Standard Chartered Annual Report 2017 Standard Chartered Annual Report 2017

118 Pages·2017·1.35 MB·English

FINANCIAL STATEMENTS
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Katie Hasson | Business & Change Manager | Singapore 192 Independent auditor’s report IA
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200 Consolidated income statement S
T
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201 Consolidated statement of TE
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My family and my work comprehensive income E
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I’m an Australian-born mother of two: Mason (three) and Mia (one and a half). 202 Consolidated balance sheet TS
My husband and I moved to Singapore over fi ve years ago as a newly married
couple looking for a new experience. I currently work as a business and change 203 Consolidated statement of changes in equity
manager, which involves ensuring that the bank complies with the customer
due diligence standards that apply in our markets. 204 Cash fl ow statement
I always knew that I wanted to return to work on a part-time basis after giving 205 Company balance sheet Su
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birth so, after Mason came along, I used remaining maternity and annual leave p
206 Company statement of changes in equity le
entitlements to work a shorter week. m
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207 Notes to the fi nancial statements nta
“I feel I have moved on to the next step in my ry in
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career and that fl exible working has allowed me rm
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to develop in a way that suited me.” tion
Best of both worlds
Part-time work enables me to continue to advance in my career, while being
a full-time, hands-on mother. The best part is that I can take my kids on various
outings and play dates during what would be a ‘typical’ work day, while
helping to get important initiatives rolled out within the bank on the other days.
Attitudes are changing
Not all companies in Singapore would consider hiring someone on a fl exible
basis, and some people may assume I am less ambitious than everyone else
because I work part time, which is certainly not the case.
191
FINANCIAL STATEMENTS Independent auditor’s report
Independent auditor’s report
to the members of Standard Chartered PLC
1.Our opinion is unmodifi ed Basis for opinion
We conducted our audit in accordance with International Standards
We have audited the fi nancial statements of Standard Chartered PLC
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
(“the Company”), and its subsidiaries (together “the Group”), for the
are described below. We believe that the audit evidence we have
year ended 31 December 2017 which comprise the consolidated
obtained is a suffic ient and appropriate basis for our opinion. Our audit
balance sheet, the consolidated income statement, the consolidated
opinion is consistent with our report to the Audit Committee.
statement of comprehensive income, the consolidated statement of
changes in equity, the Group and Company cash fl ow statement, We were appointed as auditor by the Group before 1973. The period
the Company balance sheet, the Company statement of changes of total uninterrupted engagement is for more than the 45 financial
in equity and the related notes, including the accounting policies in years ended 31 December 2017.
note 1.
We have fulfi lled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical
In our opinion:
requirements including the FRC Ethical Standard as applied to
(cid:188) the fi nancial statements give a true and fair view of the state of the
listed public interest entities. No non-audit services prohibited by
Group’s and of the parent Company’s affairs as at 31 December
that standard were provided.
2017 and of the Group’s profi t for the year then ended;
Overview 2017 2016
(cid:188) the Group fi nancial statements have been properly prepared in
Materiality:
accordance with International Financial Reporting Standards as
adopted by the European Union (IFRSs as adopted by the EU); Group fi nancial statements $100m $150m
Benchmark1 4.1% of 4.3% of
(cid:188) the parent Company fi nancial statements have been properly
group four-year
prepared in accordance with IFRSs as adopted by the EU and as
profi t normalised
applied in accordance with the provisions of the Companies Act
before tax average
2006; and
group profi t
(cid:188) the fi nancial statements have been prepared in accordance with before tax
the requirements of the Companies Act 2006 and, as regards Coverage:
the Group fi nancial statements, Article 4 of the IAS Regulation.
