The objective of NGERS is to provide “a single national reporting framework for the reporting and dissemination of information related to GHG emissions, GHG projects, energy consumption and energy production”^[25] for a number of government purposes. With respect to assurance, NGERS provides a consistent approach to the conduct and reporting on assurance and agreedupon procedures (verification) engagements on reports issued under NGERS, whether conducted voluntarily or by regulatory requirement.

Mandatory registration and reporting of emissions, energy consumption and energy production under NGERS is required for controlling corporations meeting group or facility emissions or energy thresholds. Controlling corporations which exceed the group threshold are required to report on all facilities.

ASAE 3410 applies to reports prepared under section 19 of the NGER Act, reporting GHG emissions, energy production and energy consumption of a registered corporation’s group, and section 22A of the NGER Act, reporting “covered” scope 1 emissions of a liable entity, to the extent that that standard applies to assurance on a GHG Statement, or a portion of a GHG Statement of an entity. A GHG Statement under ASAE 3410 includes an entity’s emissions and, if applicable, removals or deductions, for the period. GHG emissions under ASAE 3410 include direct (scope 1) emissions and indirect (scope 2 and 3) emissions, but do not include energy consumption or production, required to be reported on in a section 19 NGER Report. Although ASAE 3410 does not provide requirements for assurance over energy consumption or production, it can still be used as guidance for auditing energy. An entity, under ASAE 3410, is sufficiently broadly defined to include facilities under the operational control of a registered corporation or members of its group, which are required to report under NGERS.

NGERS provides for “greenhouse and energy audits”^[26] which include:

1. Assurance engagements, providing a reasonable or limited assurance report; and
2. Verification engagements, providing a report of factual findings with no assurance.

Greenhouse and energy audits are not equivalent to “audit engagements” under the AUASB Standards, which is a term restricted to reasonable assurance engagements.^[27] ASAE 3410 applies to greenhouse and energy audits to the extent that they are assurance engagements on a Greenhouse and Energy Report or portion of a Greenhouse and Energy Report.

Verification engagements are defined under the NGERS Audit Determination as “a greenhouse and energy audit the purpose of which is to verify the matter being audited. It does not contain an opinion as to the reliability, accuracy and completeness of the matter being audited.”^[28] The contents of a verification engagement report^[29] specify that it is not an assurance report and only findings with respect to each procedure are reported. Verification engagements are equivalent to agreed-upon procedures engagements under the AUASB Standards. The requirements for agreed-upon procedures engagements are contained in ASRS 4400 and that is the only AUASB Standard which applies to those engagements.

Regulator Initiated Engagements

The NGER Act provides for engagements initiated by the Regulator for compliance and monitoring purposes on registered corporation’s compliance with the NGER Act or Regulations. For the Regulator initiated engagements the assurance practitioner is engaged after submission of the Greenhouse and Energy or Emissions Report and so after period end, which may create challenges for the assurance practitioner in gathering sufficient appropriate evidence to support their conclusions.

The subject matter of engagements initiated by the Regulator, may be one or more aspects of the registered corporation’s compliance with the NGER Act or NGER Regulations.^[30] Whilst the subject matter of these engagements is at the Regulator’s discretion, the main compliance requirements in that legislation currently relate to:

1. Registration requirements under section 12 of the NGER Act for controlling corporations meeting thresholds under section 13;
2. Reports under sections 19, 22A and 22AA of the NGER Act on GHG emissions, energy production or energy consumption or a portion of that report, which encompasses the application of reporting boundaries based on “operational control” requirements in the NGER Act, measurement of emissions or energy in accordance with the NGER Measurement Determination and presentation and disclosure in accordance with the NGER Act; and
3. Record keeping requirements.

Regulator initiated engagements are compliance engagements, consequently, in addition to applying the NGER Audit Determination the assurance practitioner applies ASAE 3100 and, when assuring emissions, ASAE 3410.

Emitter or Project Proponent Initiated Engagements

The NGER Act also provides for assurance reports to accompany reports lodged for the purposes of other schemes, including CPM, JCP and CFI. In addition, emitters may voluntarily engage an assurance practitioner to provide assurance on their NGER Report. For engagements initiated by the emitter or project proponent either voluntarily or to meet a requirement of a scheme, the assurance practitioner may be engaged before or during the reporting period. Engagement before or early in the reporting period maximises the available methods of evidence gathering and allows greater scope for reliance on controls, as evidence of their operating effectiveness is more likely to be available.

