Appendix C- Audit Requirements - PowerPoint Presentation

Appendix C- Audit Requirements Economic Benchmarking Backcast Data Template

1.0 Audit of actual historical financial information The audit   of actual historical financial information must : comply with the Auditing Standard ASA 805 Special Considerations — Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement ; assess and verify whether the historical information: has been captured for the entire time period required ; has been derived from actual historical information and can be directly reconcilable to the audited statutory financial statements of the NSP; is complete and accurate; is prepared consistent with the requirements of the Notice   ; and has been prepared in a manner consistent with the CAM   .

2.0 Review of estimated historical financial information The review   of the estimated historical financial information must : comply with the ASAE 3000 Assurance engagements other than audits or reviews of historical financial information ; assess: the validity of the certification by the NSP that it was not possible to provide actual information and hence estimates have been provided; that the estimated historical financial data has been derived based on reasonable management judgement and assumptions and is the most appropriate estimate of the information required; that the estimated historical data has been captured for the entire time period required; that the estimated historical data is prepared consistent with the requirements of the Notice;   and that the estimated historical data has been prepared in a manner consistent with the CAM.  

3.0 Review of historical actual and estimated non-financial information The review  of the non-financial information must : comply with the ASAE 3000 Assurance engagements other than audits or reviews of historical financial information ; assess: that the non-financial data has been captured for the entire time period required; where actual data is provided, that it is complete and accurate, and can be directly reconcilable to systems or other supporting schedules maintained by the NSP; and where estimated: the validity of the certification by the NSP that it was not possible to provide actual information and hence estimates have been provided; that the estimated historical non-financial data has been derived based on reasonable management judgement and assumptions and is the most appropriate estimate of the information required; and that the non-financial has been prepared consistent with the requirements of the Notice.  

4.0 Review of processes, procedures used and systems applied to provide, prepare and maintain non-financial information The review of processes, procedures used and systems applied to provide, prepare and maintain the non-financial must : comply with the ASAE 3000 Assurance engagements other than audits or reviews of historical financial information ; assess: the reliability of the processes, procedures used and the systems applied to provide, prepare and maintain the information; whether the processes, procedures and systems were correctly used and applied by the relevant staff to prepare, provide and maintain the information; whether the systems are able to prepare and provide the required parameter definitions and data exclusions in accordance with the AER’s requirements; whether the systems are able to competently identify and correct errors and whether the information provided reflects any such corrections; whether the processes, procedures, or systems provide any missing information or unusual trends that suggest errors in information entry or manipulation.

5.0 Issues raised by NSPs regarding assurance requirements Issue highlighted Status of concern Assurance requirements should affirm that audit requirements are to be fulfilled by a person qualified under the auditing standards Addressed in Appendix C Audit Requirements , Section 2 “Class of Person to Conduct Audits”. The AER should explicitly identify a financial reporting framework to be tailored for each RIN or RIO Given the importance of data, that data should be audited against a clearly defined standard The AER should set out detailed assurance requirements in relation historic information This is currently under consideration by AER in terms of the development of an overall framework and potential development of user instructions/accounting guidelines. High level audit requirements have been addressed in Appendix C A udit Requirements.

5.0 Issues raised by NSPs regarding assurance arrangements (cont.) Issue highlighted Status of concern Historical and forecast information will require different standards Appendix C has dealt with the assurance for historical data. If NSP is required to provide forecast information, the AER will need to consider the level of assurance (if any) under: ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information ; or ASRS 4400 Agreed-Upon Procedures Engagements to Report Factual Findings Auditor responsibilities Addressed in Appendix C Audit Requirements , Section 2 “Class of Person to Conduct Audits”.

Issue highlighted Status of concern More detail on how the auditor should be engaged The AER should consider allowing independent engineering sign off on non-financial data and limit audit requirement to financial data Limitations with auditing backcast data Backcast data verification requirements Backcast data cannot be audited Engagement of the auditor is the responsibility of the NSP. In most cases, we would assume that the auditor engaged for the work would be the external auditor of the NSP. Potential use of experts (i.e. engineers) within the engagement team when conducting procedures over non-financial data. Appendix C has tried to address varying levels of assurance to be provided over back cast data dependent on the nature of how the data is derivedIf the data cannot be derived from the retention of actual data, then any estimate imposed is reviewed under ASAE 3000. 5.0 Issues raised by NSPs regarding assurance arrangements (cont.)