The purpose of a verification engagement is to conduct agreed-upon procedures and report factual findings arising from those procedures. The Clean Energy Regulator or other person engaging the audit team leader, uses the factual findings combined with any other information they have obtained to draw their own conclusions on the subject matter.
Successful and efficient verification engagements depend upon the audit team leader and the engaging party having the same understanding about what the verification engagement will involve, how its outcomes will be reported and what is not included in the terms of the verification engagement. It is important that scope exclusions (that is, what is not included) from the verification engagement are discussed and agreed at the outset, so that the audited body, the Clean Energy Regulator and the audit team leader share the same understanding of what the verification engagement does not include. The key scope exclusion will be that the verification engagement is not an assurance engagement and therefore that the audit team leader will not issue either a limited or reasonable assurance engagement conclusion.
This requires:
- clear procedures which are agreed upon upfront by both parties
- amendments to those procedures being discussed and agreed prior to any variation in procedures being performed, and
- reporting factual findings only.
To illustrate this further, a summary of what a verification engagement includes and does not include is provided below. The term ‘verification provider’ is used to describe the audit team, led by the audit team leader, performing the verification engagement.
| A verification engagement includes | A verification engagement does not include |
|---|
The verification provider performing specific procedures over the greenhouse and energy information. | The verification provider making judgements on the extent and nature of the verification procedures during the engagement. For example, the verification provider performs only those verification procedures agreed in the verification engagement terms and would not perform additional procedures, even if they found misstatements or compliance breaches, they would only report the matter to the engaging party. |
The verification provider agreeing to the procedures upfront with the audited body in the verification engagement terms. | The verification provider performing any procedures outside of the agreed upon procedures, unless the amendments to the agreed upon procedures are agreed in a written addendum to the original letter of engagement. |
The verification provider providing a report of factual findings on the verification procedures performed. | The verification provider expressing any form of conclusion, evaluation, or assessment on the completeness, validity or accuracy of the reported information based on the verification procedures performed. This is explained further in the reporting section 6.5 below. |
The chapter describes the stages of a verification engagement process as shown in Figure 6 in section 3.3 of this handbook.