104 JUST GROUP PLC Annual Report and Accounts 2019
INDEPENDENT AUDITOR’S REPORT CONTINUED
The risk
Our response
The impact of uncertainties due to the UK exiting the European Union on our audit The risk compared to the prior year is unchanged Refer to page 72 (Audit Committee report), page 115 (accounting policy) and pages 123 to 156 (financial disclosures)
Unprecedented levels of uncertainty All audits assess and challenge the reasonableness of estimates, in particular as described in valuation of insurance liabilities, valuation of loans secured by residential mortgages, recoverability of parent company’s investment in subsidiaries and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements (see above). All of these depend on assessments of the future economic environment and the Group’s future prospects and performance. In addition, we are required to consider the other information presented in the Annual Report including the principal risks disclosure and the viability statement and to consider the directors’ statement that the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. Brexit is one of the most significant economic events for the UK and its effects are subject to unprecedented levels of uncertainty of consequences, with the full range of possible effects unknown.
We developed a standardised firm-wide approach to the consideration of the uncertainties arising from Brexit in planning and performing our audits. Our procedures included: Our Brexit knowledge: • We considered the directors’ assessment of Brexit-related sources of risk for the Group’s business and financial resources compared with our own understanding of the risks. We considered the directors’ plans to take action • When addressing valuation of insurance liabilities, valuation of loans secured by residential mortgages, recoverability of parent company’s investment in subsidiaries and the appropriateness of the going concern basis of preparation of the financial statements and other areas that depend on forecasts, we compared the directors’ analysis to our assessment of the full range of reasonably possible scenarios resulting from Brexit uncertainty and, where forecast cash flows are required to be discounted, considered adjustments to discount rates for the level of remaining uncertainty. Assessing transparency: • As well as assessing individual disclosures as part of our procedures on valuation of insurance liabilities, valuation of loans secured by residential mortgages, recoverability of parent company’s investment in subsidiaries and the appropriateness of the going concern basis of preparation of the financial statements, we considered all of the Brexit related disclosures together, including those in the strategic report, comparing the overall picture against our understanding of the risks. Our findings See the Key Audit Matters of valuation of insurance liabilities, valuation of loans secured by residential mortgages and recoverability of parent company’s investment in subsidiaries for our findings in relation to these estimates and the associated disclosures. As reported under going concern above, we found the disclosures in relation to going concern to be proportionate. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit. to mitigate the risks. Sensitivity analysis:
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