of group profi t before tax 88% 92%
Risks of material misstatement vs 2016
Legal and regulatory matters
Impairment on loans and advances
Goodwill impairment
Valuation of fi nancial instruments held at
fair value
Information technology
Recoverability of Parent Company’s investment
in subsidiaries2
1 Further determination of benchmark is included on page 197
2 Separately set out in the auditor’s report for the fi rst time in 2017
192 Standard Chartered
Annual Report 2017
2. Key audit matters: our assessment of risks of material misstatement
S
Key audit matters are those matters that, in our professional judgment, were of most signifi cance in the audit of the fi nancial statements and trate
include the most signifi cant assessed risks of material misstatement (whether or not due to fraud) identifi ed by us, including those which had the gic
greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. re
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We summarise below the key audit matters in arriving at our audit opinion above, together with our key audit procedures to address those rt
matters and, as required for public interest entities, our results from those procedures. These matters were addressed, and our results are
based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the fi nancial statements as a whole, and in forming
our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
Key audit matter The risk Our response
Legal and regulatory matters Dispute Outcome Our procedures included:
There are a number of pending and ongoing legal
Refer to page 64 (Audit Committee Enquiry of lawyers: Meetings with the Group’s
f(iRnnoecor pltluieaod b2ritni6)l,igt iLpe aeascgg acaenol 2dua5 nnc8tdhi n (arngero ggpteueos lla2i)c t4aoie nrPsydr ompvaaisgtitoee nr2ss5) 9 dGstoiigsr odnpueiufi pttcee.ar sImnn a tic nnjueeddr wtrgaeehingme ultihlteaigentoart rtaisiyo prniner veaqesnusedirtne igrtde ao gtbbiuoyllin agmstao atirnionyvn aom glevaexintmitsgete srtns h te e(rawexnghtdeuo rsl anattaaroetl ruc yisno b uoroenf dglseiueeglls aain)rl t dcothio suenpn tUuadtSceet rs asw nataindtnhd Ud Ur KetSh ga eaun nnladdat ott houryerthe Pe rR A Directors’ rep
and whether a provision should be recognised. investigations to determine whether or not ort
If there is a present obligation there are signifi cant
a provision should recognised.
judgements in determining the measurement of
provisions, which are subject to the future outcome Assessing provisions: We critically assessed
of legal or regulatory processes. and challenged the adequacy of provisions
and contingent liability disclosures including
We focused on the risk of material misstatement
management’s ability to reliably estimate any
arising from ongoing investigations by regulators,
monetary penalties. Our procedures included
specifi cally in the US relating to the possible
comparing assumptions to historical data, approved
violation of US sanction laws and regulations. R
settlement agreements and enquiry of lawyers. is
Refer to note 26 (under ‘Other ongoing k re
investigations and review’) in relation to the Group’s Assessing transparency: Assessed whether vie
ongoing discussions with the relevant US authorities the disclosures related to signifi cant litigation and w a
regarding the resolution of this investigation. regulatory matters adequately disclose the potential nd
liabilities and the signifi cant uncertainties that exist. ca
Aress odliustciouns soefd th ine ninovtees 2ti6g,a itti oisn amckany oinwvloeldveg ead r athnagte t hoef Our results: We considered the provisions for pital re
civil and criminal penalties for sanctions compliance legal and regulatory matters recognised, including vie
violations including substantial monetary penalties. the related disclosures and the contingent liability w
disclosure made in note 26, to be acceptable
As also discussed in note 26 there are ongoing
(2016: acceptable).
discussions with the UK regulators in relation to
fi nancial crime controls in the correspondent
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banking business. IN
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193
FINANCIAL STATEMENTS Independent auditor’s report
Key audit matter The risk Our response
Impairment of loans Subjective estimate Our procedures included:
and advances The carrying value of loans and advances to
Control design, observation and operation:
Charge: $1,362 million banks and customers held at amortised cost may
We tested the design and operation of manual
(2016: $2,791 million) be materially misstated if individual or collective
and automated controls over the individual
impairments are not appropriately identifi ed and
Provision: $5,707 million impairment provision including:
estimated. The identifi cation of impaired assets and
(2016: $6,518 million)
the estimation of impairment including estimates of (cid:188) the accuracy of data input into the system
Corporate & Institutional Banking future cash fl ows and valuation of collateral involve used for credit grading and the approval of
(CIB) clients, Commercial Banking signifi cant management judgement. credit facilities
(CB) clients and Private Banking
The collective impairment on CIB, CB and Retail (cid:188) the ongoing monitoring and identifi cation of loans
clients (collectively ‘larger clients’)
loans and advances include overlays to the model displaying indicators of impairment and whether
represent 72 per cent ($264 billion)
calculated collective impairment. These overlays are they are migrating, on a timely basis, to early alert
of the Group’s net loan exposure,
calculated and assessed based on management’s or to grades 12 to 14 including generation of days
whereas Retail clients represent
judgement of the performance of the book. past due reports.
