Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information Audit team structure All audit work for the purposes of the Group audit was undertaken by the primary audit team. The Senior Statutory Auditor is based in the UK, but since the Group management and operations reside in Georgia, the Group audit team operates as an integrated primary team including members from the UK, Georgia, Russia and the CIS. The UK members of the audit team continued to follow a programme of planned visits that has been designed to make sure that the Senior Statutory Auditor visits the principal components of the Group. There was regular interaction between team members in each jurisdiction and the Senior Statutory Auditor and the UK members of the audit team visited Georgia five times during the current year’s audit. These visits involved discussing the audit approach with the local team members and any issues arising from their work, as well as meeting with local management. In addition, the UK members of the team interacted regularly with the Georgia members of the team where appropriate during various stages of the audit and were responsible for the scope and direction of the audit process. This, together with the additional procedures performed at the UK level, gave us appropriate evidence for our opinion on the financial statements. Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group to be GEL 20 million (2017: GEL 25 million), which was approximately 5% (2017: 5%) of forecast profit from continuing operations before tax and non-recurring items at the time of our audit planning. We consider that this adjusted profit figure best represents the results of the underlying operations of the Group and as such provides us with an appropriate basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures. Although the actual profit for the financial year exceeded the forecast, we decided to retain the original materiality amount. As a consequence, materiality is approximately 4% of actual profit from continuing operations before tax and non-recurring items. Starting Profit before tax from continuing operations: GEL 437.5 million basis • Adjustments • Non-recurring items: GEL 57.2 million Materiality • Totals GEL 494.7 million (materiality basis) • Materiality of GEL 20.0 million (approx. 4% of materiality basis) We determined materiality for the Parent Company to be GEL 70 million, which is approximately 2% of equity of £3,461m. We consider that, in respect of the Parent Company, equity is most relevant to the stakeholders and is best representative of the economic size of the entity and as such provides us with an appropriate basis for determining the nature, timing and extent of risk assessment procedures, identifying and assessing the risk of material misstatement and determining the nature, timing and extent of further audit procedures. Annual Report 2018Bank of Georgia Group PLC 161