Mizuho Bank Europe Annual Report 2018

75 2018 ANNUAL REPORT By performing the procedures ourselves, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the financial statements. 6.1.5 Our key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. • Cut-off, completeness and accuracy of interest income and commission income Key audit matter Mizuho Bank Europe N.V. has multiple income sources of which interest income and commission income are the most significant. The risk exists that contract details of customers are not recorded on an accurate, complete and/or timely basis. Given the relative size of these revenue streams we have identified cut-off, completeness and accuracy of interest and commission income as a key audit matter. Audit procedures performed We have tested the design, implementation and operating effectiveness of the (application) controls with respect to the cut-off, completeness and accuracy of the revenues. Furthermore, based on the underlying contractual data and independent interest rate data, we have performed a substantive analytical review complemented with detailed substantive procedures. In addition, we have evaluated the internal accounting policies for compliance with the Dutch Accounting Standards. We refer to note 26 and note 28 of the financial statements for the interest income and commission income. • Classification and disclosure of the pledged asset scheme Key audit matter Mizuho Bank Europe N.V. has a pledged asset scheme (“PAS”), based on a master guarantee- and pledge agreement with Mizuho Bank Ltd. London branch. The financial instruments under this agreement have been derecognized by Mizuho Bank Europe N.V. as Mizuho Bank Europe N.V. does not bear a significant part of the risks and rewards. The risk exists that Mizuho Bank Europe N.V. has included loans under the PAS agreement that do not comply with the standardized PAS framework contracts. Furthermore, the risk exists that fees are recognized on a gross basis. Given the relative size of the PAS and the associated risks, we have assessed the classification and disclosure of the pledged asset scheme as a key audit matter. Audit procedures performed We have performed a detailed review on the on the pledged asset portfolio, the master loan-, master guarantee- and pledge agreement with Mizuho Bank Ltd. London branch and the accounting thereof. We note that Mizuho Bank Ltd. London branch acts as the guarantor for the loans under the PAS, according to the master guarantee- and pledge agreement. We have verified on a sample basis that the PAS agreements on individual loans between Mizuho Bank Europe N.V. and Mizuho Bank Ltd. London branch comply with the standardized PAS framework contracts. We have reviewed the fee agreements between Mizuho Bank Europe N.V. and Mizuho Bank Ltd. London branch and verified that these transactions are part of the