Annual Report & Accounts 2026
41
OUR GOVERNANCE
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group and Parent Company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group and Parent Company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. REVENUE RECOGNITION AND YEAR END ACCRUED INCOME
Key audit matter description
Revenue is the most significant component of the financial statements and there is risk that this could be materially misstated due to revenue being recognised in the incorrect accounting period. In addition, recognised revenue is impacted by the year end accrued income balance which is subject to management judgement. Judgement is applied by management in respect of the forecasting of billing and percentages applied in calculating the element relating to prior year work as further explained below and in the notes to the financial statements. The Group recognised revenue of £115.2m (2026: £97.7m) in respect of lawyer fees billed and accrued in the year. The accrued income balance of £14.7m (2026: £12.9m) is calculated by reference to the historical performance of the business as well as making forward looking assumptions. The Group has reviewed, over a number of years, the percentage of actual invoicing which relates to prior year activity and it applies these percentages to the Group’s monthly forecast billing. There are inherent uncertainties in the estimations used. For the above reasons, revenue recognition, including accrued income, is considered to be a key audit matter. Refer to notes 2, 3, 4 and 17 to the financial statements for disclosures relating to revenue and year end accrued income.
OUR GOVERNANCE
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group and Parent Company financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the Group and Parent Company financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. REVENUE RECOGNITION AND YEAR END ACCRUED INCOME
Key audit matter description
Revenue is the most significant component of the financial statements and there is risk that this could be materially misstated due to revenue being recognised in the incorrect accounting period. In addition, recognised revenue is impacted by the year end accrued income balance which is subject to management judgement. Judgement is applied by management in respect of the forecasting of billing and percentages applied in calculating the element relating to prior year work as further explained below and in the notes to the financial statements. The Group recognised revenue of £115.2m (2026: £97.7m) in respect of lawyer fees billed and accrued in the year. The accrued income balance of £14.7m (2026: £12.9m) is calculated by reference to the historical performance of the business as well as making forward looking assumptions. The Group has reviewed, over a number of years, the percentage of actual invoicing which relates to prior year activity and it applies these percentages to the Group’s monthly forecast billing. There are inherent uncertainties in the estimations used. For the above reasons, revenue recognition, including accrued income, is considered to be a key audit matter. Refer to notes 2, 3, 4 and 17 to the financial statements for disclosures relating to revenue and year end accrued income.