Page 251 - Annual Report 2020

4. Our Scope of the Audit of BHP
What we mean We are required to establish an overall audit strategy that sets the scope, timing and direction of our audit, and that
guides the development of our audit plan. Audit scope comprises the operated and non-operated assets, activities
and processes to be audited that, in aggregate, provide sufficient coverage of the financial statements for us to Strategic Report
express an audit opinion.
Criteria for Our assessment of audit risk and our evaluation of materiality determined our audit scope for each location within BHP
determining our which, when taken together, enabled us to form an opinion on the financial statements under Australian Auditing
audit scope Standards and ISAs (UK). Our audit effort was focused towards higher risk areas, such as management judgements
and estimates, and on assets and group functions that we considered significant based upon size, complexity or risk.
The factors that we considered when assessing the scope of the BHP audit, and the level of work to be performed
at each asset or group function that were in scope for Group reporting purposes, included the following:
• the financial significance to BHP’s earnings, total assets or total liabilities, including consideration of the financial
significance of specific account balances or transactions;
• the significance of specific risks relating to an asset or group function: history of unusual or complex transactions, Governance at BHP
identification of significant audit issues or the potential for, or a history of, material misstatements; and
• the effectiveness of the control environment and monitoring activities, including entity-level controls.
Full and specific Of the 36 assets and group functions (‘locations’), we selected 10 locations based on their size or risk characteristics
scopes and performed full scope audits of the complete financial information at four locations. Three of the full scope
locations are the most significant assets within the Iron Ore, Copper and Coal segments. The additional full scope
location is the Group Treasury Function. For the other six locations we performed specific scope audit procedures
on individual account balances within the location based on their size and risk profiles.
Specified and Specified
Group procedures In addition to the 10 full and specific scope locations above, we selected 10 locations to perform procedures specified
by the group audit team in response to specific risk factors and in order to ensure that, at the overall Group level,
we reduced and appropriately covered the residual risk of error. Remuneration Report
Centralised group functions
For full and specific scope locations, as well as specified procedures locations, we have performed procedures over
certain accounts by testing group functions which have centralised processes for revenue and accounts receivables,
purchase to pay, treasury, property, plant and equipment, employee benefits, right of use assets and lease liabilities
and the elimination of intercompany balances.
Group wide procedures
We performed centralised procedures across the entire Group, including IT general and IT application controls over
the 1SAP IT system and audit of manual and consolidation journal entries.
For the remaining 16 locations we performed supplementary audit procedures in relation to BHP’s centralised group Directors’ Report
accounting and reporting processes including, but not limited to, procedures over equity accounted investments, and
the completeness of litigation and other claims. We also performed disaggregated analytical reviews on each financial
statement line item.
Changes from The prior year audit scope of the previous auditor was based on 10 reporting components, which included each asset,
the prior year segment and group function, as aggregated by region. Our audit scope is based on assets and group functions, rather
than aggregating by region.
Analysis of our The locations within the scope of our work accounted for the following percentages of the Group’s measures: 5
audit coverage
Profit before tax % Total assets % Revenue %
1
1 14 11 4 2 2 4
4 19 Financial Statements

11
70 19 64 74

● Full scope ● Specific Scope ● Specified Procedures ● Review Scope ● Limited Procedures Additional information

Shareholder information

BHP Annual Report 2020 249