial statements - company
Overall materiality
£1,289,000 (FY23: £1,100,000).
£1,272,900 (FY23: £1,045,000).
How we determined it
5% of Adjusted profit before tax adjusted for two non-recurring items comprising £11.6m Goodwill impairment (Note 13) & £2.6m redundancy costs (Note 5). The most appropriate benchmark for group materiality is Adjusted profit before tax on the basis that the group is primarily measured on its financial performance via its consolidated statement of comprehensive income, adjusted as appropriate for non-recurring items.
1% of net assets
The impact of climate risk on our audit
In planning our audit, we made enquiries with management to understand the extent of the potential impact of climate change risk on the financial statements. Management concluded that there was no material impact on the financial statements. Our evaluation of this conclusion included challenging key judgements and estimates in areas where we considered that there was greatest potential for climate change impact. This included evaluating the long-term threats posed by climate change to some of the Group’s key operating territories and the impact this may have on the risk of impairment of the related Goodwill balance. We also considered the consistency of the disclosures in relation to climate change made within the Annual Report, the financial statements and the knowledge obtained from our audit. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Rationale for benchmark applied
A benchmark of net assets has been used as the company’s primary purpose is to act as a holding company with investments in the group’s subsidiaries, not to generate operating profits and therefore a profit based measure was not considered appropriate. 1% of net assets was the benchmark used in the prior year.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £14,768 and £1,224,707. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (FY23: 75%) of overall materiality, amounting to £966,800 (FY23: £825,000) for
the group financial statements and £954,690 (FY23: £783,750) for the company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the lower end of our normal range was appropriate. We agreed with those charged with governance that we would report to them misstatements identified during our audit above £64,458 (group audit) (FY23: £55,000) and £63,646 (company audit) (FY23: £52,250) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Brooks Macdonald Group plc Annual Report and Accounts 2024
105
Made with FlippingBook - professional solution for displaying marketing and sales documents online