From 1 July 2012, the CPM requires entities over specified thresholds to report their emissions number, comprising covered scope 1 emissions and potential emissions embodied in an amount of natural gas, annually for the period to 30 June under section 22A of the NGER Act (Emissions Report) to the Regulator by 31 October.  The liable entity is required to surrender carbon units at a rate of 1 per tonne CO₂‑e of emissions.  Entities with operational control over the facility are liable for carbon units at a fixed price for an initial period of 3 years of the CPM followed by a flexible price cap‑and‑trade scheme commencing 1 July 2015.  In the fixed price years, emitters are required to surrender 75% of their carbon units obligation by 15 June of the compliance year (ending on 30 June), lodge their Emissions Report by 31 October and “true up” the remainder of the obligation by 1 February based on the Emissions Report submitted and any subsequent adjustments.

For liable entities under the CPM with emissions over specified thresholds, a reasonable assurance report, prepared by a Category 2 or 3 greenhouse and energy auditor in accordance with the NGER Audit Determination, must also be submitted with the Emissions Report. The subject matter of the reasonable assurance report is the Emissions Report and record keeping required under section 22B.^[31] Regulations may also specify any other matters relating to the Emissions Report to be assured.^[32]

In addition to the NGER Audit Determination, the assurance practitioner applies ASAE 3410 when conducting assurance on an Emissions Report and applies ASAE 3100 when conducting assurance on record keeping.

Emissions intensive Trade exposed Activity Assessment

The Jobs and Competitiveness Program (JCP) provides for assistance in the form of free carbon units for activities which are assessed to be emissions‑intensive trade‑exposed (EITE).  If the preliminary assessment indicates the potential for an activity to meet the JCP eligibility criteria, a draft activity definition is issued by the DCCEE. 

Applications can then be made for formal assessments of activities as EITE, which are used to develop the final activity definition and allocative baselines for the assistance to be provided. These applications for formal assessment require reasonable assurance reports to be prepared by a registered company auditor under ASAE 3000, to be submitted along with the application. The subject matter of the reasonable assurance report is:

1. Emissions;
2. Production;
3. Revenue; and
4. The basis of preparation,

reported in the application in accordance with the EITE activity description, the Guidance Paper and Supplementary Guidance.^[33]

When providing assurance on emissions in an application for EITE assessment, the assurance practitioner applies ASAE 3410 and when providing assurance on compliance, the assurance practitioner applies ASAE 3100, in addition to ASAE 3000.

Emissions-intensive Trade-exposed Industry Assistance

The CE Regulations require assurance reports, prepared by a registered company auditor, authorised audit company or a category 2 or 3 registered greenhouse and energy auditor, to be submitted with applications for free carbon units under JCP for entities conducting EITE activities.  The assurance reports are required to provide:^[34]

1. Reasonable assurance on the activity’s compliance with the relevant EITE activity description^[35] and production reported in the application, in accordance with ASAE 3000, and emissions for new facilities reported in the application, in accordance with NGERS; and
2. Limited assurance on expected production, for new or expanding activities, in accordance with ASAE 3000.

In addition to ASAE 3000, the assurance practitioner applies ASAE 3410 when providing assurance on emissions for new facilities in the application for EITE assistance under JCP and ASAE 3100 when providing assurance on compliance.

Liquefied Natural Gas Supplementary Assistance

Applications for supplementary assistance for liquefied natural gas (LNG) producers under JCP also require a reasonable assurance report to be submitted with the application, prepared by a registered company auditor, authorised audit company or a category 2 or 3 registered greenhouse and energy auditor. The subject matter of the reasonable assurance report is:^[36]

1. The provisional LNG emissions number;
2. The process flow diagram; and
3. The average energy consumed for LNG production (GJ/t),

reported in the application.

In addition to NGERS, the assurance practitioner applies ASAE 3410 when providing assurance on the provisional LNG emissions number and ASAE 3000 when providing assurance on the process flow diagram and production.

Eligible Offsets Projects

The CFI provides for Australian carbon credit units (ACCUs), equivalent to 1 t CO₂‑e, to be issued for abatement from eligible offsets projects. CFI activities can earn either non‑Kyoto ACCUs or Kyoto ACCUs (equivalent to compliance ACCUs to be issued after 2012), depending on the nature of the CFI activities.  Only Kyoto or compliance ACCUs can be offset against a carbon liability under Australia’s carbon pricing mechanism or exchanged for international emissions units. Compliance or Kyoto activities include: reducing emissions from livestock, manure or fertiliser use, reforestation, avoided deforestation and reduction in pre July 2012 landfill emissions.  Non‑Kyoto activities include: soil carbon management, feral animal management, improved forest management and non‑forest revegetation. 

Entities wishing to be project proponents can apply to be a recognised offset entity (ROE), which requires them to pass the “fit and proper person” test. Each ROE is required to open a registry account in the Australian National Registry of Emissions Units, into which ACCUs earned are deposited.

