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International Auditing and Assurance
Standards Board
Our ref:
ConDocResponse1106
Date:
9th June 2011
DDI: +44 (0)78 66 49 27 60
Fax: +44 (0)20 72 37 70 91
Email: [email protected]
Dear Sirs
Feedback Comments on the Exposure Draft ofISAE 3410 – Assurance Engagements on Greenhouse Gas Statements
We thank you for the opportunity to provide feedback comments on this document.
Our comments are made in the light of over ten years of experience of GHG Statement Assurance
and related accounting and protocol development activities; working with both financial assurance
providers and others such as technical or certification body based verifiers, government
agencies/regulators and Accreditation Bodies.
Having reviewed the Exposure Draft we consider that it is a significant improvement upon earlier
iterations, however we have concerns related to the areas outlined below and in particular the need
for clarity about competence requirements for the core assurance team. With my colleagues at
Future Perfect Ltd, I have over the last 7.5 years trained well over 1000 GHG verifiers, including a
significant number from traditional financial assurance companies and it is very clear to us where
the strengths and weaknesses of assurance providers lie; the lack of technical and sector
competencies and knowledge limits significantly the ability of an individual verifier to conduct
strategic analysis and risk assessment of GHG emissions determination and accounting processes.
We make the following comments and suggestions for your consideration:
Section
Comment
Pg 13.
Q8(b)
Whilst it might appear sensible to include a statement on uncertainties in the Opinion
Statement, it is not clear to us from the draft guidance how the assurance team will
deal with the situation where there are multiple emissions sources, each with a different
level of uncertainty associated with the metrology and lab analytics as well as the data
calculation uncertainties; this is a common situation in many manufacturing facilities
and when aggregated up at an entity level is even more challenging to summarise for a
Statement.
We make further comments on this below in relation to the relevant sections citing
uncertainty.
Pg23.
S-18
When planning the engagement, the practitioner at this stage needs also to consider
any additional technical skills that need to be incorporated in the team or specialist that
need to be attached to the team; including for example process sector knowledge,
Instrumentation Engineers, IT & Information Security Specialists, Laboratory and
analytics specialists etc
Pg23.
S-18(f)
There needs to be clarity that the internal audit function should include both that
concerned with the internal controls and risks processes from an accounting perspective
and the operational internal audits related to, for example, an ISO9000 Quality
Management System, ISO14001 Environmental Management System and other
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9th June 2011
ISAE 3410 – Assurance Engagements on Greenhouse Gas Statements
Section
Comment
associated ISO type operational management systems. The latter may be under the
management of a completely different and more technical part of the organisation.
Pg26
S-29
The presumption for this para ought to be on justifying why a visit to site is NOT
necessary. Experience suggests that delivery of reasonable assurance in circumstances
where measurement systems etc have not been inspected (especially in the early years
of reporting and assurance), is open to doubt as to robustness
Pg33.
S-48
The requirement given in this para needs to distinguish between regulatory and nonregulatory schemes as it would not be acceptable for the assurance provider to exclude
mis-statements from the materiality analysis. In regulated schemes these normally
require ALL mis-statements to be accounted for, no matter how de-minimis, in order to
demonstrate that the final declared emissions value is within the required accuracy for
the scheme taking account of the aggregate of all errors and omissions etc.
Pg 37,
S-68(b)
This needs to explicitly include a review if the supporting evidence (technical and nontechnical) from the client.
Pg 39
S73(h)(i)
The statement should also make reference to other relevant/applicable GHG standards,
including ISO14064-3 and ISO14065.
Pg 41,
S-A7
Further clarity is required in relation to mobile emissions sources in order to distinguish
wheeled transport from other wheeled equipment. The commonly accepted definition is
that where the fuel combusted is for the purpose of moving the wheels, then this is
considered mobile; where it is not then the equipment would be considered static
combustion equipment, even if it had wheels to make it portable (eg a portable
generator).
Pg43.
S-A17
In relation to knowledge of applicable criteria such as “appropriate emissions factors”.
Competencies here need to extend to understanding the technical aspects of sampling,
chain-of-custody, testing/ lab analytics, quality control of laboratories and
stoichiometrics, in order that the appropriateness of the determination of factors related
to fuel/material characteristics can be assessed.
