In a verification engagement, the audit team leader performs a predetermined set of procedures that the audit team leader and the Clean Energy Regulator, or the audit team leader and the audited body, agree to before the engagement starts. This verification engagement is similar to an ‘agreed-upon procedures’ engagement, commonly used in financial reporting and verification.
The product of a verification engagement is different from an assurance engagement, as the audit team leader provides a report of factual findings based on the specific procedures requested. No assurance conclusion is expressed. Instead, users of the report themselves assess the procedures conducted and the findings reported to draw their own conclusions.
The verification engagement process can be split into the key elements shown in the process diagram and described in the sections below.
Section 2.4 of the NGER Audit Determination requires the audit team leader to sign an independence and conduct declaration. Verification engagement terms have prescribed items to be included (s4.2) and must be agreed in writing by the Clean Energy Regulator or the audited body, prior to carrying out the verification engagement (s4.3).
Section 4.4 of the NGER Audit Determination requires the registered greenhouse and energy auditor to prepare a verification engagement plan.
Section 4.6 of the NGER Audit Determination covers performing verification engagements.
Sections 4.7 and 4.8 of the NGER Audit Determination cover the required elements of a verification engagement report.
Figure 6 — The verification engagement process
During this stage of the verification engagement, the audit team leader completes the quality control steps to assess the risks in accepting the corporation to be audited, and the verification engagement terms.
This step is common between assurance and verification engagements. Refer to the notes in 3.2.1 of the assurance section above for further detail.
The audit team leader must prepare a verification engagement plan to efficiently and effectively carry out the procedures agreed between the audit team leader and the Clean Energy Regulator or audited body in the verification engagement terms.
The audit team leader performs the activities outlined in the verification engagement terms as agreed in the letter of engagement—nothing more, nothing less.
This is significantly different to an assurance engagement, where the audit team leader designs a mix of assurance procedures to perform during the engagement.
In the verification engagement report, the audit team leader documents the results of the verification procedures performed as per the engagement letter. This is a report of factual findings. The audit team leader should not express a conclusion in their report or include any further recommendations or comments beyond those required by the NGER Audit Determination with respect to verification engagement reports.
Guidance for verification engagement reports has been provided in the templates section at the end of this handbook.
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