Auditor Performance
Framework
Peter Crookes, Scheme Audit and Assurance
Integrity of audits
Audits are a principal control for the agency’s schemes but
particularly for the ERF.
• This means the integrity of audits must be maintained.
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"Not only must
Justice be done;
it must also be
seen to be done."
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Today I will talk about
• How the agency manages auditor performance.
• The pilot desktop inspection programme.
• The Auditor Performance Advisory Committee.
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Managing auditor
performance
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Standard processes: gathering data
• education and client
engagement
• annual reporting
• NGER Audit Programme
• registration reviews
• analysing audit reports
• surveillance and
outreach visits
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In progress
• desktop inspections:
pilot programme
conducted recently
• audit analysis and risk
profiling
• working with
certification bodies, e.g.
ASIC
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Under development
On-site inspections
• at auditor’s premises
• inspections by agency staff and others appointed by agency
• both random and targeted inspections
Other
• increased scrutiny of fit and proper status
• checks to ensure CPD requirements met – annual selection of
auditors
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Desktop inspections
What is the pilot desktop inspection programme?
• started in August last year
• auditors from different firms provided documentation
• testing agency’s systems and processes
• gain insight into future role of desktop and physical inspections
• auditors to get more detailed feedback shortly
• desktop inspections will compliment other assessment
activities, e.g. reviews – they will not replace them
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Overall results
13 auditors assessed
7
Met
expectations
6
5
Improvements
recommended
4
3
2
Did not meet
expectations
1
0
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Findings
What was done well
Room for improvement
Terms of engagement
Independence and conduct
declarations
• comprehensive
• appears that sufficient time
allocated for audits
Management representation
letters
• legislative requirements usually
met
• signed after terms of
engagement
• legislation not strictly complied
with
• better use of audit standards
Peer review documentation
• lack of evidence
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Terms of engagement
The agency expects:
• Auditors should use Audit Determination Handbook template.
• Auditors must meet requirements in section 3.3 of Audit
Determination.
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Management representation letter
The agency expects:
• Auditors should use Audit Determination Handbook template – not
mandatory.
• Letter should be signed on same day as audit report. (No audit work
to be undertaken once this is signed).
• Auditors should meet requirements in paragraph 58 of GS021.
• Auditors should meet requirements in paragraph 56 of ASAE 3000.
• Auditors must meet requirements in section 3.14(2) of Audit
Determination.
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Independence and conduct declarations
The agency expects:
• Declaration for team leader should be signed same day as terms of
engagement – if not before.
• Declaration for peer reviewer should be signed within five days of
terms of engagement.
• Declaration for team member should be signed by the time start
working on assurance engagement.
• Auditors should meet requirements of section 290 of APES 110.
• Auditors must meet requirements in section 2.4 of Audit
Determination.
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Peer review – taking a close look
The agency expects:
• External peer reviewers
should be engaged in
writing.
• Peer reviewers should be
engaged no more than 5
days after terms of
engagement signed.
• Auditors must meet
requirements in section
3.7(2) of Audit
Determination.
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Where to now?
Desktop inspections will become part of business as usual.
Auditors can expect that:
• each year agency will select auditors to undergo desktop
inspections
• auditors to submit a set of designated documentation for
review, and
• on-site inspections to supplement desktop inspections.
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Auditor Performance
Advisory Committee
What is this committee?
The committee will:
• supervise the conducting of on-site inspections of auditors
• consist of four or five senior agency staff, and
• have four advisers—both agency staff and external experts.
It will meet several times a year to:
• select auditors for inspection
• choose scope of inspections
• appoint inspection teams, and
• review findings and make recommendations to delegate.
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Advantages of a committee
• Inspections not reliant on one individual and their personal
abilities and attitudes.
• Provides oversight to ensure the integrity of inspection
process.
• Facilitates robust and rigorous decision-making process.
• Allows agency to make use of outside expertise e.g. former
registered greenhouse and energy auditors.
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Inspections
Expected to be three or more inspections a year. These will:
> be performed on both selected auditors and on a random basis
> take place at an auditor’s premises
> require auditor to provide access to inspectors—including to records
and other documentation
> look into the conduct of several audits by same auditor, and
> likely to be performed by one expert and one agency staffer who is
an Authorised Officer.
The first inspection should take place in April or May.
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Looking at the big picture
• Audits are principal
control for ERF and
other schemes.
• Audits only have value if
they have integrity.
• This integrity is crucial
for both agency and
auditors.
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Questions?
Peter Crookes
You can also email audit@cleanenergyregulator.gov.au or phone 1300 553 542.