28 per cent ($103 billion).
The most signifi cant areas are: Assessing overlays: We assessed the adequacy
Refer to page 64 (Audit Committee of management overlays to the modelled collective
Report), page 218 (note 8 Impairment (cid:188) Loan exposures in India due to high debt levels provision for CIB, CB and Retail by recalculating the
losses on loans and advances and and weak balance sheets, regulatory reform and
coverage provided by the collective impairment
other credit risk provisions) and page the poor performance of certain sectors such as
249 (note 16 Loans and and advances provision (including overlays) to loan book, taking
telecoms and power
to banks and customers) including into account recent loss history, performance and
accounting policies (cid:188) Oil and gas support service related exposures de-risking of the relevant portfolios. We assessed
following sustained depression of oil prices in the areas identifi ed as most signifi cant opposite
prior years using external data and challenged whether the
modelled collective impairment provision already
appropriately refl ected them or if an overlay
was required.
Assessing individual exposures: We selected
a sample (based on quantitative thresholds) of
larger clients where impairment indicators had
been identifi ed by management. We obtained
management’s assessment of the recoverability
of these exposures (including individual provisions
calculations) and challenged whether individual
impairment provisions, or lack of, were appropriate.
This included the following procedures:
(cid:188) challenging the recoverability of the forecast
cash fl ows by comparing them to historical
performance of the customer and the expected
future performance where applicable; and
(cid:188) assessing external collateral valuer’s credentials
and comparing external valuations to values used
in management’s impairment assessments
For a risk based sample of CIB and CB loans credit
grades 1 to 11 not identifi ed as displaying indicators
of impairment by management, challenged this
assessment by reviewing the historical performance
of the customer and formed our own view whether
any impairment indicators were present.
Our results: We considered the credit impairment
charge and provision recognised and the related
disclosures to be acceptable (2016: acceptable).
194 Standard Chartered
Annual Report 2017
Key audit matter The risk Our response S
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Goodwill impairment Forecast-based valuation Our procedures included: te
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Impairment: $320 million Goodwill may be misstated if the carrying value of Methodology assessment: Assessed whether ic re
(2016: $166 million) goodwill in the balance sheet is not supported by p
the resegmentation of the CGUs refl ects our o
the estimated discounted future cash fl ows of the rt
Goodwill: $3,252 million understanding of the business and how it operates
underlying businesses.
(2016: $3,456 million) including assessment of the independence of the
underlying cash fl ows.
Subjective estimate
Refer to page 64 (Audit Committee
Report) and page 251 (note 18 The identifi cation of indicators of impairment and Benchmarking assumptions: For a sample
Goodwill and Intangible assets the preparation of the estimate of recoverable of CGUs including those identifi ed opposite,
including accounting policies) amount involves subjective judgments and compared the growth rate assumptions to
uncertainties. externally derived data for key inputs, including
projected economic growth. D
Our work focused on the CGUs which have low ire
headroom or signifi cantly reduced headroom Our expertise: Our valuation specialists critically cto
finoclloluwdiinngg :the re-segmentation (see note 18), afosrs ae sssaemdp tlhee o af pCpGroUpsr iiantcelundesinsg o tfh tohsee d idisecnotuifi netd r ates rs’ rep
opposite, independently calculating discount rate ort
(cid:188) Taiwan ranges using external data sources and peer bank
(cid:188) India data for local risk free rates, betas and market/
country/entity risk premiums.
Sensitivity analysis: Performing breakeven
analysis on the discount rate, the future cash fl ows
and gross domestic product projections.
Historical comparison: Assessed management’s R
ability to accurately prepare forecasts compared to isk
actual results. rev
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Consistency comparison: Assessed the a
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consistency of projected cash fl ows to the Board d
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approved corporate plan. ap
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Our results: We considered the goodwill l re
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impairment charge, carrying value of goodwill ie
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recognised and the related disclosures to be
acceptable (2016: acceptable).
