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

AUDIT SCOPE:
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 / <Insert here>
Period covered by the audit / <Insert here>
Number of ESC to be audited / <Insert here>

This form details the nature and scope of the services to be provided by a member of the ESS Audit Services Panel, at the request of the Scheme Administrator, in respect of the creation, or proposed creation of, Energy Savings Certificates (ESCs) 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

1Audit Scope

1.1Background Information

1.2Scope

1.3Audit Approach

2Reporting

2.1Content of Audit Report

Appendix 1 – Phone Survey Script <delete if not required>

1Audit Scope

1.1Background Information

<Name of ACP>,in its capacity as an AccreditedCertificate Provider (ACP), has registeredEnergy Savings Certificates (ESCs) under the Energy Savings Scheme Rule of 2009 (the Rule).On 24 December 2010, the Rule was amended and any activities carried out from this date onwards must comply with the amended Rule.

The registration of ESCs is in respect of the Recognised Energy Savings Activity (RESA) known as <Name of RESA>. The specific accreditation conditions of the RESA are listed in <Insert Schedule #> of the Accreditation Notice <Insert: Issue Number and Date of Accreditation Notice>

<Insert brief description of the RESA, calculation method, audit period and number of ESCs to be audited>For example - The RESA involves the replacement of showerheads with water efficient showerheads, with at least 3 Star WELS Rating (as defined in the Scheme Rule). ESCs are created from the RESA, based on valid Nomination Forms, using the Default Savings Factor method of the Rule.

The Scheme Administrator has identified a number of areas whereassurance is required in relation to the Accreditation Conditions for the RESA, specifically<for example - following the creation of 10,000 ESCs>. Accordingly, the Scheme Administrator has determined a number of matters on which the nominated auditor is requested to provide an opinion.

The Scheme Administrator requires a report to be prepared by the nominated auditor, detailing the audit opinion and related findings in relation to the matters detailed in Section 1.2 below.

This report is required to be lodged with the Scheme Administrator, before release to the ACP, as the Scheme Administrator is the client for this audit.

The audit is to be based on a fixed price quote under the terms of the audit panel agreement, with the costs of external service providers included.

1.2Scope

The auditor should consult the Accreditation Notice for the RESA to determine which of the following scope items are appropriate and should contact the Scheme Administrator if clarification is required. In each case, the audit scope should contain only the required elements.

The auditor is required to conduct sufficient procedures to enable the expression of a reasonable (positive) assurance opinion that, in all material respects:

ESC Creation <required>

the number of <Number of ESCs> ESCs registered (or proposed to be registered) in respect of the period covered by the audit has 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[1].

Record Keeping Arrangements deleted if not required

the ACP’s record keeping arrangements are:

–adequate to meet the requirements of clause 78T of the Regulation;

–consistent with the Guide to Record Keeping 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 their Accreditation Notice for the purpose of creating ESCs.

SpecialConditions <required>

The auditor should include any Special Conditions for the RESA, as listed in the respective Schedule to the Accreditation Notice, as unique scope items in the audit.

The auditor should also include any outstanding recommendations from previous audit reports, as unique scope items in the audit.

Audit Recommendations <required>

The Scheme Administrator also requests the auditor to note any relevant matters regarding the operating procedures of the ACP and, if appropriate, recommend any changes to the Conditions of Accreditation.

Additional Audit Requirementsdeleted if not required>

In forming the audit opinion, and in addition to the procedures required to express an opinion as above, the auditor is required to includea telephone survey of a sample of the residential sites where the RESA has been implemented.

1.3Audit Approach

A reasonable assurance audit should be conducted in accordance with an appropriate standard (AUS 108: Assurance Engagements, ISAE 3000, etc). The auditor must acknowledge in the audit report the standard applied in conducting the audit.

The specific audit procedures undertaken will be determined by the auditor using professional judgement in regard to what is sufficient evidence to support an opinion in relation to all of the matters within the audit scope.

