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Preparing

 

Diagram shows the preaparing stage of the assurance engagement process as described below.

Figure 7 — The assurance engagement: Preparing

See Divisions 3.2 and 3.3 of the NGER Audit Determination for the specific legislative requirements in relation to preparing for, planning and performing an assurance engagement.

The preparing stage is crucial in setting up a thorough, risk-based assurance process, aligned to the requirements of the NGER Audit Determination. Key elements that must be considered when preparing for an assurance engagement include:

  • quality control processes
  • selection of team members and peer reviewer, and
  • engagement terms.

Guidance on these key elements is provided below.

5.2.1 Quality control processes

Refer to section 4.4 of this handbook for detailed guidance on performing quality control processes. These processes are required for both assurance and verification engagements.

5.2.2 Selection of team members

Refer to section 4.1 of this handbook for detailed guidance on selection of team members, including peer reviewer and any technical experts that may be required. Selection of team members is an important consideration for both assurance and verification engagements.

5.2.3 Engagement terms

Subsection 3.3(2) of the NGER Audit Determination stipulates the minimum requirements for the assurance engagement terms.

Subsection 3.4(4) of the NGER Audit Determination requires any amendments to the engagement terms during the assurance engagement to be agreed and signed by the parties to the terms.

For the engagement to begin, the engagement terms must be agreed in writing by the audit team leader and the person appointing the audit team leader, which may be the Clean Energy Regulator or the audited body.

For all audits conducted by a registered greenhouse and energy auditor in the Emissions Reduction Fund, it is the Clean Energy Regulator’s expectation that the audit team leader and the project proponent as the audited body, not the project proponent’s agent, sign engagement terms. The project proponent should agree engagement terms with the audit team leader and also sign relevant management representation letters.

It is essential to the integrity of the audit process, and the Emissions Reduction Fund, that the proponent commission and receive independent assurance of the compliance of their project. To do this, the person being audited needs to agree and understand the terms of the audit. This however, does not preclude the project proponent’s agent from arranging and contracting with auditors on behalf of project proponents.

The engagement terms can form a legally binding contract. The purpose of the engagement terms is to document and confirm:

  • the audit team leader’s appointment
  • the objective and scope of the assurance engagement
  • the criteria against which the subject matter will be assessed, and
  • the roles and responsibilities of the members of the three-party relationship.

Assurance engagements under the various schemes administered by the Clean Energy Regulator can be complex in terms of the planning process, particularly assessing the suitability of the criteria and the appropriateness of the subject matter (refer to section 5.3.4 of this handbook for a detailed discussion).

Templates for letters of engagement, including the engagement terms, are included in the templates at the end of this handbook.

It is recommended that the auditor include an information request as an appendix to the engagement terms. The information request outlines the key documents and information required by the audit team leader, when they should be provided, and who is responsible for providing them. This assists the audit team leader and the audited body manage the flow of information and assurance evidence during the assurance engagement.

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