Independent limited assurance report to the Management and Directors of Federation Limited ( Federation Centres ) in relation to compliance with

Transcription

1 Independent limited assurance report to the Management and Directors of Federation Limited ( Federation Centres ) in relation to compliance with Section 19 of the National Greenhouse and Energy Reporting Act 2007 for the financial year ended 30 June 2015

2 Audit Report Coversheet Audited body Name of audited body: Federation Limited Name of contact person for audited body: Melissa Schulz Contact person phone number: (03) Contact person address: Reporting requirements Total scope 1 and 2 emissions for audited body: 248,331 tco 2 -e Total energy consumption for audited body: 1,067,321 GJ Total energy production for audited body: 5,747 GJ Audit Description Kind of audit: Objective of the assurance engagement: Limited Assurance Assurance on total scope 1 emissions and scope 2 emissions, total energy production and total energy consumption in Federation Centres Energy and Emissions Report under s19 of the NGER Act. Time period audited: 1 July June 2015 Date terms of engagement signed: 22 September 2015 Date audit report signed Auditor Details Name of audit team leader: Kim Farrant GEA registration number 0098/2010 Organisation Ernst & Young Phone Number (03) Address Names and contact details of audit team and other persons working with the audit team leader Details of exemptions under section 6.71 of the National Greenhouse and Energy Reporting Regulations 2008 for the audit team leader or professional member of the audit team. These may include: conflict of interest and details of the procedures for managing conflict of interest relevant relationships, and exemptions for an audit team leader to carry out more than five consecutive greenhouse and energy audits in relation to the audited body 8 Exhibition Street Melbourne VIC 3000 Nishitha Vissamraju (03) Camilla Waterhouse (03) Terence Jeyaretnam (03) Not applicable - Audit team is in full compliance with independence requirements EY 1

3 Part A Auditor s Conclusion To: Directors of Federation Limited We have conducted a limited assurance engagement of Federation Limited s ( Federation Centres ) Energy and Emissions Report for the period 1 July 2014 to 30 June 2015 (the Energy and Emissions Report ), prepared in accordance with section 19 of the National Greenhouse and Energy Reporting Act Details of the audited body Name of audited body: Address Federation Limited Level 28, 35 Collins Street Melbourne VIC 3000 ABN Subject Matter The subject matter for our assurance engagement is Federation Centres Energy and Emissions Report for the period 1 July 2014 to 30 June The amounts within the Energy and Emissions Report being audited, consists of the following: Scope 1 and scope 2 greenhouse gas emissions, expressed in tonnes of carbon dioxide equivalent of 248,331 (tco2-e) Energy consumption of 1,067,321 GJ Energy production, expressed in gigajoules of 5,747 GJ Criteria The criteria are: Section 19 of the National Greenhouse and Energy Reporting Act 2007 ( the NGER Act ) National Greenhouse and Energy Reporting Regulations 2008 ( NGER Regulations ) National Greenhouse and Energy (Measurement) Determination 2008, including the National Greenhouse and Energy Reporting (Measurement) Amendment Determination 2014 (No. 1) ( the NGER (Measurement) Determination ) Management s responsibility Management of Federation Centres are responsible for the preparation and presentation of the Subject Matter in accordance with the Criteria, and in compliance with section 19 of the NGER Act. This includes establishing and maintaining internal controls relevant to the preparation and presentation of the Subject Matter that are free from material misstatement, whether due to fraud or error. Management of Federation Centres is responsible for the interpretation and application of the requirements of the NGER Act and the NGER (Measurement) Determination in determining operational control and quantifying emissions and energy, which are reflected in Federation Centres 2015 Basis of Preparation which has been provided to us. Independence and quality control In conducting our assurance engagement, we have met the independence requirements of the APES 110 Code of Ethics for Professional Accountants and have complied with the relevant ethical requirements relating to assurance engagements, which include independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence, due care, confidentiality and professional behaviour. These include all of the requirements defined in the NGER Regulations regarding the Code of Conduct, independence and quality control. We have the required competencies and experience to conduct this assurance engagement. EY 2

