Consolidated financial statements of the BP group
Independent auditor’s report on the Annual Report and Accounts to the members of BP p.l.c.
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2014 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRS as adopted by
the European Union;
• the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice;
and
• the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
Emphasis of matter – significant uncertainty over provisions and contingencies related to the Gulf
of Mexico oil spill
In forming our opinion on the group financial statements we have considered the adequacy of the
disclosure in Note 2 to the financial statements concerning the provisions, future expenditures
which cannot be reliably estimated and other contingent liabilities related to the claims,
penalties and litigation arising from the Gulf of Mexico oil spill. The total amount that will
ultimately be paid by BP in relation to all obligations arising from this significant event is
subject to significant uncertainty and the ultimate exposure and cost to BP is dependent on many
factors, including but not limited to, the determinations of the Courts and Regulatory authorities
in the US. Significant uncertainty exists in relation to the amount of claims that will become
payable by BP and the amount of fines that will be levied on BP (including any ultimate
determination of BP’s culpability based on negligence, gross negligence or wilful misconduct). The
outcome of litigation and the cost of the longer term environmental consequences of the oil spill
are also subject to significant uncertainty. For these reasons it is not possible to estimate
reliably the ultimate cost to BP. Our opinion is not qualified in respect of these matters.
Separate opinion in relation to IFRS as issued by the International Accounting Standards Board
As explained in Note 1 to the consolidated financial statements, the group in addition to applying
IFRS as adopted by the European Union, has also applied IFRS as issued by the International
Accounting Standards Board (IASB). In our opinion the consolidated financial statements comply with
IFRS as issued by the IASB.
What we have audited
We have audited the financial statements of BP p.l.c. for the year ended 31 December 2014 which
comprise the Group income statement, the Group statement of comprehensive income, the Group
statement of changes in equity, the Group and Parent Company balance sheets, the Group and Parent
Company cash flow statements, the Parent Company statement of total recognized gains and losses and
the related notes. The financial reporting framework that has been applied in the preparation of
the group financial statements is applicable law and International Financial Reporting Standards
(IFRS) as adopted by the European Union. The financial reporting framework that has been applied in
the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of directors’ responsibilities set out on page 90, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view. Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and International Standards on Auditing (UK
and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the group’s and parent company’s circumstances and have been
consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial statements. In
addition, we read all the financial and non-financial information in the Annual Report to identify
material inconsistencies with the audited financial statements and to identify any information that
is apparently materially incorrect based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Our assessment of risks of material misstatement
We identified the following risks that have the greatest effect on the overall audit strategy; the
allocation of audit resource; and in directing the efforts of the audit engagement team:
• the determination of the liabilities, contingent liabilities and disclosures arising from the
significant uncertainties related to the Gulf of Mexico oil spill
(See AC and AP)*;
• the significant decline in oil and gas prices since late 2014 has the potential for a material
impact on the carrying value of the group’s assets. We reconsidered our risk assessment at the year
end to recognise this significant development (See AC and AP)*;
• the estimate of oil and gas reserves and resources which has a significant impact on impairment
tests, depreciation, depletion & amortisation and decommissioning provisions (See AC and AP)*;
• unauthorized trading activity within the Integrated Supply and Trading function and the potential
impact on revenue (See AC)*;
• BP’s ability to exercise significant influence over Rosneft and the consequent accounting for the
interest in Rosneft using the equity method
(See AC and AP)*;
1. The maintenance and integrity of the BP p.l.c website is the responsibility of BP p.l.c.; the
work carried out by the auditors does not involve consideration of these matters and, accordingly,
the auditors accept no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
* These risks are discussed in other areas of this report as noted by the following key: AC – see
Audit Committee Report on pages 64 to 67.
AP – see Financial statements—Note 1 Significant accounting policies, judgements, estimates and
assumptions on pages 100 to 110. This page does not form part of BP’s Annual Report on Form 20-F as
filed with the SEC.
BP Annual Report and Form 20-F 2014 91
With the exception of the risk related to the recent significant decrease in the oil price the
other risks are consistent with the prior year. The risk we identified in the prior year related to
the determination of the fair value of the assets and liabilities of the Rosneft business on
acquisition of the equity interest is not relevant to the current period as the acquisition was
completed and accounted for in the prior year.
Our application of materiality
We quantify materiality in planning and executing the audit and in evaluating the materiality of
misstatements on the financial statements and the effect they have on our audit. In determining if
the financial statements are free from material error, we define materiality as the magnitude of an
omission or misstatement that, individually or in the aggregate, in light of the surrounding
circumstances, could reasonably be expected to influence
the economic decisions of the users of the financial statements. The evaluation of materiality
requires professional judgement and the consideration of both qualitative and quantitative factors.
We determined materiality for the group to be $1 billion (2013 $1 billion), which represents 5% of
underlying replacement cost profit (as defined on page 255) before tax having added back charges
related to the Gulf of Mexico oil spill response. We used this measure to calculate our materiality
to exclude the impact of both changes in crude oil and product prices and items disclosed as
non-operating items that can significantly distort the results. This provides a basis for assessing
the importance of misstatements and in determining the scope of our audit procedures.
We determined, based on our risk assessment and consideration of the group’s control environment,
that performance materiality be set at 75% of our materiality for the group, namely at $750 million
(2013 $750 million). Performance materiality is the application of materiality at an individual
account or balance level and is set to reduce to an appropriately low level the probability that
the