Request for Auditof an Accredited Certificate Provider in Respect of a Specific RESA

AUDIT SCOPE: Commercial Lighting
Audit of Accreditation Conditions

Request for auditof an Accredited Certificate Provider in respect of a specific RESA.

Accredited Certificate Provider / <Insert here>
Accreditation Number / <Insert here>
Name of RESA / <Insert here>
RESA Identifier/s / <Insert here>
Calculation Method / Commercial Lighting Energy Savings Formula
ESC creation period covered by the audit / ESCs created from <Insert date to <Insert date
Number of ESCs to be audited / <Insert here>

This document details the nature and scope of the services to be provided by a member of the ESS Audit Services Panelin respect of the creation, or proposed creation of, Energy Savings Certificates (ESCs) using the Deemed Energy Savings Method – Commercial Lighting Energy Savings Formula under the Energy Savings Scheme Rule of 2009 (the Rule).

Copies of the Rule, the Audit Guideline and other relevant documentation are available on theEnergy Savings Scheme website:

All queries should be directed to:

Scheme Administrator
Energy Savings Scheme
Independent Pricing and Regulatory Tribunal
PO Box Q290
QVB Post Office NSW 1230
email:

Table of Contents

1Introduction

1.1Preparing a Detailed Scope of Works

2Matters to be Audited

2.1ESC Creation

2.2Special Conditions

2.3Additional Audit Requirements

2.4Record Keeping Arrangements

3Audit Approach

3.1Audit Standards

3.2Materiality and Establishing an Error Rate

3.3Sample and Site Selection

3.4Audit Procedures

4Audit Plan

5Audit Resourcing

6Audit Quote

7Schedule of installation sites

8Audit Report

8.1Audit Opinions

8.2Schedule of Audit Procedures and Findings

8.3Audit Recommendations

Appendix A – Specific Audit Requirements for Commercial Lighting

Perform Site Visits

Inspect/Reconcile Products and Equipment

Check Use of Commercial Lighting Calculation Tool

Procedures for Emerging Lighting Technologies (ELT)

Procedures for Extended Operating Hours (EOH)

Use of Energy Mad 15W Ecobulb CFL Downlight

1Introduction

Under the Energy Savings Scheme Audit Guideline (Part B of the ESS Compliance and Performance Monitoring Strategy) and the Audit Services Panel Agreement, audits may be commissioned either by the Scheme Administrator, or by the Accredited Certificate Provider (ACP)[1].

This Audit Scope is provided to assist members of the ESS Audit Services Panel to prepare a Detailed Scope of Works (DSW) for auditing commercial lighting Recognised Energy Savings Activities (RESAs), regardless of who is commissioning the audit.

A DSW must be approved by the Scheme Administrator prior to any audit commencing.

1.1Preparing a Detailed Scope of Works

In preparing a DSW, you should consider the information provided in this document, as well as the Energy Savings Scheme Audit Guideline and the Audit Services Panel Agreement.

Your DSW should describe how you propose to meet the specific requirements of this Audit Scope. In particular, your DSW should detail:

Matters to be audited

Audit Approach

Audit Plan

Audit Resourcing

Quote for Services (only required where IPART is commissioning the audit).

A schedule of all the installation sites to be covered by the audit.

2Matters to be Audited

The Scheme Administrator requires the auditor to express a reasonable level of assurance over the matters being audited. Therefore you must conduct sufficient audit procedures to enable the expression of a reasonable(positive) assurance opinion that, in all material respects, the matters being audited comply with the Scheme requirements.

The following scope items are matters to be audited for all commercial lighting installation RESAs. The audit scope should address only the relevantmatters to be audited:

Number of ESCs created;

Special Conditions; and

Additional Audit Requirements.

In some cases, the Schedule to the Accreditation Notice may specify that matters to be audited include record keeping arrangements for the RESA.

Please contact IPART if you wish to vary the matters to be audited for a particular RESA or if clarification is required.

2.1ESC Creation

The audit should identify the number of ESCs registered (or proposed to be registered) in respect of the audit period that have been calculated:

In accordance with the Rule, Act, Regulations and Conditions of Accreditation;

Based on accurate and reliable records and other relevant supporting documentation;

In a manner consistent with the methodology and approach specified in the ACP’s Application for Accreditation and subsequently submitted information, as approved by the Scheme Administrator; and

In a manner consistent with the Accreditation Notice and Schedule(s), including any Special Conditionsas specified by the Scheme Administrator.

2.2SpecialConditions

You must audit the ACP’s compliance with the following as a unique scope item in the audit:

Special Conditions for the RESA, as listed in Item 9 of the respective Schedule to the Accreditation Notice.

2.3Additional Audit Requirements

You must include the following as unique scope items in the audit:

The ACP’s compliance with its Insurance requirements in accordance with Item 16 of the Accreditation Notice and Item 7 of the relevant Schedule;

Outstanding recommendations from previous audit reports; and

Any other audit requirements specified by the Scheme Administrator.