Not withstanding the specific audit procedures considered appropriate by the auditor, a number of key requirements that should be considered in the audit are listed below. In relation to the telephone survey more specific guidance is provided below.

ESC Creation and Record Keeping Arrangements

The following provides a non-exhaustive list of typical audit procedures that may be undertaken by the auditor:

Comparison of approved project details to existing documentation;

Review of information systems to assess the extent to which they generate information relevant to the areas subject to audit. This may require an examination of:

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

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

Stock reconciliation comparing:

–the records showing number and type of products purchased to number and type of products recorded in nomination forms;

–the records of removed End-User Equipment, such as inefficient showerheads or halogen lamps; and

–physical examination of removed End-User Equipment where possible (for instance, for installations before 24 December 2010, to ensure that only qualifying showerheads with flow rate of greater than 9 litres/minute have been replaced).

Sample testing and/or review of relevant documentation supporting adherence to the Minimum Requirements for Installer Conduct (Default Savings Factor), including:

–Contractual Relationship between ACP and Installers;

–Training of Installers;

–Register of Installers; and

–Customer Service.

Sample testing and/or review of relevant documentation supporting adherence to the Minimum Requirements for Sales Programs (Default Savings Factor), including:

–Minimum Evidentiary Requirements

–Customer Information/ Customer Service

–Arrangements for Sales Programs delivered through Third Parties

Sample testing of completeness and accuracy of recording, aggregation and transcription of source data used to support the creation of ESCs;

Comparison of calculation methodology and approach against the calculation methodology outlined in the ACP’s Application for Accreditation, including subsequent information and Conditions of Accreditation;

Review of each component of the data collection and recording process;

Reviewing or re-performing calculations to confirm that any arithmetical calculations are fairly presented;

Discussions with and interviews of the relevant ACP personnel in relation to systems, procedures, controls and quality assurance activities;

Observation and review of relevant documentation that supports process descriptions provided by the ACP. For example, processes for storing electronic data could be examined; and

Checking that the implementation date stated inthe application form fairly represents the applicant’s actual implementation date for the RESA.

Telephone Survey of Showerhead programsdeleted if not required>

The purpose of the Telephone Survey is to ‘look behind’ the Nomination Form and to determine the validity of energy savings claimed by an ACP on the Nomination Form.

The telephonesurvey should include a statistically significant sample of original Energy Savers (i.e based on the number of nomination forms) to confirm details relating to any showerhead replacement claim, including:

that installations occurred at a residential premises and that a Nomination Form was signed,

clarification of the number ofshowerheads in the premises and how many of these were replaced,

that the ACP checked eligibility of the premises through testing of showerheads before replacement (for installations before 24 December 2010) and confirmation of hot water system type,

any follow up by the ACP to establish bona fides of the replacement since the installation, and

any other questions the auditor considers necessary to satisfy themselves that ESCs can be created in respect of that installation.

It is suggested that the auditor engage a Market Research Agency to conduct the telephone survey component of the audit. A list of preferred research providers is available from the Scheme Administrator on request, and guidance for a phone survey script is provided in Appendix 1.

The auditor should use the results of the phone survey to determine which respondents to the phone survey have also been contacted by <Name of ACP> as part of their internal audits/surveys. For these respondents, the auditor should, where possible, compare respondents' responses to the phone survey with their responses to <Name of ACP> 's internal audits/surveys. This may require the auditor to review voice recordings from the ACP’s internal quality assurance processes.

In order to perform the comparison outlined above, the auditor will need to ensure that the market research agency conducts the phone survey in a manner that allows the details of the respondents to be shared with the auditor.

Sample Selection

Where an audit of ESC creation is combined with a telephone survey, the same random sample should be utilised for both components of the audit, with the sample size determined by the requirements of the phone survey. This is primarily to facilitate a combination of errors from the two samples to give a final error across the total population of records being sampled.

