In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed at each reporting unit and we used component auditors within PwC UK, from other PwC network firms and from other audit firms operating under our instruction, who are familiar with the local laws and regulations in each of these territories to perform this audit work. Accordingly, of the Group’s 246 active reporting units, we identified 54 which, in our view, required a full audit of their complete financial information in order to ensure that sufficient appropriate audit evidence was obtained. The reporting units on which a full audit of their complete financial information was performed accounted for 70% of Group revenue. Of these reporting units, three were considered to be significant components, due to their size and/or risk circumstances; a UK treasury reporting unit, the reporting unit responsible for the A350 programme at Western Approach in the UK and an Aerospace reporting unit in Sweden. Specific audit procedures on certain balances and transactions were performed at a further 32 reporting units with due consideration paid to obtaining global coverage on a rotational basis. Specific audit procedures were also performed at the joint venture investment in China by another audit firm who reported to PwC in the UK. This joint venture accounted for 96% of the share of post-tax earnings of equity accounted investments in the Consolidated income statement. The Group consolidation, financial statements disclosures and a number of centralised functions were audited by the Group engagement team at the head office. These included, but were not limited to, central procedures on post-employment obligations, derivative financial instruments, UK and corporate taxation and goodwill and intangible asset impairment assessments. We also performed Group level analytical procedures on all of the remaining out of scope active reporting units to identify whether any further audit evidence was needed, which resulted in no extra testing being required. The Company was also subject to a full scope audit. The Group engagement team visits component auditors based on significance and/or risk characteristics, as well as on a rotational basis to ensure coverage across the Group. In the current year, the Group engagement team visited all significant components and a number of other component auditors in multiple locations in the Netherlands and the USA, as well as being responsible for all in scope UK reporting locations performing full scope audits and specified audit procedures. Additionally the Group audit team was in contact, at each stage of the audit, with all component teams through regular written communication in line with detailed instructions issued by the Group audit team and though holding global planning calls. In addition, for a number of the component teams, the Group team discussed in detail the planned audit approach at the component level, was in attendance at local audit close meetings and discussed the detailed findings of the audit with the component team.
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall Group materiality How we determined it Rationale for benchmark applied