2 Key Audit Matter How the scope of our audit responded to the Key Audit Matter Existence and valuation of inventory including the elimination of intergroup profit. Refer to Note 4 Inventories At 30 June 2024, the carrying value of the Group’s inventories, which are recorded at the lower of cost and net realisable value, was $5,964 million. Inventory is held at a number of geographically diverse locations across the globe, some of which are managed by third parties. The Group’s accounting for inventories is complex due to the nature of products being manufactured requiring multiple inputs into the determination of cost and the need to ensure the effect of intragroup inventory sales and the capitalisation and amortisation of purchase price and other manufacturing variances within the Group, are appropriately considered in the determination of costs. Furthermore, inventory provisions may be recognised in relation to raw materials, work in progress and finished goods based on a number of factors including expiry dates, selling prices and margins realised. Given the significant value of inventories, global distribution, intra-group transactions, including the complexity involved in eliminating unrealised profits, and judgements in determining whether inventory is carried at the lower of cost and net realisable value, we consider the existence and valuation of inventories to be a key audit matter. Our procedures included, but were not limited to: • Understanding the policies, processes and relevant controls that management has in place in respect of the valuation and existence of inventory; • Assessing the existence of inventory by: o Understanding the Group’s stock take procedures. o Confirming the physical existence of inventory, including attendance at stock takes. o Evaluating the results from stock takes performed and validating that variances have been appropriately recognised. • Assessing the valuation of inventory by: o Assessing the determination of inventory cost, including evaluating the appropriateness of standard costs and the recognition of variances between standard and actual costs. o Evaluating the carrying value of inventories, including any provisions required, to ensure inventory is carried at the lower of cost and net realisable value at 30 June 2024. o Assessing the Group’s transfer pricing principles and recalculating the resulting elimination of unrealised profit on sale of inventories between group entities. We also assessed the adequacy of the disclosures in note 4 to the financial statements. Other Information The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2024, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 151
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