A ROE applies for a declaration that the activity is an eligible offsets project if:

1. The ROE has a legal right to undertake the project;
2. For sequestration projects, the ROE has the applicable carbon sequestration right and the consent of any others with eligible interest in the land where the project will be undertaken;
3. Any necessary environmental, planning and water approvals have been obtained;
4. An approved CFI methodology exists which is applicable to the project; and
5. The activity is on the positive list (projects on the positive list have met the additionality test, in that projects must not be required by law or already be common practice) and not on the negative list nor involve clearing native forests.

The CFI Act^[37] allows for the CFI Regulations to require a prescribed audit report to accompany applications for an eligible offsets project, however the Regulations do not currently require an audit report to be submitted.

An approved CFI methodology, provided in a CFI methodology determination, comprises:

1. Requirements that must be met for an offsets project to be an eligible offsets project;
2. Methodology for calculating the CO_2‑e net abatement, including instructions for determining a baseline; and
3. Project‑specific data collection, monitoring, reporting and record keeping requirements.

Offsets Reports and Certificate of Entitlement

For eligible offsets projects, ROEs must submit a certificate of entitlement application to the Regulator, as a basis on which the Regulator issues ACCUs into the ROE’s registry account. The application includes an Offsets Report for their project’s nominated reporting period. The first reporting period is between 12 months to 5 years from the date the project was declared eligible, then every 1 to 5 years. The crediting period^[38] is set out in the CFI legislation for each eligible offsets project and is the length of time that the project can generate carbon credits using the approved CFI methodology.

Offsets Reports and applications for a certificate of entitlement lodged are required to be accompanied by a reasonable assurance report prepared in accordance with the NGER Audit Determination by a category 2 or 3 registered greenhouse and energy auditor, with the exception of exempt projects.^[39] The reasonable assurance report on an Offsets Report concludes, for the reporting period, whether:^[40]

1. The project is in accordance with:
   1. The declaration of an eligible offsets project;^[41]
   2. The applicable methodology determination; and
   3. The requirements of the CFI Act and CFI Regulations, which primarily comprise notification requirements,^[42] record keeping requirements^[43] and provisions to prevent double counting of abatement that has already been recognised under another carbon offsets project.^[44]
2. The project proponent meets the requirements under the applicable methodology determination.^[45]

Assurance engagements on eligible offsets projects and Offsets Reports are compliance engagements, consequently assurance practitioners apply ASAE 3100, in addition to the NGER Audit Determination as required by the CFI Regulations.

Regulator Initiated Engagements

The Regulator may initiate an assurance engagement or agreed‑upon procedures engagement (verification) on one or more aspects of an eligible offsets project proponent’s compliance with the CFI Act or associated provisions^[46] for compliance or monitoring purposes.^[47]  The engagement is required to be conducted by a registered greenhouse and energy auditor.  Whilst the subject matter of these engagements is at the Regulator’s discretion, the main CFI compliance requirements relate to whether the project activity conforms with the applicable CFI methodology determination, including data collection, monitoring, reporting and record keeping.

In addition to the NGER Audit Determination, the assurance practitioner applies ASAE 3100 for Regulator initiated assurance engagements and ASRS 4400 for agreedupon procedures engagements.

The Renewable Energy Target (RET) imposes a liability if a proportion of electricity produced does not come from renewable sources, which may increase the cost of electricity to EITE activities along with other businesses. Partial exemption certificates (PECs) from RET liability for electricity acquired are available to EITE activities defined in the RET Regulations, which are generally the same as those which qualify for assistance under JCP.

Applications under the Renewable Energy (Electricity) Act 2000 (RET Act) for PECs for an EITE activity which will be acquiring electricity for use in the activity from an entity liable under the RET^[48] are required to be accompanied by an assurance report.^[49]  The Renewable Energy (Electricity) Regulations 2001 (RET Regulations) require that report to be a reasonable assurance report on:^[50]

1. The activity’s compliance with the description of an EITE activity;
2. Production for each year reported; and
3. For new entrants or significant expansions, new or expected additional production.^[51]

The RET Regulations require the auditor be a registered company auditor, authorised audit company or a category 2 or 3 registered greenhouse and energy auditor and to conduct reasonable assurance engagements for PEC applications in accordance with the NGER Audit Determination or ASAE 3000 or other relevant AUASB Standards.^[52]  The applicable AUASB Standards for assurance engagements on:

1. Compliance with the EITE activity description in PEC applications, is ASAE 3100; and
2. Prior year, new or expected additional production in PEC applications, is ASAE 3000.