Valuation of fi nancial Subjective estimate Our procedures included:
instruments held at fair value The valuation of level 3 fi nancial instruments held at Controls operation: We tested the Group’s FIN
Fair value of level 3 asset positions fair value through profi t or loss or as available-for- controls over the identifi cation and measurement of AN
$1,938 million comprising sale may be misstated due to the application of level 3 fi nancial instruments including independent CIA
1.0 per cent of total fair value valuation techniques which often involve the L
price verifi cation controls and pricing inputs. S
fi nancial instrument assets exercise of judgement and the use of assumptions T
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(2016: $2.3 billion, 1.2 per cent) and estimates. Methodology assessment: We assessed, for a T
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selection of level 3 investments, the reasonableness M
Fair value of level 3 liability A subjective estimate exists for instruments E
of valuation methodology, model calculation, inputs N
positions $536 million comprising where the valuation method uses signifi cantly T
and assumptions used, considering potential S
0.8% of total fair value unobservable inputs, which is principally the
alternatives and sensitivities to key factors, for
fi nancial instrument liabilities case for level 3 fi nancial instruments.
example EBITDA and PE multiples for Principal
(2016: $0.8 billion, 1.0%)
Our work focused on the following: Finance investments.
aiR Rnneesdftper oupr mratto)g,e eppn aat2sgg2)ee7 62(n43o 4(tA e(au 1cd3cit o FCuinonamtnincmgia iptlt oeelic y) (cid:188) Viannavdleu sadttmeiorenivn aottsfi v leeinvs et hwl e3it hPp rsoinisgcintiipoifi anclsa F,n iinnt acunlnucodebin sbgeu rusvnianlibessltees d Dalepvispecll ie2lod as fnuodrr et3hs efi: n Wfaainer c vaiaasllsu ieness hstrieeudrma trehcneht ysm. wFeotehr coahd saoallloemgnpgyl eed o f Suppleme
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pricing inputs the appropriateness of the levelling classifi cation. ta
(cid:188) Modelling of, and key inputs into, the valuation Tinhsitsr uinmcelundtse dm deet ttehrem rienqinugis witeh ectrhiteerr iale vtoe lb 2e fi cnlaasnsciifia el d ry info
of derivative and other instruments classifi ed rm
as such. For level 3 positions, we assessed the a
as level 3 transparency of the fi nancial statement disclosures, tio
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(cid:188) Disclosure of level 3 fi nancial assets and including sensitivity to key inputs refl ect the Group’s
liabilities held at fair value, including the exposure to valuation risk.
assessment of observability of pricing inputs
Our results: We considered the valuation of
level 3 fi nancial instruments held at fair value
and the related disclosures to be acceptable
(2016: acceptable).
195
FINANCIAL STATEMENTS Independent auditor’s report
Key audit matter The risk Our response
Information technology Processing error Our procedures included:
The Group’s key fi nancial accounting and reporting
Refer to page 66 General IT controls design, observation and
(Audit Committee Report) processes are highly dependent on the automated operation: Tested a sample of key controls
controls over the Group’s information systems, such
operating over the information technology in
that there exists a risk that gaps in the IT control
relation to fi nancial accounting and reporting
environment could result in the fi nancial accounting
systems, including system access and system
and reporting records being materially misstated.
change management, program development
We have focused on user access management, and computer operations.
segregation of duties and controls over system
User access controls operation: We obtained
change over key fi nancial accounting and
management’s evaluation of the access rights
reporting systems.
granted to applications relevant to fi nancial
accounting and reporting systems and tested
resolution of a sample of exceptions. We also
assessed the operating effectiveness of controls
over granting, removal and appropriateness of
access rights.
Our results: We considered the user access
management, segregation of duties and change
management controls in relation to fi nancial
accounting and reporting systems to be acceptable
(2016: acceptable).
Company: recoverability Low risk, high value Our procedures included:
of Parent Company’s The carrying value of the Parent Company’s
Tests of detail: Comparing the carrying amount
investment in subsidiaries investment in subsidiaries represents 55 per cent
of a sample of the highest value investments,
Investment in subsidiaries of the company’s total assets. Recoverability of
representing 99 per cent of the total investment
$34,853 million (2016: the investment is not considered a high risk of
balance with the relevant subsidiaries’ draft balance
$33,853 million) signifi cant misstatement or subject to signifi cant
sheet to identify whether their net assets, being
judgement. However, due to the materiality of the
an approximation of their minimum recoverable
Refer to page 64 (Audit Committee investment in the context of the parent company
Report), page 274 (note 32 Investment amount, were in excess of their carrying amount
fi nancial statements, this is considered to be the
in subsidiary undertakings, joint and assessing whether those subsidiaries have
ventures and associates including area that had the greatest focus of our overall historically been profi t-making.
accounting policies) parent company audit.