2.4Record Keeping Arrangements

The audit should confirm that the ACP’s record keeping arrangements are:

Adequate to meet the requirements of clause 78T of the Regulation;

Consistent with the Record Keeping Guide published by the Scheme Administrator;

Adequate to support the creation of ESCs using the approach approved by the Scheme Administrator; and

Adequate to demonstrate the ACP’s ability to achieve on-going compliance with the relevant legislation and its Accreditation Notice for the purpose of creating ESCs.

3Audit Approach

3.1Audit Standards

You must conduct areasonable assurance audit in accordance with your auditing standard acceptable to IPART. Various auditing standards are acceptable to IPART, including:

ISO14064-3Greenhouse gases –Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions

ISAE 3000 - International Standard on Assurance Engagements

Australian Auditing Standards – as published by the Auditing and Assurance Standards Board (AuASB).

Auditors should contact IPART before preparing a DSW if they want to use other standards.

Auditors are required to disclose in their Audit Report the standard used to conduct the audit and state that the audit was conducted in accordance with this standard.

3.2Materiality and Establishing an Error Rate

IPART expects auditors to identify errors (misstatements) and assess their materiality during audits. Information is considered to be material if its omission or misstatement could adversely influence decisions relating to accreditationconditions or relating to the number of ESCs registered by an ACP.

Materiality can be both quantitative and qualitative and IPART treats qualitative and quantitative errors differently, as described in the Table 3.1.

Table 3.1Treatment of Qualitative and Quantitative Material Errors

Error type / Error identified / Consequence
Qualitative errors / Material / Outcome of the audit is considered unsatisfactory and the ACP would be required to take immediate corrective actions to rectify the error. Once these actions have occurred a second auditis commissioned (at the ACP’s expense). Accreditation conditions may be amended.
Non material / Outcome of the audit is generallyconsidered satisfactory and errors detailed in Schedule of Audit Procedures and Findings.
The ACPwould be given a certain period of time to make the recommended changes and report on these changes to IPART. Accreditation conditions may be amended.
Quantitative errors / Material
(error >5%) / Outcome of the audit is considered unsatisfactory and the error rate (5% or greater) is applied to the entire ESC population being audited. This means that:
The ACP can choose to voluntarily forfeit ESCs at the identified error rate; or
The ACP is required to reduce the number of ESCs proposed to be created by the identified error rate.
Additional compliance enforcement action may also be taken. If the ACP believes it can reduce that error rate IPART may allow the ACP to rectify the errors and commission a second audit over a larger sample size (at the ACP’s expense).
Non material (error <5%) / Audit is generally considered satisfactory and the identified errors are either:
Voluntarily forfeited by the ACP from ESCs already created; or
Subtracted from the number of ESC proposed to be created by the ACP.

IPART expects that the audit outcomes will clearly identify theactual error rate. All errors should be reported to IPART regardless of whether they exceed the materiality threshold.

3.3Sample and Site Selection

Sampling

Where a quantitative error rate is considered material (error >5% in the sample), the quantitative error rate will be extrapolated to the whole population and an adjustment made to the number of eligible ESCs for an ACP. This means that IPART must be confident that the error rate can be extrapolated across the entire population being audited.Therefore, it is essential that a statistically significant number of samples are selected and tested.

In order to confidently extrapolate the error rate,IPART requiresa 95% confidence interval with a maximum width of ±5%to be established. In most cases, this means the number of samples must be established across installation sites rather than across ESCs.

However, a risk based approach should be applied when selecting samples and auditors can consider stratifying the population based on:

Type of lighting technologies

Location (regional/metro sites)

Size of sites (large/small sites)

Differing installers (contractor/employees).

The proposed sampling regime and its mathematical basis must be included in the DSW.

Site Visits

Site visits are for the purpose of verifying installations and the implementation of relevant policies and procedures. Site visits are not intended to establish a statistically significant error rate but should be selected to represent a cross-section of technologies, locations (including regional areas), site sizes and installers as much as possible.

The number and type of sites to be visitedby you and the rationale for selecting sites mustbe included in the DSW. However, the specific sites should not be named or discussed with the ACP prior to the audit being commissioned.

For ACPs using third parties to undertake commercial lighting upgrades, the auditor must visit at least one site where an upgrade was undertaken by a third party for which ESCs are being audited. IPART may also request auditors undertake site visits in regional areas where installations are occurring.

For ACPs using third parties to undertake commercial lighting upgrades, the auditor must visit at least one site for third party that undertook an upgrade for which ESCs are being audited. IPART may also request auditors undertake site visits in regional areas where installations are occurring.

Please contact IPART if you wish to discuss the appropriate selection of sites for a particular RESA.

3.4Audit Procedures

The audit procedures undertaken should be determined using your professional judgement in regard to what is sufficient evidence to support a positive opinion in relation to the matters being audited. These should be identified in your DSW. A list of typical audit procedures has been developed to assist auditors in this regard and has been included below.

There are a number of specific audit requirements that IPART has developed in relation to commercial lighting installation audits. These specific audit requirements have been included in Appendix A.You should refer to these when scoping your auditand ensure that your DSW allocates adequate resources to meet these requirements to the satisfaction of IPART. You do not need to detail these specific audit requirements in your DSW but should advise that you are able to meet the specific audit requirements detailed in Appendix A in your proposed audit.

