nger audit framework 2014-15 gavin mongan, scheme audit and assurance

NGER Audit Framework 2014-15

Gavin Mongan, Scheme Audit and Assurance

2015 Auditor workshops

231 March 2015

Key themes

• integrity

• control

• consistency

These themes will be recurring throughout the day.

Pay attention.

You will be quizzed at the end.

NGER Audit Program 2014-15

Where are we now

(and where are we going)

4

Maturing NGER framework

31 March 2015

2010 – Auditor Registration

2011 – Pilot NGER Audits

2012 – PEC, JCP, CFI Audits

2013 – Liable Entity Audits

2014 – Auditor Review & Inspection

2015 – ERF Audits

NGER Audit Program 2014-15

Major achievements 2014

531 March 2015

• Final Liable Entity audits completed.

• Completed pilot auditor desktop inspection programme.

• Received and assessed our 1500th audit under the Framework.

•560 NGER

•680 CPM (including JCP)

•270 CFI

• Established new Greenhouse and Energy Audit Service Panel.

NGER Audit Program 2014-15

Audit reports assessed

631 March 2015

2011 2012 2013 2014 20150

20

40

60

80

100

120

140

160

180

Carbon Farming InitiativeJobs and Competitiveness ProgramLiable Entity Report Audit ReportPartial Exemption Certificates74Voluntary Audit

NGER Audit Program 2014-15

2013 vs 2014Audits in 2013

593 audits across all schemes

Over half were carbon tax related including liable entity, JCP and audit programme.

94% clean

Highest proportion of clean were PEC and Voluntary audits.

Lowest proportion were CFI.

Audits in 2014

675 audits across all schemes

Increase due to higher number of CFI audits (75 in 2013 vs 170 in 2014)

Offset by lower number of JCP and PEC.

95% clean

Improvements in CFI as the scheme matures

731 March 2015NGER Audit Program 2014-15

Audits received in 2014

831 March 2015

Carbon Farming

JCP

Liable Entity

PEC

s74 NGER

Voluntary NGER

0 40 80 120 160 200

Clean

Qualified

Unable to form an opinion

Adverse

Verificaiton

NGER Audit Program 2014-15

NGER Audit Programme

2013/14 NGER Audit Programme

10

• 48 audits completed.

> 22 s19 audits> 25 s22A audits> 1 s11 operational control audit

• No incidences of fraud or deliberate non-compliance.

• 0.1% Quantifiable Scope 1 errors.

• 12 Audit firms engaged.

• Main issues identified related to energy production and consumption, incorrect application of NGER determination and record keeping issues.

31 March 2015NGER Audit Program 2014-15

Audits of liable entities

Liable Entity Audits

12

0

4,000,000

8,000,000

12,000,000

16,000,000

20,000,000

24,000,000

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Liable entity audits

Proportion of emissions

No auditVoluntaryaudits

Mandatory audits

31 March 2015NGER Audit Program 2014-15

Carbon Farming Initiative

Audits under Carbon Farming Initiative

• 171 audits received in last 12 months.

> 270 audits in total

• 10 Qualified audits from 6 Project Proponents.

> 60% from landfill projects now corrected

• 19 audit firms using 16 audit team leaders.

• a good mix of teams providing excellent value.

1431 March 2015NGER Audit Program 2014-15

Number of CFI projects vs abatement

Projects

Abatement

15NGER Audit Framework 2014-15 31 March 2015

Landfill methaneReforestation

and Afforesta-tion (including native forest protection)

Savanna Burning

Piggeries

Audit firms participation in CFI

The top 5 audit firms by number of projects audited assessed over 70% of projects from 50% of proponents.

16

0

20

40

60

80

100

120

140

160

180

200

Project proponents Projects

NGER Audit Program 2014-15 31 March 2015

Other audits

JCP and PEC

Audits for JCP and PEC• 117 audits for JCP and PEC

• 99% of JCP audits clean

• 100% of PEC audits clean

• 75% from Cat 2 or 3 auditors

• 2014 final year of JCP audits

• PEC to continue

• *Registered Greenhouse and Energy Auditor (RGEA)

• 18

RGEA CAT 2

RGEA CAT 3

Company Registered Only

31 March 2015NGER Audit Program 2014-15

Registered greenhouse and energy auditors

Auditor registration• 168 active registered greenhouse

and energy auditors

• review programme has resulted in reduction over 2014

• greatest decrease in Cat 1 – down 11% over 2014

• auditors can be registered in multiple categories

2031 March 2015

Cat 151%

Cat 239%

Cat 310%

NGER Audit Program 2014-15

Auditor review

2131 March 2015

137 reviews initiated to date

• majority of auditors meeting legislative requirements

• minor recommendations for some

• 4 suspensions

• 7 deregistrations

• 24 self-initiated suspensions or deregistrations

NGER Audit Program 2014-15

Auditor review• Auditor management activities

• Annual reporting

• Notifications

• Outreach and surveillance

2231 March 2015NGER Audit Program 2014-15

Lessons learned

What has been done well• Use of multi-disciplinary teams including subcontracting.

• Effective use of templates including fitting to existing branding.

• Communication between firms and the Clean Energy Regulator.

• Responsive to Clean Energy Regulator feedback.

• Audit reports were broadly clear and concise.

2431 March 2015NGER Audit Program 2014-15

Areas for improvement• Inconsistent audit scope and objectives.

• Failure to reference appropriate legislation correctly.

• Failure to reference correct standards (ASQC1, ASAEs).

• Excessive wording undermined confidence in opinion given.

• Peer reviewer lacked appropriate assurance experience.

• Knowing limitations and capacity – Resourcing and capability.

2531 March 2015NGER Audit Program 2014-15

What’s next?

2015 What’s ahead…• 2014/15 NGER Audit Programme.

• No change to NGER Audit Framework.

• No more Carbon Liability or JCP audits

• Update of Audit Determination Handbook.

• Maturing the Auditor Performance Framework, and

• The Emissions Reduction Fund.

2731 March 2015NGER Audit Program 2014-15

Key messages

Maintaining the integrity

• Of the schemes

• Of the audit framework

• Of yourselves

2831 March 2015NGER Audit Program 2014-15

You can also email audit@cleanenergyregulator.gov.au or phone 1300 553 542.

Questions?Gavin Mongan