Assessing subsidiary audits: We assessed the
work performed by the subsidiary audit team on
that sample of those subsidiaries and considered
the results of that work, on those subsidiaries’
profi ts and net assets.
Our results: We considered the Company’s
assessment of the recoverability of the investment
in subsidiaries to be acceptable.
196 Standard Chartered
Annual Report 2017
3. Our application of materiality and an overview Group profit before tax1 % Group total assets %
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of the scope of our audit tra
12 10 2 teg
Materiality 11 9 8 13 5 ic rep
Materiality for the fi nancial statements as a whole was set with o
reference to a benchmark of profi t before tax for the period 88% 98% rt
(2016: 92%) (2016: 95%)
(representing 4.1 per cent of the benchmark). The prior year materiality
used 4.3 per cent of a four-year normalised average Group profi t
83 82
before tax to mitigate volatility in determining our materiality. As results 87 88
are less volatile, an average benchmark was no longer considered
necessary. 2017 2016
Full scope for group audit purposes
Materiality for the Parent Company fi nancial statements as a whole
Specified risk-focused audit procedures
was set at $100 million (2016: $150 million), determined with reference Residual components D
to a benchmark of net assets, of which it represents 0.4 per cent ire
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(2016: 0.5 per cent). 1 Calculation used absolute profi t before tax. Specifi ed risk focused audit procedures to
We agreed to report to the Audit Committee any corrected or coverage was calculated using absolute income and expense. rs’ re
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uncorrected identifi ed misstatements affecting Group profi t and loss Scope – disclosure of IFRS 9 effect ort
or Group shareholders’ funds exceeding $5 million (2016: $7.5 million) The Group is adopting IFRS 9 Financial Instruments from 1 January
and affecting Group assets or liabilities exceeding $50 million (2016: 2018 and have included an estimate of the fi nancial impact of the
$75 million), in addition to other identifi ed misstatements that warrant change in accounting standard in accordance with IAS 8 Changes in
reporting on qualitative grounds. Accounting Estimates and Errors as set out in note 41. This disclosure
notes that the Group continues to refi ne its expected credit loss model
The Group team instructed component and hub auditors as to the
and embed its operational processes which may change the actual
signifi cant areas to be covered, including the relevant risks and the
impact on adoption. While further testing of the fi nancial impact will
information to be reported to the Group team. The Group team
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Group profit before tax Group materiality (cid:188) Considered the appropriateness of key technical decisions, an
judgements, assumptions and elections made by management d
$2.4bn (2016: $3.5bn) $100m (2016: $150m) c
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£W1h0o0lem financial statements materiality (cid:188) Cincolnusdidinegr eBdu kseinye Cssla Mssoifid ceal tAiosns easnsdm Meenatss uarnedm Seonlte dlye Pcaisyiomnesn, t pital rev
(2016: $150m) of Principal and Interest (SPPI) outcomes iew
(cid:188) Involved credit risk modelling and economic specialists in
the consideration of credit risk modelling decisions and
macroeconomic variables, including forward economic
£40m guidance and generation of multiple economic scenarios F
Range of materiality at 35 components IN
(£$51mm to $40m) (2016: $1m to $40m) (cid:188) Creolantesdid etore tdh etr aapnspirtoiovnaal lo cf othnetr oelsst iamnadt egdo vtrearnnsaintiocnea pl rimocpeascstes ANC
Misstatements reported to the audit IA
committee (2016: $7.5m) L
Team structure S
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Scope – general As part of determining the scope and preparing the audit plan and T
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The scoping of our audit is focused on those components which are strategy, the Group team led a global planning conference to discuss M
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either individually signifi cant or contain signifi cant risks. Components key audit risks and obtain input from component and hub teams. N
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subject to specifi ed audit procedures (as shown in the table below) S
Aside from the audit of the parent company, consolidation, valuation
were not individually fi nancially signifi cant to require an audit for
of fi nancial instruments, collective impairment provision methodology,
Group reporting purposes, but were either scoped on the basis of
goodwill impairment, material litigation and regulatory provisions,
the signifi cant volume of liquid assets and transactions processed
US deferred tax asset and IAS 8 disclosures in relation to IFRS 9,
in those components or contained signifi cant risks which were S
all audit work was performed by component or hub auditors. u
covered centrally. Additionally we continued to scope specifi ed audit pp
procedures on one of the Group joint ventures, which had high levels Further, the Group team visited 8 (2016: 11) component and hub lem
of credit impairment in the previous year. All central processing hubs locations, including China, Hong Kong, India, Bangladesh, Singapore, en
(shared service centres) where in-scope fi nancial reporting processes South Korea, Malaysia and US. At these visits and meetings, the tary
are performed were subject to specifi ed audit procedures, primarily fi ndings reported to the Group team and any further work required by info
over transaction processing and IT controls. the Group team were discussed in more detail. Regular conference rm
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2017 2016 coaf tllhs ew oetrhee ar lcsoou hnetlrdie ws itthha tth weseere c noomt ppohnyseincta allyu dviistoitresd a. nd the majority tion
Total Group components1 172 178
The Group team inspected the component team’s key work papers
– Subject to full scope audit 35 35
related to the signifi cant risks and assessed the appropriateness of
– Subject to specifi ed procedures 4 4 conclusions and the consistency between reported fi ndings and
Hubs subject to specifi ed audit procedures 8 8 work performed.
