INDEPENDENT AUDITOR'S REPORT Scoping:

 Auditors have prepared financial statement of the parent Full audit of

company and group companies
95% revenue (last year 96%)
 Notes – 1-17 -> Parent Company FS
 Notes 1-36 -> Group Financials 95% net assets (last year 92%)
 For Group Financial Statement
 they have applied IFRS
 For parent Company
 merged with Booker -> acquired business and became a
 UK Accounting Standard
part of the audit scope
 Auditor is independent of the Group and Parent Company
 one stop (group's convenience retail business) is no longer
and audit is done in an ethical standard of the Financial
part of the audit, as it is no longer significant.
Reporting council (FRC)

 symbolizes new Key Audit matters  Significant changes in approach

 Symbolizes Key audit matters same as the prior year.
New key audit maters this year were:
1 acquisition (asset) accounting judgements and presentations
of results.
2. Presentation & disclosure TESCO Bank: loan impairment
1) Booker acquisition accounting judgment & presentation
of results
2) IFRS 16 presentation and disclosure
3) Tesco Bank: loan impairment
 inventory valuation is not considered as a key audit matter
due to the reduction in the required level of management
judgment.

3. Materiality  Going Concern

 reviewed Director's statement about considering it
-> considered to base materiality on profit before tax before appropriate to adopt going concern basic of accounting
exceptional items and amortization of acquired intangibles.  Risk Assessments made:
o Nature of the Group
-> Materiality  (4.7% $80m) as opposed to (4.4% $ 50m) last
o Business Model
year.
o Related Risk like Brexit
 o Requirement of applicable financial reporting
framework
o system of internal control
 Evaluated director's assessment of continuing as going
concern challenging underlying data and key assumptions,
plans for future actions.
 Required to state whether the company has any material to
add or draw attention to that statement by listing Rule 9.68
R(3)
 Required to report if the statement is materially
inconsistent by the knowledge obtained in the audit.
 The auditors have confirmed that they have nothing
material to report, add or draw attention to in respect of
the matters.
 Principle Risks & Viability Statement
-> They are required to state whether they have anything
material to add or draw attention to in relation to:
a) Principle risks and explain how they are being managed
or mitigated.
b) Robust assessment of principle risks facing the group like
those which business model future performance, solvency
or liquidity.
c) Assessment of prospects of the group whether they will
be able to continue operation and meet its liabilities.
d) Director's statement relating to the prospect of the group
is materiality inconsistent confirmation – Nothing material
to report, add or draw attention to in respect of these
matters.
* Key Audit Matters
-> Most significant in audit financial statement of current
period.
-> include most significant assessed risks of material
misstatement that were identified.
-> They have an effect on:
* Overall Audit strategy
* Allocation of Resources
* Directing efforts of the engagement team.
-> These matters were addressed in audit and they state
that they do not provide a separate opinion on these
matters.
* Booker IFRS 3 acquisition accounting judgment
-> The completeness and valuation of the separately
identifiable assets, and the fair value valuation of land and
buildings are reasonable.
* Presentation of Booker Results.
-> Inclusion of Booker's result in UK and R01 segment as
operating segment is in compliance with IRFS 8.
-> The company has well reflected of how CODM monitors
performance and allocates resources to the business.
 IFRS 16 Presentation and Disclosure
The key estimates and judgments underpinning the group's
IFRS 16 and impact assessment are appropriate.
 Tesco Bank: Loan Impairment
 The management's provision is reasonably stated and is
supported by a methodology that is consistently applied
and compliant with IFRS 9.
 Store Impairment Review
 Actions are required by the group to achieve the OUTCOMES:
impairment forecasts over medium term.
 Assumptions in impairment model (specially in value in use  Use of materiality in planning the scope of audit as well as
calculations) were within an acceptable range. evaluating the result of the work.
 Overall level of net reversal of impairment was reasonable.  Major Key Performance indicators are Profit before tax,
 Risk associated with Brexit (Britain’s exist from the EU) is Exceptional Items and Amortization of Acquired Intangibles.
considered to be appropriate.
2018/19 2017/18
 Recognition of Commercial income
Profit before tax 4.7% 4.4%
 Satisfactory
before exceptional
 The disclosure provided based on the types of rebate items
income received, supplier, retailer and impact on group's Amortization of £1.716m £1.45m
Balance sheet produces appropriate understanding. acquired intangibles
 Pension Obligation Valuation Materiality Less than 1% Less than 1%
 satisfied with the valuation, as it in an acceptable range.
 Contingent liabilities
 The materiality that exists in the group’s net assets is 0.5%
 complete and appropriate disclosure
(2017/18: 0.5%)
 Presentation of the Group's Income Statement
 Parent Company of the group does not generate significant
Non – recurring income & income and expenses have been
revenues but instead incurs costs.
included within profit before exceptional items and
 Net assets are of most relevance to users of financial
amortization of acquired intangibles and that inclusion is
statements.
appropriate.
 Group has subsidiary grocery retail operations in eight
 deficiency in IT has been recorded.
countries, interests in a number of other businesses both in
 Retail –Technology environment including IT security
the UK and internationally.
 The Remediation plan is multi – year program and not yet
 Shared service center is in Bengaluru, India which provides
complete such that weaknesses remain in the control
accounting & administrative support.
environment.
 Most significant component of the group is its retail
 Management's actions have reduced the number of
business in the UK.
deficiencies.
 Auditor’s Responsibilities:
 Objectives are to obtain reasonable assurance on  Concluded that the firm’s strategic report and Director’s
the financial statements, check the material misstatement report is consistent and in accordance with applicable
and to issue an opinion via auditor’s report. legal requirements.
 Further description of the responsibilities for the  They have not identified any material misstatements in
audit of the financial statements is located on the Financial the strategic report or director’s report.
Reporting Council’s website.  Matters reported by the audit team:
 Auditors design and perform audit procedures
Matters Reported Verdict/ Claim
responsive to the risks of material misstatement, caused
Adequacy of explanations Inadequate and
due to any fraud or errors and provide a basis of their
received and accounting Inaccurate
opinion based on audit evidence. records
 Have identified potential fraud in the following
areas: Disclosure of Director’s Not disclosed
I. Timing & Recognition of Commercial Income remuneration
II. Posting of unusual journals & complex transactions Auditor Tenure Contract period is over
III. Manipulating group’s alternative performance by the date of audit
Consistency of Audit Consistent
indicators to meet the targets
Report
IV. Consideration of several laws & regulations Use of the Report Solely by the Company
 Procedures involved in Audit response to risks members
identified
 Reviewing the financial statement disclosures
 Enquiring the management
 Performing analytical procedures
 Reading minutes of meetings, reviewing internal audit
reports and correspondence
 Testing appropriateness of accounting systems
 They have also communicated relevant identified laws &
regulations and potential fraud risks to all engagement
team members.