Compliance audit framework
- Project Released: 28 Apr 2004
- Project Closes: 13 Sep 2004
- Contact: Adam Wilson
The Commission has periodically used compliance audits to investigate
specific areas that it believed warranted such review. The compliance and
enforcement functions of the Commission are considered to be vital aspect to its
regulatory role in the electricity supply industry. In particular, without a
strong approach to compliance matters, the licensing system, as established
under Part 3 of the Electricity Act 1996, will be largely
The aim of the Commission's compliance auditing framework is to provide
assurance that each licensee has in place a compliance system that is effective,
and that the system is being applied in a rigorous manner in relation to the
regulatory obligations that are the subject of the audits.
The Commission's approach to compliance auditing under this framework is
underpinned by four key steps:
- consideration of the audit scope;
- appointment of the auditor;
- conduct of the audit; and
- reporting of the audit results.
Current status is Final
In September 2004, the Commission issued a final decision paper entitled "Electricity Compliance Audit Framework" relating to the implementation of a more rigorous and risk-based approach to the conduct of compliance audits in the electricity sector that complements the existing compliance reporting framework established by Energy Industry Guideline No. 4 - "Compliance systems and reporting".
The final decision paper envisages the extension of the electricity compliance audit framework to the gas industry at some future date. The first regulatory compliance audits conducted under this risk-based compliance audit framework (in the areas of compliance with FRC obligations and performance reporting requirements by electricity retailers) commenced in November 2004.