Strategic Shareholder Climate and Risk Financial Financial Barclays PLC 176 report information sustainability report Governance review review statements Annual Report 2022 Directors’ report: Board Audit Committee report (continued) The AQR inspection covered three key specific country which did not specify their External auditor audit matters (impairment allowances on legal names. Following an external audit tender in 2015, loans and advances, valuation of financial The Group undertakes an annual formal KPMG was appointed as Barclays’ instruments held at fair value and IT user assessment of KPMG’s performance, statutory auditor with effect from the access management) as well as four other independence and objectivity. This 2017 financial year. Stuart Crisp of KPMG is areas of audit focus (general IT controls assessment was conducted in early 2023, Barclays’ lead audit engagement partner and automated IT controls, settlement by way of a questionnaire completed by and was appointed to this role with effect and clearing and the overall payments key stakeholders across the Group, for the 2022 financial year following the process, existence and accuracy of including the chairs of the Board Audit retirement of the previous lead audit unconfirmed OTC bilateral derivatives and Committees of the Group’s main engagement partner, Michelle Hinchliffe. cash and cash equivalents). The AQR also operating companies (BBUKPLC, Barclays Assessing external auditor inspected the work carried out by KPMG in US LLC and Barclays Europe). The effectiveness, objectivity and assessing the restatement that was questionnaire was designed to evaluate independence and non-audit services reported in the Group's first quarter’s KPMG’s audit process and addressed The Committee is responsible for results, arising from the impact of the matters such as the quality of planning and assessing the effectiveness, objectivity Over-issuance of Securities. The final communication, technical knowledge, the and independence of the Group’s auditor, report from the AQR was received last level of scrutiny and challenge applied and KPMG. This responsibility was discharged week and the Committee was pleased to KPMG’s understanding of the business. by the Committee throughout the year at note that there were no significant findings In line with the approach taken in previous formal meetings, during private meetings and that the AQR called out examples of years, in 2022 KPMG also nominated a with KPMG and through discussions with best practice in KPMG’s work on IT senior partner of the audit team to have key Group executives. In addition to the automated controls, on the partial model specific responsibility for ensuring audit matters noted above, the Committee also: rebuild and evaluation of reasonable quality. The Committee met with the • approved the terms of the audit ranges for expected credit losses, on partner concerned on a number of engagement letter and associated fees, valuation models and on their climate risk occasions, without the lead audit on behalf of the Board assessment including their reporting engagement partner present, to receive a thereon in the audit report. There were a • discussed the Group Policy on the report on his assessment of audit quality. number of areas included for Provision of Services by the Group Taking into account the result of all of the improvement, which the Committee will be Statutory Auditor (the Policy) and above, the Committee considered that discussing with KPMG following a meeting reviewed regular reports from KPMG maintained its independence and to be arranged between the current and management on the non-audit services objectivity and that the audit process was incoming Chair of the Committee with the provided by KPMG to Barclays effective. AQR. The Committee noted however that • evaluated and recommended to the KPMG’s proposed actions did not envisage Non-audit services Board for approval revisions to the significant additional work, but clearly In order to safeguard the auditor’s Group Policy on Engagement of recognised the need to better articulate independence and objectivity, Barclays has Employees and Workers of the the rationale for and evidence of the audit in place the Policy setting out the Statutory Auditor and ensured work carried out in the relevant areas. circumstances in which the auditor may be compliance with this by regularly The PCAOB’s inspection also covered the engaged to provide services other than assessing reports from management impairment allowances on loans and those covered by the Group audit. The detailing any appointments made advances and the valuation of financial Policy applies to all Barclays’ subsidiaries • received reports on KPMG’s instruments held at fair value both as and other material entities over which assessment of the financial impact of regards the valuations themselves and the Barclays has significant influence. The core the Over-issuance of Securities on both presentation and disclosure thereof. In principle of the Policy is that non-audit the Group's UK and US financial addition, the PCAOB inspected the work services (other than those legally required statements carried out by KPMG on their revised audit to be carried out by the Group’s auditor) • was briefed by KPMG on critical accounting report on the restated financial should be performed by the auditor only in judgements and estimates and internal statements included in the amended 2021 certain controlled circumstances. The controls over financial reporting 20-F, which incorporated the impact of the Policy sets out those types of services that Over-issuance of Securities. KPMG have are permitted (Permitted services). A • met with senior members of the KPMG not yet received a report from the PCAOB, summary of the Policy can be found at Barclays team both from the UK and US but have informed us that the PCAOB home.barclays/who-we-are/our- to discuss the approach to the 2022 verbally communicated to them that they governance/auditor-independence/. audit had no formal comments on the work The Policy is reviewed on an annual basis • assessed any potential threats to supporting their audit opinion. KPMG did to ensure that it is fit for purpose and that independence that were self-identified inform us that the PCAOB had provided it reflects applicable rules and guidelines. and reported by KPMG, all of which were them with one comment as regards The Policy is aligned with both the FRC’s regarded by the Committee as being required communications with the requirements and KPMG’s own internal adequately addressed. Committee in respect of the inadvertent policy on non-audit services for FTSE 350 KPMG’s audit of Barclays' 2021 financial omission of two overseas KPMG member companies, which broadly restricts non- statements was subject to inspection by firms who provided some limited audit work to services that are ‘closely the AQR team from the FRC and the US assistance on the audit and a reference to related’ to the audit. PCAOB. three other KPMG member firms in a During 2022, the Committee reviewed and approved the Policy in its current form on