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BP » Topics » Authorization of financial statements and statement of compliance with International Financial Reporting Standards

This excerpt taken from the BP 20-F filed Mar 4, 2008.
Authorization of financial statements and statement of compliance with International Financial Reporting Standards
The consolidated financial statements of the BP group for the year ended 31 December 2007 were authorized for issue by the board of directors on 22 February 2008 and the balance sheet was signed on the board’s behalf by P D Sutherland and Dr A B Hayward. BP p.l.c. is a public limited company incorporated and domiciled in England and Wales. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and IFRS as adopted by the European Union (EU). IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the group’s consolidated financial statements for the years presented. The significant accounting policies of the group are set out below.

Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations issued and effective for the year ended 31 December 2007, or issued and early adopted.
     In preparing the consolidated financial statements for the current year, the group has adopted the following new IFRS, amendment to IFRS and IFRIC interpretations:
– IFRS 7 ‘Financial Instruments: Disclosures’.
– Amendment to IAS 1 ‘Presentation of Financial Statements’ – Capital Disclosures.
– IFRIC 10 ‘Interim Financial Reporting and Impairment’.
– IFRIC 11 ‘IFRS 2 – Group and Treasury Share Transactions’.

     Further information regarding the impact of adoption is given below.
     The accounting policies that follow have been consistently applied to all years presented with the exception of those relating to financial instruments under IAS 32 ‘Financial Instruments: Presentation’ (IAS 32) and IAS 39 ‘Financial Instruments: Recognition and Measurement’ (IAS 39) which have been applied with effect from 1 January 2005. The standards in force at the time of BP’s first time adoption of IFRS in 2005 were applied retrospectively to 1 January 2003, BP’s date of transition to IFRS. However, BP elected to take advantage of the exemption allowing comparative information on financial instruments to be prepared in accordance with the group’s previous accounting policies under UK generally accepted accounting practice (UK GAAP). The effect on shareholders’ equity of this change on 1 January 2005 is shown in the group statement of recognized income and expense and related mainly to all derivative financial instruments being brought on to the group balance sheet at fair value and available-for-sale investments being measured at fair value rather than at cost.
     The consolidated financial statements are presented in US dollars and all values are rounded to the nearest million dollars ($ million), except where otherwise indicated.
     For further information regarding the key judgements and estimates made by management in applying the group’s accounting policies, refer to Critical accounting policies on pages 56 to 57, which forms part of these financial statements.

Basis of consolidation
The group financial statements consolidate the financial statements of BP p.l.c. and the entities it controls (its subsidiaries) drawn up to 31 December each year. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct and indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. Subsidiaries are consolidated from the date of their acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intercompany balances and transactions, including unrealized profits arising from intragroup transactions, have been eliminated in full. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Minority interests represent the portion of profit or loss and net assets in subsidiaries that is not held by the group.

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