1 Component defi ned as a reporting component within the Group’s consolidation
system, typically these are a branch or subsidiary of the Group.
197
FINANCIAL STATEMENTS Independent auditor’s report
4. We have nothing to report on going concern Corporate governance disclosures
We are required to report to you if:
We are required to report to you if:
(cid:188) we have anything material to add or draw attention to in relation (cid:188) we have identifi ed material inconsistencies between the knowledge
we acquired during our fi nancial statements audit and the directors’
to the directors’ statement in note 1 to the fi nancial statements on
statement that they consider that the annual report and fi nancial
the use of the going concern basis of accounting with no material
statements taken as a whole is fair, balanced and understandable
uncertainties that may cast signifi cant doubt over the Group and
and provides the information necessary for shareholders to assess
Company’s use of that basis for a period of at least twelve months
the Group’s position and performance, business model and
from the date of approval of the fi nancial statements; or
strategy; or
(cid:188) the related statement under the Listing Rules is materially
inconsistent with our audit knowledge. (cid:188) the section of the annual report describing the work of the Audit
Committee does not appropriately address matters communicated
We have nothing to report in these respects. by us to the Audit Committee.
We are required to report to you if the Corporate Governance
5. We have nothing to report on the other
Statement does not properly disclose a departure from the eleven
information in the Annual Report
provisions of the UK Corporate Governance Code specifi ed by the
The directors are responsible for the other information presented in Listing Rules for our review.
the Annual Report together with the fi nancial statements. Our opinion
We have nothing to report in these respects.
on the fi nancial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except as explicitly
6. We have nothing to report on the other matters
stated below, any form of assurance conclusion thereon.
on which we are required to report by exception
Our responsibility is to read the other information and, in doing so,
Under the Companies Act 2006, we are required to report to you if,
consider whether, based on our fi nancial statements audit work,
in our opinion:
the information therein is materially misstated or inconsistent with
the fi nancial statements or our audit knowledge. Based solely on (cid:188) adequate accounting records have not been kept by the parent
that work we have not identifi ed material misstatements in the Company, or returns adequate for our audit have not been received
other information. from branches not visited by us; or
Strategic report and directors’ report (cid:188) the parent Company fi nancial statements and the part of the
Directors’ Remuneration Report to be audited are not in agreement
Based solely on our work on the other information:
with the accounting records and returns; or
(cid:188) we have not identifi ed material misstatements in the strategic report
(cid:188) certain disclosures of directors’ remuneration specifi ed by law are
and the directors’ report;
not made; or
(cid:188) in our opinion the information given in those reports for the fi nancial
(cid:188) we have not received all the information and explanations we
year is consistent with the fi nancial statements; and
require for our audit.
(cid:188) in our opinion those reports have been prepared in accordance
We have nothing to report in these respects.
with the Companies Act 2006.
