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Assurance statement

Deloitte assurance statement
2017

Independent assurance statement by Deloitte LLP to BAE Systems plc on the Corporate Responsibility (CR) of the BAE Systems website for the year ended 31 December 2017, corresponding performance indicators at pages 17, 24, 25, 61, 63 and 65 of the BAE Systems 2017 Annual Report.

What we looked at: Scope of our work

BAE Systems plc (‘BAE Systems’) engaged us to perform limited assurance procedures on the Group level compilation of selected corporate responsibility (CR) performance indicators for the year ended 31 December 2017.  The assured indicators are:
 
 

Safety

  • Recordable Accident Rate (per 100,000 employees)
  • Number of fatalities
  • Number of major injuries
  • Cause of major injuries recorded (%)

 

Responsible Business Conduct

  • Employee enquires of Ethics Helpline
    • Volume (number)
    • Category of call (number)
  • Number of dismissals for reasons relating to unethical behaviour

 

Diversity and Inclusion

  • Age diversity
    • 24 and under
    • 25-34
    • 35-49
    • 50-59
    • 60+
  • Gender diversity
    • Male
    • Female

 

Community Investment

  • Total value of Community Investment program donations (£m)

 

Environment

  • Carbon dioxide equivalent (tCO2e) (“carbon footprint”)
    • Scope 1
    • Scope 2 (location based)
    • Scope 3
The Group level safety, business conduct, diversity and inclusion, community investment and environmental performance indicators are published on the webpage http://www.baesystems.com/en/our-company/corporate-responsibility, indicated with accompanying footnotes. The corresponding marked performance indicators are also published at pages 17, 24, 25, 61, 63 and 65 of the BAE Systems 2017 Annual Report.

 

What standards we used: basis of our work, criteria used and level of assurance

Our work was carried out by a multi-disciplinary team of CR and business ethics assurance specialists in accordance with the International Standard on Assurance Engagements 3000 (ISAE 3000) (Revised). To achieve limited assurance the ISAE 3000 (Revised) requires that we review the processes, systems and competencies used to compile the areas on which we provide assurance. This is designed to give a similar level of assurance to that obtained in the review of interim financial information. It does not include the detailed testing of source data or the operating effectiveness of processes or internal controls. 
 
Our engagement provides limited assurance as defined in ISAE 3000. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement and consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.

For the selected CR performance indicators we planned and performed the work to provide limited assurance as to whether the BAE Systems’ data on the webpage http://www.baesystems.com/en/our-company/corporate-responsibility, indicated with a footnote, corresponding performance indicators at pages 17, 24, 25, 61, 63 and 65 of the BAE Systems 2017 Annual Report, are not materially misstated.
 

The basis of reporting for each assured indicator as noted above is provided at:  www.baesystems.com/2017basisofreporting and should be read in conjunction with the indicators and associated statements reported on BAE Systems’ website.

 

What we did: key assurance procedures

Considering the risk of material error, we planned and performed the work to obtain all the information and explanations considered necessary to provide sufficient evidence to support our assurance conclusion. The key procedures we carried out included:

  • Interviewing managers at BAE Systems’ head office, including the CR team and those with responsibility for CR management and Group CR reporting 
  • Analysing and reviewing on a sample basis the key structures, systems, processes, procedures and controls relating to the Group level collation, validation and reporting of CR performance data including:
    • The collection, collation, validation and reporting of selected environmental, safety, diversity, community and business conduct performance data at the year end.
    • Using questionnaires to survey a limited purpose non-statistical sample of sites to gain an understanding of key processes and controls for reporting selected performance data to the Group CR team. Sites were selected based on safety performance, materiality to the Group and inherent risk of location.  We did not perform any site visits during our work.
    • Examining underlying documents to corroborate questionnaire outcomes and to inform our assessment of the subject matter to be assured.
    • Performing limited purpose non-statistical sample testing to verify that data has been appropriately captured, investigated, categorised and reported.
    • With regard to the recordable injuries safety data, our testing comprised an assessment of the understanding of relevant policy and procedures held by a sample of Site Safety Leads, rather than a qualitative reassessment of non-major incidents and the underlying injuries.
  • Understood and analysed on a non-statistical sample basis the collation, validation and reporting of selected CR performance data at Group level as indicated by corresponding footnotes is provided at http://www.baesystems.com/en/our-company/corporate-responsibility, in accordance with their definitions and basis of reporting.
  • Reviewed the content of the CR section of the Annual Report 2017 and CR content of the website against the findings of the aforementioned procedures.
 

Limitations

In relation to our work performed on the CR performance indicators for 2017, we note the following specific limitations:
  • With regard to GHG emissions data, testing was carried out on the sites that were included on the BAE Systems plc internal environment management system. These represented 88% of reported emissions in 2017. The remaining 12% of reported emissions consisted of estimated data for sites which were not tested for accuracy and completeness.

 

What we found: our assurance conclusion

 

Limited assurance conclusion:
Based on the assurance work performed nothing has come to our attention to suggest that the safety, business conduct, diversity and inclusion, community investment and environmental performance indicators on the webpage, http://www.baesystems.com/en/our-company/corporate-responsibility, indicated with accompanying footnotes, and the corresponding marked performance indicators at pages 17, 24, 25, 61, 63 and 65 of the BAE Systems 2017 Annual Report, are in all material aspects, not fairly stated.

Responsibilities of Directors and independent assurance provider
 
BAE Systems’ responsibilities
  • The Directors are responsible for the preparation of the Annual Report and for the information and statements contained in connection with it. They are responsible for determining BAE Systems’ objectives in respect of CR performance and for establishing and maintaining appropriate performance management and internal control systems from which the reported information is derived.

Deloitte’s responsibilities
  • Our responsibility is to independently express conclusions on the reliability of management’s assertions on the selected subject matters as defined within the scope of work above.
  • This report is made solely to BAE Systems in accordance with our letter of engagement for the purpose of the directors’ governance and stewardship. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility for anyone other than BAE Systems for our work, for this report, or for the conclusions we have formed.

Deloitte LLP
London
2 March 2018
 

Deloitte's independence in providing assurance to BAE Systems

 
  • We complied with Deloitte’s independence policies, which address and, in certain cases, exceed the requirements of the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants in their role as independent auditors, and in particular preclude us from taking financial, commercial, governance and ownership positions which might affect, or be perceived to affect, our independence and impartiality, and from any involvement in the preparation of the report.
  • We have confirmed to BAE Systems that we have maintained our independence and objectivity throughout the year and in particular that there were no events or prohibited services provided which could impair our independence and objectivity.
 

Deloitte's team and quality control procedures

 
  • Our team consisted of a combination of Chartered Accountants with professional assurance qualifications and professionals with many years’ experience in providing corporate sustainability report assurance.
  • In performing our work, we applied International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.