Typical Audit Procedures

The following provides a non-exhaustive list of typical audit procedures used to establish reasonable assurance:

Understand the RESA activity and review each component of the RESA;

Perform a site visit to administrative offices to discuss the RESA and hold interviews with relevant ACP personnel in relation to systems, procedures, controls and quality assurance activities;

Review relevant documentation that supports process descriptions provided by the ACP;

Review information systems which generate information relevant to the matters being audited. This may require an examination of:

–the design and operation of internal system controls; and/or

–the design of queries and calculation formulae which are used to generate information that is subject to audit;

Select a representative sample and test the validity of source data and any assumptions used to support the creation of ESCs (for example,evidence of implementation date, electricity bills, inspect/reconcile products and equipment,);

Select a representative sample and test the completeness and accuracy of recording, aggregation and transcription of source data used to support the creation of ESCs;

Ensure that document management and record keeping is compliant with the ACP’s Accreditation Conditions relating to Record Keeping Arrangements and that these processes and procedures are operational effectively;

If the ACP is a nominated Energy Saver, you must:

–Review the Customer Engagement Process and its implementation, including review against the Customer Engagement Process in the ACP’s Application for Accreditation, Accreditation Conditions and guidance provided in the Commercial Lighting Energy Savings Formula Guide; and

–Select a representative sample of Nomination Forms and check that the signed Nomination Forms and the data within the nomination form are valid and correspond to ESC creation;

Assess calculation methodologies, including determining whether the Commercial Lighting Calculation Tool has been correctly used;

Check ESS Registry to confirm any ESCs registered are consistent with the audited eligible ESCs;

Confirm that the RESA does not result in decreased service levels and determine whether the ACP has procedures to adequately account for degradation in service levels after the RESA activity has been implemented;

Perform additional procedures for Emerging Lighting Technologies (ELT), Extended Operating Hours (EOH) and Use of Energy Mad 15W Ecobulb CFL Downlights (refer to Appendix A); and

Perform site visits to a number of project sites to verify lighting installations and evidence the implementation of the relevant policies and procedures.

The sample selection guidance in Section 3.3 should be used when selecting representative samples.

4Audit Plan

Your DSW should include an audit plan outlining the various stages of the audit. The audit plan should identify a possible commencement date and expected completion date for the audit where possible. It is understood that this timeframe may be subject to change.

5Audit Resourcing

Your DSW should identify the level of resourcing that will be required to complete the audit. You should identify your staff that will participate in undertaking the audit including the Lead Auditor and arrangements for peer review of the audit report.

6Audit Quote

Where IPART is commissioning an audit, you will be required to provide a quote for services to IPART with your DSW. The quote should be a fixed price quote and must:

Itemize a separate cost for each stage of work specified in thescope of work;

Specify a total cost for the services applying the hourly rates set out in Schedule 4 of the Panel Services Agreement when calculating each ofthe costs referred to above, subject to any variation to the ratesas approved by IPART

Be exclusive of GST.

7Schedule of installation sites

A schedule of all the sites that have received a lighting upgrade or replacement and that are to be covered by the audit should be attached to the DSW. The schedule should include:

The site address;

The number of ESCs created or eligible for creation, and

The date of the lighting installation.

8Audit Report

Should your audit scope be approved and youare commissioned to undertake the audit, youwill be required to provide a written audit report to the Scheme Administrator. You should consider the requirements of a satisfactory audit report when developing a DSW. Further detail regarding audit reports is provided in the ESSAudit Guideline.

Auditors should provide a draft report to IPART in the first instance. It should only be forwarded to the ACP once IPART has approved its release. A final audit report will be requested by IPART once IPART and the ACP have had an opportunity to provide comment.

Your audit report will include:

Detail of the matters being audited (as detailed in Section2) consistent with the approved DSW;

A description of the audit approach in relation to each matter being audited;

A statement that the audit was performed in accordance with the auditing standard acceptable to IPART;

Details of any limitations in the scope of work undertaken by you;

The audit opinion in relation to each of the matters being audited, includingthe time period covered by the audit;

A Schedule of Audit Procedures and Findings and

Audit recommendations or observations

8.1Audit Opinions

The audit opinion should be expressed in the positive form to provide reasonable assurance. The audit opinion should be in relation to each of the matters in the scope of the audit (as detailed in Section 2).

The audit opinion should be included as a separate section in the audit report. This section should clearly express your opinion as to whether, in all material respects, the matters being audited comply with the Scheme requirements.

The following must be included for audit opinions relating to ESC Creation:

The number of valid ESCs that have been registered or are proposed to be registered (with ESCs reported by calendar year vintage)

The number of invalid ESCs that have been registered or are proposed to be registered (with ESCs reported by calendar year vintage)

A calculated error rate and whether this error rate is considered to be material.

8.2Schedule of Audit Procedures and Findings

IPART requires a Schedule of Audit Procedures and Findings as specified by the ESS Audit Guideline and providing details of procedures and findings relating to each scope item and any associated audit tasks. This includes:

Specific items in the scopeand specific requirements for each scope item