7. Respective responsibilities
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
Directors’ responsibilities
be audited has been properly prepared in accordance with the
As explained more fully in their statement set out on page 115,
Companies Act 2006.
the directors are responsible for: the preparation of the fi nancial
statements including being satisfi ed that they give a true and fair
Disclosures of principal risks and longer-term viability
view; such internal control as they determine is necessary to enable
Based on the knowledge we acquired during our fi nancial statements
the preparation of fi nancial statements that are free from material
audit, we have nothing material to add or draw attention to in
misstatement, whether due to fraud or error; assessing the Group and
relation to:
parent Company’s ability to continue as a going concern, disclosing,
(cid:188) the directors’ confi rmation within the Viability statement on page 43 as applicable, matters related to going concern; and using the going
that they have carried out a robust assessment of the principal risks concern basis of accounting unless they either intend to liquidate the
facing the Group, including those that would threaten its business Group or the parent Company or to cease operations, or have no
model, future performance, solvency and liquidity; realistic alternative but to do so.
(cid:188) the Principal Risks disclosures describing these risks and explaining Auditor’s responsibilities
how they are being managed and mitigated; and
Our objectives are to obtain reasonable assurance about whether
(cid:188) the directors’ explanation in the Viability statement of how they have the fi nancial statements as a whole are free from material
assessed the prospects of the Group, over what period they have misstatement, whether due to fraud or other irregularities (see below),
done so and why they considered that period to be appropriate, or error, and to issue our opinion in an auditor’s report. Reasonable
and their statement as to whether they have a reasonable assurance is a high level of assurance, but does not guarantee that
expectation that the Group will be able to continue in operation an audit conducted in accordance with ISAs (UK) will always detect
and meet its liabilities as they fall due over the period of their a material misstatement when it exists. Misstatements can arise
assessment, including any related disclosures drawing attention from fraud, other irregularities or error and are considered material if,
to any necessary qualifi cations or assumptions. individually or in aggregate, they could reasonably be expected to
infl uence the economic decisions of users taken on the basis of the
Under the Listing Rules we are required to review the directors’
fi nancial statements.
viability statement. We have nothing to report in this respect.
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities
198 Standard Chartered
Annual Report 2017
Irregularities – ability to detect
S
We identifi ed relevant areas of laws and regulations from our tra
sector experience, through discussion with the directors and teg
other management (as required by auditing standards), and from ic re
inspection of the Group’s regulatory correspondence. po
rt
We had regard to laws and regulations in areas that directly affect
the fi nancial statements including fi nancial reporting (including related
company legislation) and taxation legislation. We considered the
extent of compliance with those laws and regulations as part of our
procedures on the related annual accounts items.
In addition we considered the impact of laws and regulations in the
specifi c areas of regulatory capital and liquidity, conduct and fi nancial
crime including money laundering, sanctions list and market abuse D
regulations recognising the fi nancial and regulated nature of the irec
Groups activities. With the exception of any known or possible tors
non-compliance, and as required by auditing standards, our work ’ re
p
in respect of these was limited to enquiry of the directors and other o
rt
management and inspection of regulatory correspondence. We
considered the effect of any known or possible non-compliance in
these areas as part of our procedures on the related annual accounts
items. Further detail in respect of legal and regulatory matters is set
out in the key audit matter disclosures in section 2 of this report.
We communicated identifi ed laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the group R
is
to component audit teams of relevant laws and regulations identifi ed k re
at Group level, with a request to report on any indications of potential vie
existence of irregularities in these areas, or other areas directly w a
identifi ed by the component team. nd
c
a
As with any audit, there remained a higher risk of non-detection of p
ita
irregularities, as these may involve collusion, forgery, intentional l re
omissions, misrepresentations, or the override of internal controls. vie
w
8. The purpose of our audit work and to whom we
owe our responsibilities
This report is made solely to the Company’s members, as a body, F
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. IN
A
Our audit work has been undertaken so that we might state to the N
C
Company’s members those matters we are required to state to them IA
L
in an auditor’s report and for no other purpose. To the fullest extent S
permitted by law, we do not accept or assume responsibility to TA
T
anyone other than the Company and the Company’s members, E
M
as a body, for our audit work, for this report, or for the opinions we E
N
have formed. T
S
S
Michelle Hinchliffe u
p
Senior Statutory Auditor ple
for and on behalf of KPMG LLP, Statutory Auditor Chartered m
e
n
Accountants ta
15 Canada Square ry in
London E14 5GL fo
rm
27 February 2018 atio
n
199