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Rothschild & Co | Annual Report 2017
177
1. Overview
4. Financial statements
3.
Management report
2. Business review
Statutory auditors’ report on the consolidated financial
statements for the nine-month period ended 31 December 2017
This is a translation into English of the statutory auditors’ report on the consolidated financial statements of the Company issued in French and it is
provided solely for the convenience of English speaking users.
This statutory auditors’ report includes information required by European regulation and French law, such as information about the appointment of the
statutory auditors or verification of the management report and other documents provided to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
Dear Shareholders,
Opinion
In compliance with the engagement entrusted to us by your General
Meeting, we have audited the accompanying consolidated financial
statements of Rothschild & Co for the nine-month period ended
31 December 2017.
In our opinion, the consolidated financial statements give a true and
fair view of the assets and liabilities and of the financial position of the
Group as at 31 December 2017 and of the results of its operations for the
nine-month period then ended in accordance with International Financial
Reporting Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the
Audit Committee.
Basis for Opinion
Audit framework
We conducted our audit in accordance with professional standards applicable
in France. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the
Statutory Auditors’ Responsibilities for the Audit of the Consolidated
Financial Statements section of our report.
Independence
We conducted our audit engagement in compliance with independence
rules applicable to us, for the period from 1 April 2017 to the date of our
report and specifically we did not provide any prohibited non-audit services
referred to in Article 5(1) of Regulation (EU) No 537/2014 or in the French
Code of ethics (code de déontologie) for statutory auditors.
Justification of Assessments –
Key Audit Matters
In accordance with the requirements of Articles L. 823-9 and R. 823-7
of the French Commercial Code (code de commerce) relating to the
justification of our assessments, we inform you of the key audit matters
relating to risks of material misstatement that, in our professional
judgement, were of most significance in our audit of the consolidated
financial statements of the current period, as well as how we addressed
those risks.
These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on specific items of the
consolidated financial statements.
1 Valuation of financial instruments carried
at fair values
Key audit matter
As at 31 December 2017, the Group holds for trading purposes financial
instruments categorised as Level 2 and Level 3 according to the IFRS fair
value hierarchy. These financial instruments are presented at fair value on
the asset side of the balance sheet for €566 million, representing 5% of
total assets.
The fair value of these financial assets, whose market prices are not
available or the valuation parameters are not observable, is determined
using valuation techniques or complex internal and external valuation
models and requires exercise of judgement.
We considered that the valuation of Level 2 and 3 financial instruments
recognised at fair value was a key audit matter for the consolidated financial
statements due to the exercise of the judgement that it requires and its
sensitivity to the assumptions made.
Information on the valuation of financial instruments is presented in
note IV.E, note V.1 and note V.3 of the consolidated financial statements
on pages 140 to 145 and page 147.
Our response
Our procedures consisted of:
• understanding of the internal control and governance put in place by
Management to identify and value the financial assets in level 2 and 3
of the fair value hierarchy;
• assessing the soundness of the methodology applied and the relevance
of the parameters and assumptions used by the Group to determine the
fair values of these financial assets;
• testing the valuations used by the Group for these level 2 and 3 financial
assets.
We have ensured that the information presented in the financial statements
is appropriate.