In Australia, the National Greenhouse and Energy Reporting Scheme (NGERS) provides the legislative and regulatory requirements for reporting GHG emissions, energy consumption and energy production. NGERS reporting underpins the Carbon Pricing Mechanism (CPM), which creates a carbon price liability. In addition, there are assistance and carbon offsets schemes available under the Clean Energy legislation.

The schemes which are addressed in this Guidance Statement are:^[1] 

• NGERS – the National Greenhouse and Energy Reporting Act 2007 (NGER Act) creates a reporting framework for emitters, which exceed specified emissions or energy thresholds,^[2] to report emissions, energy consumption and energy production to the Clean Energy Regulator (the Regulator).
• CPM – the Clean Energy Act 2011 (CE Act) creates a carbon price liability for emitters, which exceed specified emissions thresholds,^[3] which is met by submission of carbon units or carbon offsets.
• Jobs and Competitiveness Program (JCP) – the Clean Energy Regulations 2011 (CE Regulations) provide for approval of activities as emissions intensive trade exposed (EITE) as the basis for assistance through the allocation of free carbon units.
• Carbon Farming Initiative (CFI) – the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act) provides for approval of eligible offsets projects and carbon credit units arising from those projects which may be offset against a carbon liability.
• Renewable Energy Target (RET) – the Renewable Energy (Electricity) Act 2000 (RET Act) and Renewable Energy (Electricity) Regulations 2001 (RET Regulations) provide for a renewable energy target for electricity generation, a renewable energy shortfall charge and relief from that charge for EITE activities using electricity, by way of partial exemption certificates (PEC).

Each scheme either:

1. Allows for the Regulator to initiate an assurance or agreed upon procedures engagement on reports lodged, applications submitted or compliance with related legislative requirements (such as record keeping), for compliance or monitoring purposes; and/or
2. Requires assurance reports to be provided with reports lodged or applications submitted.

The assurance and agreed upon procedures engagements covered under the schemes are:

• NGERS – the National Greenhouse and Energy Reporting (Audit) Determination 2009 (NGER Audit Determination) provides for reasonable assurance, limited assurance or agreed-upon procedures^[4] engagements on the report submitted or other compliance matters identified to the Regulator under NGERS, initiated by the Regulator for monitoring or compliance purposes^[5] or conducted voluntarily at the initiation of the responsible party.
• CPM – the National Greenhouse and Energy Reporting Regulations 2008 (NGER Regulations) require a reasonable assurance report on reported emissions to be submitted by liable entities under the CPM, if their emissions number exceeds the specified threshold.^[6]
• JCP
  • the Guidance Paper Establishing the eligibility of emissions intensive, trade exposed activities under the Jobs and Competitiveness Program and Renewable Energy Target (2012) requires reasonable assurance on applications for assessment of activities as emissions intensive trade exposed (EITE), which is required to be eligible for assistance.^[7]
  • The CE Regulations require a reasonable assurance report on applications for free carbon units for EITE activities, and, if applicable, a limited assurance report on expected production in the application.^[8]
  • The CE Regulations require a reasonable assurance report on applications for supplementary allocations of free carbon units for an EITE liquefied natural gas (LNG) project.^[9]
• CFI
  • The CFI Act and Carbon Credits (Carbon Farming Initiative) Regulations 2011 (CFI Regulations) require a reasonable assurance report on: an eligible offset project’s compliance with the section 27 declaration in operation for the project, the applicable CFI Methodology Determination and the requirements of the CFI Act for the reporting period; and the project proponent’s compliance with the applicable CFI methodology determination.^[10]
  • the CFI Act provides for a reasonable assurance, limited assurance or agreed upon procedures report on the project proponent’s compliance with the CFI Act, initiated by the Regulator for monitoring or compliance purposes.^[11]
• RET – the RET Regulations require a reasonable assurance report on PEC applications.^[12]

The relevant legislative and regulatory requirements for and nature of engagements under each scheme are set out in Appendix 2.

The assurance and agreed upon procedures engagements to be conducted under these schemes are required by the relevant Regulations to be conducted in accordance with the NGER Audit Determination, in so far as the subject matter relates to emissions, energy or offsets, and Standard on Assurance Engagements ASAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information, in so far as the subject matter relates to matters other than financial information, including production, activity definitions and compliance. In addition to this Guidance Statement, guidance on the conduct of assurance and agreed-upon procedures engagements in accordance with the NGER Audit Determination, whether instigated by the Regulator or required to be submitted with reports or applications, is provided in the NGER Audit Determination Handbook.

In addition to the legislative and regulatory requirements imposed on assurance practitioners, relevant Auditing and Assurance Standards Board (AUASB) Standards are applicable to engagements under these schemes. This Guidance Statement has been developed to clarify how the assurance practitioner meets their regulatory obligations whilst also applying the requirements of:

1. ASAE 3000, when conducting assurance engagements on subject matters other than historical financial information, which includes all assurance engagements under NGERS, CPM, JCP, CFI or RET schemes;
2. ASAE 3410 Assurance on Greenhouse Gas Statements, when conducting and reporting on an assurance engagement on emissions, including NGERS, CPM and JCP activity assessments;
3. ASRS 4400 Agreed upon Procedures Engagements to Report Factual Findings, when conducting and reporting on verification engagements under NGERS or CFI; and
4. ASAE 3100 Compliance Engagements, when conducting and reporting on assurance engagements regarding compliance with legislative or regulatory requirements under NGERS, CPM, JCP, CFI or RET schemes.

Applications for a Financial Control or Corporate Group Liability Transfer Certificate (LTC) under the CE Act^[13] require submission of auditor’s reports on the financial reports of the entity assuming the carbon liability. These audit engagements are not addressed in this Guidance Statement as they are engagements conducted under the Australian Auditing Standards, or the equivalent in another jurisdiction, for annual financial reports or under the Standards on Review Engagements for half yearly financial reports, for general purposes not specifically for LTC applications and so do not involve additional work effort for the assurance practitioner with respect to the LTC application.

Entities may seek advice with respect to emissions, energy or offsets, such as the appropriate application of measurement methodologies, application of operational control requirements, identification of facility boundaries, application of reporting or liability thresholds or recommendations for improvements to internal control or record keeping systems. Engagements of this nature, which provide recommendations or advice, are consulting engagements, which are not covered by the AUASB’s pronouncements and so are not addressed in this Guidance Statement. Nevertheless, assurance practitioners may conduct consulting engagements, as long as it does not impact their independence with respect to existing assurance or agreed-upon procedures engagements. The form of reporting for an assurance or agreed-upon procedures engagement is not appropriate for a consulting engagement as it may be misleading to users. Nevertheless, the assurance practitioner in conducting an assurance or agreed-upon procedures engagement may provide observations arising from their work which are significant or relevant to the engaging party’s role with respect to the subject matter or report weaknesses in internal control identified in the course of their work. The provision of this information is ancillary to the objective of an assurance engagement or an agreed-upon procedures engagement.