As an audit assistant you are on the audit team assigned to audit, BP, you are working on the 2015 audit. The following are the financial statements that have been submitted by the Chief financial officer and the Audit manager has assigned you to analyse them.

Financial Statements: BP Group

Consolidated Statement of Financial Position

Notes

31.12.2015 million31

.12.2014 million

ASSETS

Cash and cash equivalents

3

338.8

401.5

Inventories

4

657.0

571.5

Trade receivables

5

483.1

449.2

Income tax receivables

22

50.5

75.0

Other current financial assets

6

76.8

93.6

Other current assets

7

78.6

91.8

Current assets

1,684.8

1,682.5

Deferred taxes

8

219.8

178.8

Property, plant and equipment

9

232.6

224.0

Intangible assets

10

403.3

391.4

Investments in associates

11

15.2

15.2

Other non-current financial assets

12

39.3

34.6

Other non-current assets

12

25.2

23.4

Non-current assets

935.5

867.5

Total assets

2,620.3

2,549.9

LIABILITIES AND SHAREHOLDERS' EQUITY

Current financial liabilities

13

14.0

19.8

Trade payables

13

519.7

515.2

Income taxes

22

49.7

58.8

Other current provisions

16

52.7

69.5

Liabilities from acquisitions

17

3.0

0.5

Other current financial liabilities

13

115.9

51.0

Other current liabilities

13

125.1

107.8

Current liabilities

880.0

822.6

Deferred taxes

8

64.2

54.6

Pension provisions

15

23.8

26.0

Other non-current provisions

16

23.5

23.1

Liabilities from acquisitions

17

0.0

2.5

Other non-current financial liabilities

13

7.2

0.3

Other non-current liabilities

13

2.2

2.5

Non-current liabilities

121.0

109.0

Subscribed capital

18

38.6

38.6

Group reserves

18

162.5

176.0

Retained earnings

18

1.441.7

1.412.0

Treasury stock

18

31.4

31.4

Equity attributable to the shareholders of theparen

t

1,611.3

1,595.2

Non-controlling interest

18

8.0

23.1

Shareholders' equity

18

1,619.3

1,618.3

Total liabilities and shareholders' equity

2,620.3

2,549.9

Consolidated Income Statement

Notes

2015 million

2014 million

Sales

25

3,387.4

2,972.0

Cost of sales

25

1,847.2

1,586.7

Gross profit

25

1,540.2

1,385.4

Royalty and commission income

16.5

19.4

Other operating income and expenses

20

1,460.5

1,276.8

Operating income (EBIT)

96.3

128.0

Result from associated companies

21

1.0

1.3

Financial income

21

11.2

4.8

Financial expenses

21

23.4

12.3

Financial result

11.2

6.2

Earnings before taxes (EBT)

85.0

121.8

Taxes on income

22

23.3

37.0

Consolidated net earnings for the year

61.7

84.8

attributable to:

Non-controlling interest

18

24.6

20.8

Equityholdersoftheparent(netearnings)

37.1

64.1

Earnings per share ()

23

2.48

4.29

Earnings per share () - diluted

23

2.48

4.29

Weighted average shares outstanding (million)

23

14.940

14.940

Weighted average shares outstanding, diluted (million)

23

14.940

14.940

Required

a) Describe what information and explanations you will ask from BP management and briefly explain the audit work you will perfume before you start the analytical review.(10marks)

b)Discussomeoftheanalyticalreviewthatyouwill performonBP financial statements above.(5marks)

c) Having done the analytical reviews, highlight the financial statements balances where you will need further explanation, and explain the substantive tests that you will perform to verify management assertion on the said issues (20marks)

d)In the notes to the financial statements, BP management have stated that the financial statementsareinaccordancewiththeapplicablefinancialreportingframework,andthatthefirm is a going concern. Basing on International Standard on Auditing (ISA) 570 going concern and the review of the above financial statement above , Discus your views on BPs ability to continue as a going concern as claimed by management?. (5marks)

e)The audit manager has reminded you that among the issues that should be checked is Presentation and disclosure of items in the financial statements and he has emphasised that it should be in accordance with applicable reporting framework. Identify some presentation issues that you are likely to raise and citing relevant financial reporting standard offer recommendation for adjustment to management (10 marks)