4 Furthermore, in accordance with Auditing Standard ASQC 1 Quality Control for Firms that Perform Audits and Reviews of Financial Reports and Other Financial Information and Other Assurance Engagements, we maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditor s responsibility Our responsibility is to express a limited assurance conclusion as to whether the Subject Matter, has been prepared, in all material respects, in accordance with the Criteria. We have conducted our limited assurance engagement in accordance with: National Greenhouse and Energy Reporting (Audit) Determination 2009 ( NGER (Audit) Determination ) ASAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information ASAE 3410 Assurance Engagements on Greenhouse Gas Statements ASAE 3100 Compliance Engagements The NGER (Audit) Determination and above relevant national and international standards require that we plan and perform this engagement to obtain limited assurance about whether the Energy and Emissions Report is free from material misstatement. A limited assurance engagement involves performing procedures to obtain assurance evidence about the Subject Matter being audited. The procedures selected depend on the audit team leader s judgement, including an assessment of the risks of material misstatement or material non-compliance of the matter being audited, whether due to fraud or error. In making those risk assessments, we consider internal controls relevant to Federation Centres determination of the amounts and disclosures in the matter being audited in order to design assurance procedures that are appropriate in the circumstances, but not for the purpose of expressing a conclusion on the effectiveness of Federation Centres internal controls. A limited assurance engagement also includes evaluating the reasonableness of emissions and energy estimates made by management of the company as well as evaluating the overall presentation of the Subject Matter. We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Summary of Procedures undertaken The procedures we conducted in our limited assurance engagement included, but were not limited to the following: Gaining an understanding of the greenhouse gas and energy reporting processes supporting the business activities of Federation Centres Conducting visits to Federation Centres Melbourne head office, service provider EnergyAdvice s Glen Waverley office, and retail sites Brandon Park and The Glen, to identify sources of greenhouse gas emissions, energy consumption and energy production and understand the basis for measurement and preparation of the Energy and Emissions Report Conducting interviews and collating evidence to understand processes and controls supporting preparation and presentation of the Energy and Emissions Report Checking documentation in support of operational control decisions Checking that methodologies have been correctly applied as per the requirements in the NGER (Measurement) Determination Testing the calculations performed by the company Undertaking analytical review procedures to support the reasonableness of the Energy and Emissions Report Identifying and testing assumptions supporting the calculations EY 3

5 Testing, on a sample basis, to underlying source information to ensure completeness and accuracy of the Energy and Emissions Report Reviewing the appropriateness of the presentation of the information. Use of our limited assurance engagement report This Report has been prepared for the Management and Directors of Federation Centres, and for the Clean Energy Regulator, for the sole purpose of reporting on Federation Centres Energy and Emissions Report and its compliance with the NGER Act. Accordingly, we disclaim any assumption of responsibility for any reliance on this report to any persons or users other than the intended users, or for any purpose other than that for which it was prepared. Inherent limitations There are inherent limitations in performing assurance for example, assurance engagements are based on selective testing of the information being examined it is possible that fraud, error or noncompliance may occur and not be detected. A limited assurance engagement is not designed to detect all instances of non-compliance with the Criteria, as a limited assurance engagement is not performed continuously throughout the period and the procedures performed in respect of compliance with the Criteria are undertaken on a test basis. The conclusion expressed in this Report has been formed on the above basis. Additionally, non-financial data may be subject to more inherent limitations than financial data, given both its nature and the methods used for determining, calculating and sampling or estimating such data. We specifically note that Federation Centres has used estimates or extrapolated underlying information to calculate certain amounts included within the greenhouse gas and energy information. The procedures performed in a limited assurance engagement vary in nature from, and are narrower in scope than for, a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than that in a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance conclusion about whether Federation Centres Energy and Emissions Report has been prepared, in all material respects, in accordance with section 19 of the NGER Act. Our conclusion Based on our limited assurance procedures, nothing has come to our attention that causes us to believe that the Energy and Emissions Report of Federation Centres for the period 1 July 2014 to 30 June 2015 has not been prepared in accordance with section 19 of the NGER Act, in all material respects. Auditor Part A Sign Off Ernst & Young Kim Farrant Director Melbourne, Australia EY 4

