Assessment Type: Individual Project Assessment. Purpose: The individual research project requires students assessment of real-life auditing issues through a case study that links auditing theory,...

Assessment Type: Individual Project Assessment
Topic: Research Individual Assignment
Student Name: Sudarshan
Executive summary
BHP Billiton Ltd is an Australian company traded in the Australian Stock Exchange. It is a public listed company and conducts its business in mining, petroleum and metal products. The company’s head office is in Victoria, Australia. BHP was founded as a result of merger between Broken Hill Proprietary Company limited and Anglo- Dutch Billiton Limited in the year 2001. In 2007, it purchased its major competitor in Australia Rio Tinto Group by acquiring all its shares. In this report we will discuss on the various auditing communications related to significant risks and potential warnings which must be reported by the auditor that might impact the functioning of the company in the future. This will help us to analyze how whether the auditors of BHP are performing diligently and are highlighting the various critical issues that might impact the company during its advancement as a going concern.

Table of contents
Introduction………………………………………………………………….Pg 1
Analysis……………………………………………………………………....Pg 2 to 7
(i) Auditor’s Declaration
(ii) Auditor’s Fees
(iii) Independent Auditor’s Report
(iv) Auditor’s opinion on the report
(v) Non audit services provided by the auditor in BHP
(vi) Audit Procedures performed for the Key audit matters
(vii) Structure of the Audit and Risk Management Committee in BHP
(viii) Material subsequent events of BHP in 2019
(ix) Directors’ and management’s opinion with respect to the financial report
(x) Annual General Meeting in BHP
(xi) Section 570 and 701
Recommendations………………………………………………………………Pg 7
Conclusions……………………………………………………………………...Pg 8
Introduction
In this research we will discuss on BHP Billiton Limited. The report discusses about the audit compliance. Executing the fair audit procedure has become extremely obligatory in this deceptive business world due to financial crisis. Therefore, there have been laws enacted as per the new auditing standards ASA701 which is related to communicating Key Audit Matters in the Independent auditor’s report. This helps the shareholders to protect their rights and to get further information which are available in the financial statements. Further as per ASA 570 (ISA 570) it is mandatory for the external auditors to specify clearly about any potential issues within the company that can hamper the organization’s ability to continue as a going concern. Therefore as per ASA 315 it has become extremely necessary for the corporations and the auditors to assess evaluate and specify the various risks of material misstatement or any significant risk which might impact the growth of the business.
Analysis
Auditor’s declaration
The external auditor of BHP is KPMG. The auditing firm KPMG provides non-statutory audit work in accordance with the provisions of the company. The external auditor is required to provide a copy of the declaration given by the external auditor to the Director which is in relation to the Australian Corporation Act 2001 and the professional code of conduct for External Auditors. There has been a proposal to appoint Ernst & Young as the external auditor of BHP in the Annual General Meeting of the company. As per the 2019, Lead Auditor KPMG’s independence declaration under section 307C of the Australian Corporation Act 2001, it was stated that there was no contravention in relation to the audit. Also, there has been no contravention of any relevant code of professional conduct with respect to the auditing of BHP.
Auditors Fees
    Particulars
    2019 (US$ in Millions)
    2018 (US$ in Millions)
    2017 (US$ in Millions)
    Fees payable to group auditors for assurance services
    13.991
    23.193
    15.867
    Fees payable to Group’s auditor for other services
    0.537
    0.657
    0.631
    Total Fees
    14.528
    23.850
    16.498
** All the amounts of fees were paid to KPMG and KPMG affiliated firms.
As per the auditors fees paid only to the external auditors of KPMG and its affiliated firms it can be stated that the in 2019 the auditors fees have reduced $14.528 million as against $23.850 million and $16.498 million in 2018 & 2017 respectively.
Independent Auditor’s report
As per...