Figure 12 — The assurance engagement process: Reporting
Once the auditor has performed the various assurance procedures as outlined in the assurance engagement plan, it is time to assess the evidence gathered from the testing performed.
Guidance is given on each of the key elements of the performing stage below.
Sections 3.17 to 3.23 of the NGER Audit Determination address the requirements for reporting on an assurance engagement.
The auditor must assess and document whether the materiality and assessment of engagement risks made in the planning stage are still appropriate in light of the evidence gathered during the performing stage.
Where new risks, or modifications to the assessment of identified risks, are identified the auditor must consider how this impacts the level of work performed—where the risk of misstatement is assessed as having increased, the auditor must consider whether the procedures performed are sufficient, and if not perform additional procedures.
The audit team leader must use their professional judgement to assess whether the procedures performed and evidence obtained is sufficient to support the assurance conclusion to be expressed in the assurance engagement report.
If the audit team leader’s assessment of materiality is reassessed and the threshold is lowered, the auditor must then consider the impact on the level of work performed—a lower level of materiality may require the auditor to perform additional procedures to support the assurance conclusion.
Section 3.16 of the NGER Audit Determination addresses the consideration the audit team leader must give to the materiality of a misstatement.
Subsequent events are events that occur between the date of issue of the reported data and the date of the audit team leader issuing the assurance engagement report.
For the avoidance of doubt, the term ‘subsequent events’ in this guidance applies only to the period until the assurance engagement report is issued.
The audit team leader must consider subsequent events prior to finalising the assurance engagement report, to check that:
By performing subsequent events procedures, the audit team leader is therefore making sure that they are providing their assurance engagement report on the final greenhouse and energy information and that they are apprised of all relevant information, events and circumstances that could impact their assurance engagement report.
Subsequent events procedures typically consist of performing enquiries with senior management of the audited body to determine whether there have been any changes or updates since the time of completing the assurance procedures. The results of enquiries performed must be corroborated, for example, by obtaining the final authorised greenhouse and energy information and enquiries with site level staff to verify the information received from management.
Subsequent events can be grouped into two types of events:
In each case, the extent of the audit team leader’s consideration of the subsequent events is dependent on the potential for such events to affect the subject matter and the appropriateness of the audit team leader conclusions as expressed in the assurance engagement report.
Materiality is a key concern for the auditor in making this assessment. If the auditor deems that a subsequent event is likely to be material, adjustments must be made to the final greenhouse and energy report prior to the assurance engagement report being signed.
The auditor must prepare a summary of errors noted during the assurance engagement that have not been corrected in the final greenhouse and energy report—this is the summary of uncorrected errors.
section 5.3.5 of this handbook for further guidance on how the auditor should set and communicate to management the level of error above which items are included in the summary of uncorrected errors.
Where material uncorrected findings exist (either individually, or in aggregate), the auditor should require the audited body to process adjustments to the final greenhouse and energy report, or consider whether it is appropriate to issue a qualified or adverse conclusion. The auditor must then compare the impact of the aggregate uncorrected findings with the defined materiality, and consider the impact for the assurance engagement report.
Prior to signing and dating the assurance engagement report, the audit team leader must seek written representation from the audited body. This representation holds management responsible for the information they have provided, the implementation of adequate internal controls and any information they haven’t provided that is relevant to the assurance engagement.
The assurance engagement forms part of the audit team leader’s assurance evidence. In addition to the management representation requirements of the NGER Audit Determination the audited body’s representation must include:
The management representation letter must be signed and dated on the same day as the audit team leader signs the assurance engagement report, as a control to make sure that the management representation letter and assurance engagement report cover the same criteria and subject matter.
The management representation letter must also state that information provided throughout the engagement may be required when the Clean Energy Regulator conducts a periodic formal review or inspection of a greenhouse and energy auditor’s registration, under subdivisions 6.5.3 or 6.5.6 of the NGER Regulations.
A template for the management representation letter is included at the end of this handbook.
Subsection 3.14(2) of the NGER Audit Determination details the representations which the audit team leader must obtain from the audited body.
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