Pg44.
S-A18
(scientific
….) bullet
5
This para needs greater clarity and should be amended to specifically include not only –
Pg45.
S-A22(a)
This para needs to be clarified to include in addition to “…….stipulate particular scientific
assumptions…” reference to “or methodologies traceable back to recognised Standards
such as National or Internationally agreed methodologies
Pg45.
S-A22(b)
This para needs to be clarified to include more specific discussion of “… parameter and
model uncertainty…” in relation to uncertainty of measurement systems, specifically
aspects related to metrology and formal uncertainty assessment using ISO etc guidance
etc. These are technical issues of importance to, in particular, regulatory based
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 the “operation of physical sensors”, but also the installation, maintenance, calibration
and uncertainty analysis associated with the relevant measurement etc system
 and also the laboratory analysis elements of “other quantification methods”
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ISAE 3410 – Assurance Engagements on Greenhouse Gas Statements
Section
Comment
accounting, and it is important that the assurance team has a core understanding of
these in order to assess risks.
Pg50.
S-A44
The assumption presented in this para is false, at least in the early years of accounting
and reporting. Experience in Europe indicates that small reporting entities/installations
are not necessarily easier or lower risk. In particular the organisations involved often
have more limited resource available for accounting and internal assurance (especially
QA/QC) and are often not ‘audit-ready’ meaning that the verification risks are higher as
the degree of internal control is often significantly less than might be found in a larger
corporate entity.
Although we agree that there are benefits to these (and larger scale) audits of having a
relatively small team to avoid things being lost in the ‘gaps’ between team members.
Pg53.
S-A52,
bullet 3
The last sentence of this para is inappropriate.
In every regulatory scheme that we have been involved in the materiality threshold is
set against the organisation’s declared emissions and not ”ordinarily” against the
scheme CAP.
It should be noted that a scheme CAP is based upon an overall aggregation of emissions
from eligible entities within the programme and apportioned to all eligible entities
(usually using historic emissions or a benchmark). Thus the CAP has no direct
relevance to the emissions being declared other than as a (policy based) target to aim
at, it is not therefore appropriate to use the level of the CAP as the basis of the
threshold when determining materiality of mis-statements in actual emissions.
However, it would be appropriate to note that over an aggregation of installations to
global level (via country/region/Group etc) it may be appropriate for the quantitative
materiality threshold % to decrease with increasing aggregation/consolidation.
Pg 55.
S-A62
In this and other paras in the document the term permit should be avoided as it
introduces a confusion of language.
The common nomenclature is “Emissions Allowance” with formal documented permits
(consents) from Regulators being the legal base for emissions rights and the allowance
being the determined level of allowable emissions under the regulated permit.
Pg58.
S-A74
See comments under Pg23. S-18(f) above which are equally applicable here.
Pg58.
S-A76
Bullet 9
This para needs to be amended to read “Errors in unit conversions AND ORDERS OF
MAGNITUDE ADJUSTMENTS when consolidating….”
Pg 63.
S-A86(a)
bullet 3
It should be noted that unless the assurance work is being undertaken in real time, it is
unlikely that the results of sampling and analysis of coal by the assurance team will
have any validity in relation to emissions data; since the batch of coal for which the
emissions have been calculated may well not be available for sampling having been
completely burnt and therefore the composition of the sampled coal would not produce
a comparable result.
Pg 66
S-A91
This para should also include consideration of the designed (inherent) uncertainty of the
instrument(s) and their flow range.
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ISAE 3410 – Assurance Engagements on Greenhouse Gas Statements
Section
Comment
Bullet 1
Pg 66
S-A91
Bullet 9
This para should be amended to state – “…… used in data GENERATION and
manipulation”
Pg 68.
S-A100
Bullet 2
The para should include the following at the end “….legal counsel OR THE RELEVANT
REGULATOR”.
Pg 69
S-A103
This para should also reference the following as well as financial reporting systems –
Pg 75
S-A123
This section should also include review of the competence of the core audit team to
ensure that it was appropriate to support the strategic analysis and evaluation of risks.
 Other monitoring software such as production accounting, hydrocarbon accounting,
energy accounting, which may form part of operational reporting systems
Yours sincerely
For PLANET & PROSPERITY
Lucy Candlin
Director
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