Annual Review 2007/2008

Reports on compliance and regulatory matters

Independent Auditor's Report to the Executive Board of the BBC

We have audited the financial statements (the 'financial statements') of BBC World Service for the year ended 31 March 2008 which comprise the Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement, and the related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the BBC's Executive Board, as a body, in accordance with the Royal Charter for the continuance of the BBC, which came into force on 1 January 2007 ('the Charter') and the Financial Memorandum with the Foreign and Commonwealth Office, and in accordance with the terms of our engagement. Our audit work has been undertaken so that we might state to the BBC's Executive Board those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the BBC and the BBC Executive Board for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of the BBC executive board, BBC World Service management board and auditors

The BBC Executive Board and BBC World Service Management Board are responsible for preparing the Annual Review and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) as set out in the Statement of BBC Executive Board and BBC World Service Management Board Responsibilities. Our responsibility, in accordance with the terms of our appointment, is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland) and the Charter.

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Companies Act 1985 as if that Act had been applied to these financial statements.

We also report to you if, in our opinion, BBC World Service has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding BBC World Service Management Board remuneration and other transactions is not disclosed.

In addition to our audit of the financial statements, we have been engaged to review its Corporate Governance Statement as if BBC World Service were required to comply with the Listing Rules of the Financial Services Authority in relation to these matters.

We review whether the Corporate Governance Statement reflects BBC World Service's compliance with the nine provisions of the 2006 Financial Reporting Council Combined Code specified for our review by the Listing Rules of the Financial Services Authority, and we report if it does not. We are not required to consider whether the statements on internal control cover all risks and controls, or form an opinion on the effectiveness of BBC World Service's corporate governance procedures or its risk and control procedures.

We read other information contained in the Annual Review and consider whether it is consistent with the audited financial statements. This information includes the Director's Overview, the Year in Review, the Financial Review, and the Reports on Compliance and Regulatory Matters. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the BBC Executive Board and BBC World Service Management Board in the preparation of the financial statements, and of whether the accounting policies are appropriate to BBC World Service's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

+ the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of BBC World Service's affairs as at 31 March 2008 and of the surplus for the year then ended; and

+ the financial statements have been properly prepared in accordance with the provisions of the Charter and the Companies Act 1985 as if that Act had applied to these financial statements.

KPMG LLP
Chartered Accountants, Registered Auditor, London
9 June 2008