Refer to the Audit Committee report on pages 82 to 83 and to note 9 to the financial statements.

The Group had £586.1m of goodwill and a further £198.8m of intangible assets recognised on the balance sheet at 31 December 2016. The carrying values of goodwill and intangibles are contingent on future cash flows of the underlying Cash Generating Units (“CGUs”) and there is a risk that, if these cash flows do not meet the directors’ expectations, the assets will be impaired.

Accounting standards require management to perform an annual assessment of the carrying value of goodwill, and other intangible assets are assessed where there are indications that they are impaired. As this assessment is based on the future value in use, future cash flows must be estimated, which can be highly judgemental and could significantly impact the carrying value of the assets.

We evaluated future cash flow forecasts, and the process by which they were drawn up, including comparing them to the latest Board approved budgets, and testing the underlying calculations. We identified no issues in this testing.

We used our in-house valuation specialists to evaluate the methodology used to calculate the value in use of the CGUs, and key assumptions including:

• the discount rate by comparing the cost of capital for the Group with comparable organisations; and

• the long term growth rates by comparing these to publicly available market data on projected growth rates in key territories such as the UK, USA and China.

We concluded that they were within the range of reasonable assumptions based on this information.

We performed sensitivity analysis around these assumptions. Having ascertained the extent of change in those assumptions that either individually or collectively would be required for an impairment to arise, we considered the likelihood of such a movement occurring.

Our testing did not identify any indicators of impairment, and that the assumptions were reasonable and would require significant downside changes before any impairment would be triggered.

In addition we assessed the appropriateness of the CGUs used in the impairment assessment, the useful economic lives of the intangible assets and the related disclosures, and concluded that these were appropriate.

Refer to the Audit Committee report on page 82 and to note 6 to the financial statements.

Provisions in relation to potential tax exposure are subject to judgement and require the selection of estimation techniques and determination of estimates, either of which could influence the current or deferred tax positions. The Group operates in a large number of jurisdictions, which increases the risk of non-compliance with international tax legislation and introduces complex transfer pricing considerations.

In addition the Group has provisions for uncertain tax positions relating to both historic and current tax arrangements. The recognition and measurement of these items in the financial statements is judgemental, and we focused on the directors’ forecasts of future profits against which to utilise accumulated losses, and the technical interpretation of taxation law in respect to transactions giving rise to deferred tax assets and uncertain tax positions.

We involved our in-house tax specialists in our testing of the appropriateness of the techniques, estimates and judgements taken in relation to deferred taxation and in respect of uncertain tax positions recognised in the financial statements.

In assessing uncertain tax positions, we obtained management’s calculations and evaluated the methodology and assumptions used.

In understanding and evaluating the directors’ technical interpretation of tax law in respect of specific transactions that gave rise to uncertain tax positions we evaluated:

• third party tax advice received by the Group;

• the status of recent and current tax authority audits and enquiries;

• the outturn of previous claims;

• judgemental positions taken in tax returns and current year estimates; and

• changes in tax legislation, or interpretation of existing legislation by local tax authorities.

In assessing the recoverability of deferred tax assets, we considered the likelihood of the Group being able to generate sufficient future taxable profits against which to offset accumulated losses, and tested:

• key inputs to the calculation including revenue and profit assumptions, in line with our work over the carrying value of goodwill; and

• the directors’ ability to accurately forecast future profits where the tax assets will not be recoverable in the foreseeable future. The procedures above did not identify any issues with regards to the valuation of deferred tax assets and provisions for uncertain tax positions.

Refer to the Audit Committee report on page 82 and to note 13 to the financial statements.

As an assurance provider, the Group can be subject to claims from customers and consumers relating to its work, and the geographically diverse nature of the Group means there is a risk that one or more significant claims are omitted from the centrally maintained claims register.

Where customer claims may give rise to a future liability, the Directors are required to recognise either a liability or a contingent liability in the financial statements. As the actual cost is often unknown, management must exercise their judgement in calculating the liability.

Where relevant obtained confirmations from the Group’s external legal counsels of the existence and details of open claims. Confirmations were sent to both the lawyers associated with the key claims but also additional lawyers who Intertek have interacted with throughout the year.

We met with legal counsel to discuss certain open or threatened claims to understand the likelihood of an adverse judgement and the potential magnitude of the claim.

We obtained and read the relevant sections of the Group’s insurance documents, and confirmed that any liability cap had been appropriately applied to the calculation of provision held against those claims.

Through our work, we did not identify any material claims that had not been recorded centrally and provided for, or for which the provision was not appropriate.

Refer to the Audit Committee report on pages 82 and to note 10 in the Consolidated Financial Statements.

The Group’s strategy is to use acquisitions to augment organic revenue growth, and during the year made three acquisitions: FIT Italia SRL, EWA-Canada Ltd and Laboratorios ABC Quimica, Investigacion y Analisis, S.A de C.V.. In addition, the 12-month hindsight period for reassessing the acquisition of Professional Service Industries, Inc closed during the year.

Judgement is required in determining the amount of consideration paid and the valuation of assets and liabilities acquired. In addition, the disclosure requirements in respect of acquisitions are extensive.

For these transactions we obtained and read the sale and purchase agreements (“SPAs”) in order to gain an understanding of the key terms of each transaction.

In testing acquisitions during the year we:

• tested that the consideration paid by the Group was consistent with the terms of the SPAs;

• assessed the appropriateness of the directors’ identification of intangible assets acquired by reference to the SPAs, due diligence reports and other supporting documentation, to identify any assets listed;

• obtained the directors’ calculation of the fair value of intangible assets acquired, and where material corroborated the inputs and assumptions to supporting evidence; and,

• verified that the accounting treatment for each transaction, and any resulting liabilities, is consistent with the accounting standard requirements.

We noted no exceptions through performing these procedures.

For PSI, which was acquired in 2015, in order to test the directors’ final assessment of the purchase price allocation, we:

• obtained evidence from internal and external advisors in relation to the fair value of liabilities recognised on acquisition, to evaluate whether the valuation remained appropriate, or that any adjustments were supported;

• evaluated whether all fair value adjustments, and any resulting impact, had been appropriately recognised and accounted for.

Based on the evidence obtained, we did not identify any indications that the fair value adjustments identified by management were inappropriate.

We also reviewed the disclosures in the financial statements and are satisfied that they are in line with the requirements of the relevant accounting standards.