The National Greenhouse and Energy Reporting Amendment Bill 2009 (the Bill) was passed in the Senate on 7 September 2009. The amendment provides new requirements for auditors and restricts the type of data that will be made public on the NGERS website. The amendments also allow for the transfer of NGERS obligations from a corporate group with operational control of a facility to the entity with financial control.
An external audit will now be referred to as a 'greenhouse and energy audit' and a register of greenhouse and energy auditors will be kept by the Greenhouse and Energy Data Officer1. Audit information, audit team leaders, audit team members and external auditors are all defined in the new Bill, which allows for the protection of information collected during audits by the secrecy provisions outlined in section 23 of the National Greenhouse and Energy Reporting Act 2007 (the Act).
Any decision to publish audit data would have to take into account a variety of issues including the possibility of publishing inaccurate information and the potential impact on audited companies2. The Bill ensures that the secrecy provisions apply to audit information by establishing an offence for release of audit information other than for the purposes of the Act or other Commonwealth, State or Territory laws3.
The Explanatory Memorandum (EM) to the Bill states that 'requirements for auditors, including independence, qualifications and expertise, will be developed under the new section 75A'4. The details of the types of audits to be conducted under section 75 of the Act will be contained in the legislative instrument determined by the Minister under section 75. The details are likely to include requirements for both assurance engagements and other audit or verification procedures5.
Section 11 of the Act defines the term 'operational control' as having the authority to introduce or implement operating, health and safety and environmental policies for the facility. The amendments to the Act allow for the transfer of obligations under NGERS from the entity with operational control of the facility to the entity with financial control. The entity with financial control can take on the NGERS obligations by applying for a reporting transfer certificate (RTC).
Reporting Transfer Certificate
To be eligible to apply for an RTC the applicant must satisfy the Greenhouse and Energy Data Officer that they pass the 'reporting transfer test', which requires the following6:
- The facility must be under the control of another corporation
- The applicant has financial control over the facility
- The applicant is a company registered under Part 2A.2 of the Corporations Act 2001
- The applicant is a constitutional corporation
- The applicant is not a member of the transferor corporation's corporate group
An applicant for an RTC must have the written consent of the controlling corporation as well as a written statement from the chief executive officer of the transferor corporation agreeing to give the applicant all documents and information necessary to fulfil its obligations under NGERS7.
Section 22R of the Bill defines financial control by outlining a number of different scenarios. If a corporation (the operator) has operational control over a facility, then another corporation (the second corporation) will have financial control and may be eligible to apply for an RTC if:
- The operator is contracted to operate the facility on behalf of the second corporation
- The second corporation is able to control the trading or financial relationships of the operator in relation to the facility
- The second corporation has the economic benefits from the facility
- The economic benefits of the facility are shared by a joint venture or partnership, and the second corporation has a share that equals or exceeds that of the other joint venture participants or partners
- The second corporation is able to direct or sell the output of the facility.
An RTC issued under the amendment to the Act will only remain in force until 30 June 2011, or when the Carbon Pollution Reduction Scheme (CPRS) commences. The 'liability transfer certificate' scheme proposed under the CPRS will take over from the RTC. The definition of financial control and the transfer test criteria in the CPRS Bill is very similar to the NGRS legislation.
1 National Greenhouse and Energy Reporting Amendment Bill 2009 section 75A(1).
2 Explanatory Memorandum to the National Greenhouse and Energy Reporting Amendment Bill 2009, Item 12.
3 Explanatory Memorandum to the National Greenhouse and Energy Reporting Amendment Bill 2009, Item 13.
4 Explanatory Memorandum to the National Greenhouse and Energy Reporting Amendment Bill 2009, Item 4.
5 Explanatory Memorandum to the National Greenhouse and Energy Reporting Amendment Bill 2009, Item 9.
6 National Greenhouse and Energy Reporting Amendment Bill 2009 section 22K.
7 National Greenhouse and Energy Reporting Amendment Bill 2009 section 22K(5).
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