6 Part B Detailed Findings Issues requiring particular attention Key audit matters are those matters that, in our professional judgement, were of most significance in our assurance of Federation Centres Energy and Emissions Report. These matters were addressed in the context of our assurance of the Energy and Emissions Report as a whole, and in forming our conclusion thereon, and we do not provide a separate conclusion on these matters. Areas that required particular attention during the assurance engagement included: Key audit matter Testing Conducted Findings Reporting structure: Federation Centres reporting structure is required to be consistent with its legal structure. Further, the boundary for each facility and the aggregation of assets by state and ANZSIC is required to be consistent with the NGER Legislation. During the year, Federation Centres merged with Novion Limited. As such, Novion Limited was required to be deregistered from NGER reporting. We reviewed the NGER Basis of Preparation and planned reporting structure against the NGER Legislation and Guidelines and Federation Centres legal structure. We conducted interviews with Federation Centres personnel to understand how the reporting structure was defined, including how facilities were grouped. We reviewed evidence for deregistration of Novion Limited from NGER reporting. An initial review of the proposed EERS structure found all data was to be reported under the controlling corporation, Federation Limited, when in fact a significant number of facilities remained under the operational control of Novion Limited. The EERS reporting structure was subsequently amended to include a Group Member for Novion Limited with relevant data reported under this Group Member. No other issues were identified. The EERS reporting structure appropriately separates data into facilities and facility aggregates based on state and ANZSIC codes. The Novion Limited controlling corporation has been appropriately deregistered and is no longer required to report. Operational control and defining the corporate reporting boundary Federation Centres is required to apply the NGER Act definitions of operational control in order to determine which facilities should be included in the Energy and Emissions Report. Data relating to the full year of operation is required to be included in Federation Centres Energy and Emissions Report for all facilities, including former Novion Limited facilities. We reviewed the list of facilities reported in FY15 and operational control decisions, as compared with FY14 and sought explanations for differences. We reviewed operational control assessment documentation for a sample of facilities against the NGER Legislation and Guidelines. We conducted a process walkthrough to understand the process for identifying facilities and to confirm that data relating to the full year of operation had been included for all facilities, including former Novion Limited facilities, unless the facility was subject to mid-year acquisition or divestment. No changes to operational control decisions were noted when compared with the previous year. All changes in reported sites were able to be explained by acquisitions or divestment. No issues were identified with the operational control assessments for the selected sample of facilities. Full year data was gathered and included within the Energy and Emissions Report for all facilities, including former Novion Limited facilities. EY 5

7 Key audit matter Testing Conducted Findings Accuracy of electricity consumption Electricity consumption is a material source of energy consumption and greenhouse gas emissions for Federation Centres, contributing 96% of total scope 1 and 2 emissions. It is therefore key that the processes used to collect, collate, manage and report this source are robust and that the data is accurate. We conducted a walkthrough of the overall electricity energy and emissions calculation process with Federation Centres and its service providers, Energetics and EnergyAdvice. We performed overall annual analytical testing and monthly analytical testing for selected material facilities and sought explanations to any variances. For two selected sites, we conducted site visits in order to assess the completeness of electricity meters reported. We considered the proportion of electricity consumption that is derived from invoices vs estimates. We assessed the compliance and reasonableness of Federation Centres approach regarding the use of estimates. We conducted detailed testing of source data for a limited number of electricity records We re-performed data aggregation processes. Through our walkthrough, we confirmed that Federation Centres approach is to only report electricity consumption associated with base building (which is the portion of each centre under Federation Centres operational control). This approach is consistent with the requirements of the NGER Legislation. FY15 electricity consumption was 2% lower compared to FY14. Monthly analytical testing for selected material sites did not identify any outliers or missing data that was not subsequently supported by detailed testing of source data. The site visits did not identify any electricity meters not already included in the data. Due to suppliers billing cycles, a portion of Federation Centres scope 2 emissions are estimated. For FY15, estimated electricity consumption accounts for less than 1.5% of total electricity consumption. The approaches used to derive estimates were found to be consistent with industry practice and the general principles for measuring emissions. No errors were identified through the detailed testing of source data or the re-performance of data aggregation. Aspects impacting on assurance engagement Nil Contraventions of NGER Legislation Nil Other matters Nil EY 6

8 Peer reviewer conclusion Name of peer reviewer David Shewring Peer reviewer s credentials Registered Company Auditor Number: EY Partner for the Federation Limited financial audit. Peer reviewer contact details (03) Outcome of the evaluation undertaken by the peer reviewer Auditor Part B Sign Off The peer review did not identify any deficiencies in the limited assurance procedures conducted or the results of such procedures, and concurred with the issuance of an unqualified limited assurance conclusion. Ernst & Young Kim Farrant Director Melbourne, Australia EY 7

9 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organisation and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organisation, please visit ey.com Ernst & Young, Australia. All Rights Reserved. Ernst & Young is a registered trademark. Our report may be relied upon by Federation Limited for the purpose of this report only pursuant to the terms of our engagement letter dated 22 September2015. We disclaim all responsibility to any other party for any loss or liability that the other party may suffer or incur arising from or relating to or in any way connected with the contents of our report, the provision of our report to the other party or the reliance upon our report by the other party. Liability limited by a scheme approved under Professional Standards Legislation. ey.com/au