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Subsection 3.7(1) of the NGER Audit Determination requires the audit team leader to ensure that their judgements are reviewed.
Subsection 3.7(2) details the requirements of the peer review.
Peer review is an important quality control process for assurance and verification engagements undertaken under the Clean Energy Regulator audit framework. Peer review provides additional confidence in the system of quality control over audits and it is essential that only those appropriately qualified undertake the evaluation.
The NGER Audit Determination requires that the judgements made by the audit team leader in preparing and carrying out the assurance engagement are peer reviewed by a person who is:
Category 2 registered greenhouse and energy auditors and company auditors registered under the
Corporations Act 2001 must ensure they have the required subject matter expertise before undertaking peer review.
The appointment of a peer reviewer should not limit or preclude the audit team leader from using other expertise from outside the audit team to assist in quality or peer review, particularly with regard to technical elements of the engagement.
To ensure compliance with ASAE 3000, the audit team leader is only to sign the assurance report once the peer review is complete.
4.3.1 Characteristics of a peer reviewer
A peer reviewer:
- should be equivalent or higher in authority and experience to the audit team leader
- may be within, or external to the audit firm, and
- cannot be part of the engagement team.
The peer reviewer must have demonstrable professional equality with or authority over the audit team leader, particularly for assurance, to objectively evaluate the significant judgements the audit team leader has made and the conclusions they have reached in formulating their opinion.
4.3.2 The role of the peer reviewer
The peer reviewer is required to be involved in the initial, planning, reporting and final stages of the engagement.
Upon completion of the review, the peer reviewer should keep on file:
- the proposed independent assurance engagement report, and documentation prepared in developing the assurance engagement report
- the engagement plan, including all comments and tracked changes, and
- independence and conduct checks.
Auditors should document in the audit file the selection and appointment of a peer reviewer (including how the peer reviewer met the impartiality, expertise and characteristics requirements), their activities and involvement throughout the engagement, and the outcome of the peer review. This documentation 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.
4.3.3 Impartiality and objectivity
To comply with the requirement of impartiality and objectivity, we recommend that audit team leaders do not engage the same peer reviewer for all of their audits.
Like auditors, peer reviewers should rotate to ensure they remain independent and impartial. Having an auditor use the same peer reviewer on all audits that they conduct over a long period of time may result in issues of familiarity and self-interest affecting the quality and reliability of audits.
To ensure peer reviewers remain impartial, we recommend that after reviewing five consecutive audits, the audit team leader engage a different peer reviewer for at least the next two successive audits.
Peer reviewers should also provide assurance that they will remain independent and review on a yearly basis their impartiality and objectivity.