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Audit framework

 

The effectiveness of the programmes administered by the Clean Energy Regulator depends on robust and reliable compliance monitoring and enforcement activities. As explained in the Clean Energy Regulator’s Compliance, education and enforcement policy, auditing is a key compliance monitoring measure under the National Greenhouse and Energy Reporting Act 2007 (NGER Act).

The Clean Energy Regulator audit framework is established in law by the following:

  • the NGER Act, sections 73–75A
  • the National Greenhouse and Energy Reporting Regulations 2008 (NGER Regulations), Divisions 6.3–6.7, which specify eligibility requirements and standards of professional conduct for registered greenhouse and energy auditors, and
  • the National Greenhouse and Energy Reporting (Audit) Determination 2009 (NGER Audit Determination), which specifies requirements that audit team leaders must meet when preparing for and carrying out Part 6 audits, and in preparing assurance engagement reports or verification engagement reports.

The agency has also published Guidance for Audits under the Emissions Reduction Fund, to assist auditors in carrying out audits under this scheme.

It is the audit team leader’s responsibility to ensure that the audit team has the required skills and expertise to satisfactorily prepare for and carry out all aspects of the engagement. In order to cover the necessary skills and expertise, audit teams are typically multidisciplinary and may include assurance practitioners, engineers, environmental scientists and financial, legal or corporate experts.

Audit team leaders must ensure that audits are carried out and reported on in compliance with all relevant audit standards set by the Australian Auditing and Assurance Standards Board. Section 2.5(c) of the NGER Audit Determination states that this includes ASAE 3000. Depending on the subject matter of the audit, auditors may need to apply ASAE 3100, ASAE 3410 and ASAE 3450.

An auditor must be independent of the subject of the audit, such as a programme applicant or project participant, to the extent that a conflict of interest situation (within the meaning of the NGER Regulations) does not arise in auditing the subject matter.

If any auditor does not feel they have the required expertise within their audit team to meet all relevant national and international audit standards, or if a conflict of interest situation exists, they should not accept the engagement.

Prospective registered greenhouse and energy auditors must become familiar with the legislative background for whichever scheme they are involved with.

It should be noted that the legislation uses the term ‘audit’ more broadly than assurance and verification practitioners currently understand it, and more broadly than is provided for under the pronouncements of the Auditing and Assurance Standards Board (AUASB). Under the legislation, the term ‘greenhouse and energy audit’ provides for reasonable assurance, limited assurance and verification engagements.

Additionally under the legislation, the term ‘Part 6 audit’ now collectively refers to both greenhouse and energy audits carried out under the NGER Scheme and audits carried out under the Emissions Reduction Fund.

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