In this instance, the company conducting the telephone surveywill be required to select the random sample of original Energy Savers, usinga copy of the entire dataset on which the ESC registration(and any proposed ESCcreation) is based.

Sufficient sampling is required to provide survey results witha 95% confidence level and ±5% confidence interval, for errors in excess of 5% in the sample population. The sample size should be sufficient so that if errors in excess of the Scheme’s 5% materiality threshold areidentified in the telephone survey, that this percentage error can beapplied to the total population in the dataset.

It is particularly important that clear and accurate records are provided to the research agencyconducting the telephone survey. In this regard, the Scheme Administrator will work with the auditor and the ACP to determine whether the database extract provided by the ACP is sufficiently complete to facilitate the telephone survey.

It is possible that the process of ensuring a data set sufficiently free of errors for use in the telephone survey may result in the removal of certain records by the auditor, where these records are considered fatal and cannot be remedied by the ACP. For example, where contact details cannot be provided, the records will be excluded and may not be used for ESC creation.

As the auditor will conduct the audit of ESC creation using the same random sample as used in the telephone survey, the error rates identified from both should be combined to give a final error across the total population of records being sampled.

2Reporting

2.1Content of Audit Report

The auditor is to provide a written report to the Scheme Administrator detailing:

An outline of the approach undertaken by the auditor in relation to the performance of the audit;

The number of valid ESCs that have been registered or are proposed to be registered;

The time period covered by the audit;

A schedule of findings as specified by the Audit Guideline;

A copy of the telephone survey results;

The auditor’s opinion[2] in relation to each of the matters in the scope of audit, as detailed in Section 1.2; and

Details of any limitations in the scope of work undertaken by the auditor, if applicable.

The ACP’s calculations which are the subject of the audit must be appended (in electronic format) to the audit report to the Scheme Administrator.

Appendix 1 – Phone Survey Script<delete if not required

Suggested wording is provided below, for use as a guide for the development of a phone survey script.

The auditor should confirm both the questions used for the survey, and the codification of results, with the Scheme Administrator and the Research Agency prior to the survey taking place.

Suggested Wording

The Administrator of the NSW Energy Savings Scheme is conducting a brieftelephone survey of people who have received a showerhead replacement as part ofan installation program operated by <Name of ACP>.

We obtained your contact detailsfrom the Nomination Form you signed when you received the new showerhead. Thesurvey is being conducted to check the effectiveness of the installation program andyour answers will be treated as confidential and will not affect you in any way.

1. When the new showerheads were installed, did you sign a form provided by theinstaller confirming the new showerheads had been installed?
2. Can you please confirm the address where the installation was done? Is this a Residential or Commercial premises?
3. At the time the new showerheads were installed, was the hot water system electric, gas, solar or another type of system?
4. In total, how many showerheads do you have at this address?
5. We understand that xx showerheads were installed. As far as you know, is that correct? If not,how many showerheads do you think were installed?
6. Were any of the showerheads replaced ‘low flow’ showerheads, such as those provided by Sydney Water? If so, how many of the original showerheads that were removed were water-saving or“low flow” showerheads?
   (ONLY for installations before 24 December 2010)
7. Before an installerreplaces the original showerhead, they may test its 'flow rate', by running the showerwater into a bucket for one minute or so.Did the installer perform this test on any of the originalshowerheads before they replaced them?If so, howmany of the original showerheads that were replaced did the installer perform thistest on? (ONLY for installations before 24 December 2010)
8. Have you been contacted by <Name of ACP>in any way, including by telephone,in writing or by email, since this installation was completed? If so, in which of the following ways, if any,have you been contacted by <Name of ACP>since this installation was completed?

ESS – Audit Scope: ACP Accreditation Conditions – v1.2 25 January 2011page 1

[1] For instance, clause 13 of the Accreditation Notice requires that Installations leading to ESCs created using Default Savings Factors must meet the Minimum Requirements for Installer Conduct (Default Savings Factors).

[2] The audit opinion should be expressed in the positive form to provide reasonable assurance