Green Power: assurance on sustainability information

Tick each point that your answer made clearly and only once. Points here are this site's own. A real examiner may accept other valid points.

• Three-party relationship: the practitioner (the firm), the responsible party (Green Power Co's management) and the intended users (investors, bond holders and the public). The relationship exists.
• Appropriate subject matter: emissions are identifiable and can be measured, although the data collection is weak. The forecast is the subject matter for the second engagement and it depends on future events.
• Suitable criteria: the company's own definitions differ from international standards, so the criteria may not be suitable (complete, neutral and understandable) unless they are disclosed and are adequate. The firm should agree the criteria in advance.
• Sufficient appropriate evidence: spreadsheets are exposed to error, so more testing of data and controls will be needed.
• Written assurance report: the report must set out the conclusion, the level of assurance (reasonable or limited), the criteria and the work done.
• For the forecast, the practitioner can conclude on whether the assumptions give a reasonable basis and whether the forecast is properly prepared, but cannot give assurance that it will be achieved.
• The assumption on wind farms without planning permission is a key risk, so it should be clearly disclosed.
• The level of assurance needs to be agreed (limited is likely to be more practical for the forecast, and either may be used for the emissions).

Marks counted: 0 of 8

Tick each point that your answer made clearly and only once. Points here are this site's own. A real examiner may accept other valid points.

• Spreadsheet errors and manual collection: test the controls over data collection, re-perform calculations, and compare data to source records such as meter readings and fuel purchase records.
• Different definitions: assess whether the definitions are appropriate against recognised standards, and consider whether the report should disclose the differences.
• Completeness of sources of emissions: compare the list of sites and sources with the company's operating information and use analytical procedures (such as emissions per unit of output compared with prior years and the industry).
• Management bias: the company has an incentive to show good performance, so apply professional scepticism and look for evidence that contradicts the data.
• Forecast assumptions: obtain the evidence on planning applications, the status of permits, costs and expected output, and assess them against the history of the company and the views of experts.
• Use an expert for technical matters such as wind output, and assess the expert's competence and objectivity.
• Sensitivity of the forecast to changes in the key assumptions.
• Written representations from management about the data, the forecast and the assumptions.

Marks counted: 0 of 8

Tick each point that your answer made clearly and only once. Points here are this site's own. A real examiner may accept other valid points.

• The advisory fee being larger than the audit fee creates a self-interest threat through fee dependence.
• Advising on how to reduce emissions and then giving assurance on the results creates a self-review threat.
• The partner leading both engagements increases the threats and risks the loss of objectivity.
• Safeguards include using separate teams and partners, an independent review of the work, limiting the advice or declining one of the engagements, and discussing with those charged with governance.
• Quality management: the firm needs to check that it has the competence and resources for sustainability assurance, and perform an engagement quality review.

Marks counted: 0 of 4