Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 410 report information sustainability report Governance review review statements Annual Report 2022 KPMG LLP’s independent auditor’s report to the members of Barclays PLC (continued) Fraud risk communication journals posted and approved by the same 5. Our ability to detect individuals. We communicated identified fraud risks irregularities, and our response Link to key audit matters throughout the audit team and we Fraud - identifying and responding to remained alert to any indications of fraud Further details of the testing we perform risks of material misstatement due to throughout the audit. This included over the identified fraud risks for ECL and fraud communication from the Group to fair value of financial instruments are Fraud risk assessment component audit teams of relevant fraud included in the respective key audit To identify risks of material misstatement risks identified at the Group level. matters sections 4.1 and 4.2 of this report, due to fraud (“fraud risks”) we assessed as the procedures relating to those Fraud risks and our procedures to events or conditions that could indicate an estimates also address the risk of fraud. address them incentive or pressure to commit fraud or We identified five fraud risks which were Laws and regulations - identifying and provide an opportunity to commit fraud. In responding to risks of material communicated to component audit this risk assessment we considered the misstatement due to non-compliance teams. The nature of these fraud risks is following: with laws and regulations substantially unchanged from the prior • Our meetings throughout the year with Risk assessment year. The fraud risks we identified are set the Group Head of Risk, Group Head of out below: We identified areas of laws and regulations Compliance and Group Head of Legal that could reasonably be expected to have 1. IFRS 9 ECL: Judgemental qualitative and inspection of Barclays’ internal a material effect on the financial adjustments made to the ECL provision ethics and compliance reporting statements. For this risk assessment, summaries, including those concerning 2. Valuations - risk relating to matters considered include the following: investigations and regulatory unobservable pricing inputs used to • our general commercial and sector correspondence; price level 3 fair value instruments experience; • Enquiries of operational managers, 3. Revenue recognition: Cut-off of the • inquiries with the directors and other internal audit, and the Board Audit recognition of revenue from investment management (as required by auditing Committee and inspection of policy banking advisory fees standards); documentation as to the Group’s high- 4. Existence and accuracy of unconfirmed level policies and procedures relating to • inspection of the Group’s key regulatory over-the-counter bilateral derivatives and legal correspondence; • detecting and responding to the risks 5. The risk of management override of of fraud as well as whether they have • inspection of the policies and controls, common with all audits under knowledge of any actual, suspected or procedures regarding compliance with ISAs (UK). alleged fraud; and laws and regulations; As required by auditing standards and • the internal controls established to • relevant discussions with the Group’s taking into account our overall knowledge mitigate risks related to fraud, external legal counsel; of the control environment, we performed including the appropriateness and procedures to address the above risks, the • relevant discussions with the Group’s impact of changes made to these risk that Group and component key regulatory supervisors including the controls to facilitate remote/hybrid management may be in a position to make Prudential Regulation Authority, working; inappropriate accounting entries and the Financial Conduct Authority, Federal • The Group’s remuneration policies and risk of bias in accounting estimates and Reserve Board, Federal Deposit key drivers for remuneration and bonus judgements. Insurance Corporation and the Joint levels; Supervisory Team; and Our audit procedures included evaluating • Discussions among the engagement the design and implementation and • the Group’s own assessment of the team regarding how and where fraud operating effectiveness of relevant risks of non-compliance with laws and might occur in the financial statements internal controls, assessing significant regulations, and the internal controls and any potential indicators of fraud. accounting estimates for bias, as well as established to mitigate these. This The engagement team includes audit substantive procedures to address the assessment was considered and partners and staff who have extensive fraud risks. approved by the Board Audit experience of working with banks, and Committee. These procedures also included identifying this experience was relevant to the journal entries to test based on risk criteria discussion about where fraud risks may and comparing the identified entries to arise. The discussions also involved our supporting documentation. forensic specialists to assist us in Incorporating unpredictability into our identifying fraud risks based on audit: A requirement of the auditing discussions of the circumstances of the standards is that we undertake procedures Group and Company, including which are deliberately unexpected and consideration of fraudulent schemes could not have reasonably been predicted that had arisen in similar sectors and by Barclays’ management. As an example, industries. The forensic specialists we update our criteria for selecting journals participated in the initial fraud risk with a higher risk of management override assessment discussions and were for testing each year so that the selection criteria do not become predictable. This consulted as required where further year we added additional key words we guidance was deemed necessary. searched for in journal descriptions and also introduced new search criteria for