1. Audit and the Emissions Reduction Fund Julie Cammell, Scheme Audit and Assurance

2. Audit and the Emissions Reduction Fund – the context

3. Audit – a risk-based approach 3 Reduce complexity & cost Reduce complexity & cost Streamline audit requirements Uphold integrity of ACCUs Reduce risk of under- delivery Reduce incidence of fraud Increase transparency Audits and the Emissions Reduction Fund31 March 2015

4. Scheduled audits Large > 150 000 t CO 2 e Large > 150 000 t CO 2 e Medium 50 000 – 150 000t CO 2 e Medium 50 000 – 150 000t CO 2 e Small < 50 000 t CO 2 e Small < 50 000 t CO 2 e Initial audit Subsequent audits 1 initial 5 subsequent audits 3 subsequent audits 2 subsequent audits Project scale Average abatement volume p.a. 1 initial 4Audits and the Emissions Reduction Fund31 March 2015

5. Unscheduled additional audits A single offset report >100kt CO 2 e Subsequent audit required with report 5Audits and the Emissions Reduction Fund31 March 2015

6. Unscheduled additional audits Initial or subsequent audit with qualified assurance opinion Subsequent audit may be required for next reporting period Variance with similar projects Subsequent audit may be required for next reporting period Regulator initiated audits Compliance or other audit conduced under s214 and 215 of the CFI Act 6Audits and the Emissions Reduction Fund31 March 2015

7. 7Audits and the Emissions Reduction Fund31 March 2015

8. 8 Carbon Farming Initiative (CFI) transition Audits and the Emissions Reduction Fund31 March 2015

9. Regulations to a rule Carbon Credits (Carbon Farming Initiative) Rule 2015

10. 10 CFI ActCFI RegulationsCFI Rules Method Determinations Audit Threshold Instrument NGER Audit Determination Audits and the Emissions Reduction Fund31 March 2015

11. Audit: CFI vs ERF 11 CFIERF ScopeFull project complianceInitial audits – full project compliance Subsequent audits – offset report accuracy TypeReasonable assurance FrequencyWith every project reportMinimum of three audits over crediting period Who can conduct audits Category 2 or 3 auditors Audits and the Emissions Reduction Fund31 March 2015

12. The Clean Energy Regulator and the Emissions Reduction Fund audit

13. Role of the Clean Energy Regulator 1.Set the audit schedule. scheduling audits to maximise the number of ACCUs subject to audit basing on modelled abatement profiles 2.Assess the audit reports. no changes to this process 3.Undertake Regulator-initiated audits. no changes to this process Audits and the Emissions Reduction Fund31 March 201513

14. Auditors and the Emissions Reduction Fund

15. Role of the auditor 1.Conduct audits 2.Participants advised to engage their auditors before registration important for auditors to maintain independence Audits and the Emissions Reduction Fund1531 March 2015

16. Initial audit scope (Legislative Rule s74) The audit must be about whether, in all material respects: the project has been implemented in accordance with: >the section 27 declaration; >the methodology determination; and >the Act, and the offsets reports prepared in accordance with section 76 of the Act. The audit must cover the longest of the following periods: the first reporting period for the project; and the first 6 months of the project. 16Audits and the Emissions Reduction Fund31 March 2015

17. Subsequent audit scope (Legislative Rule s76) 17 The audit must be about whether, in all material respects: the offsets reports prepared in accordance with s76 of the Act; whether the project continue to meets all requirements following any change to a project’s: >compliance with project eligibility requirements; >monitoring requirements; or >a change relating to the scope or location of the project. if a change in the way the project is being operated that is likely to result in the section 27 declaration for the project being revoked, whether the reasons the declaration was likely to be revoked have been rectified. The subsequent audit may also be required to address other matters if requested in writing by the Regulator : Audits and the Emissions Reduction Fund31 March 2015

18. Legal right – when required 18 You are the site/asset owner You are the site/asset lessee You are a service provider Declaration of legal right to undertake the project Consent from site/asset owner to undertake the project Consent from relevant rights holders to undertake the project Declaration of intention to gain consents (where not available at eligibility) Audits and the Emissions Reduction Fund31 March 2015

19. 19Audits and the Emissions Reduction Fund Legal right and audits 31 March 2015

20. Legal right – what is required A clear statement form a relevant stakeholder that the participant is able to carry out the project for the length of the crediting period. A clear statement from the relevant stakeholder that the participant is able to obtain financial benefit from the project including through the ERF for the length of the crediting period. A brief description of the activities being undertaken as part of the project. 20Audits and the Emissions Reduction Fund31 March 2015

21. In summary Audit schedules have been introduced. Audit requirements have changed. Audit is a principle control of the ERF process. Important to understand the legislative rule, handbook and templates. 21Audits and the Emissions Reduction Fund31 March 2015