Auditing Theory and Practice: GHG Emission Disclosure and NGER Audit Requirements

This article discusses GHG Emission Disclosure and NGER Audit Requirements in Auditing Theory and Practice. It covers Woodside Petroleum Limited and AGL Energy Limited's sustainability reports, assurance opinions, and auditing assertions. It also includes a case study on CFW Ltd and Warehousing Ltd and the importance of auditors in financial reporting.

Running head: AUDITING THEORY AND PRACTICE
Auditing theory and Practice
Name of the Student:
Name of the University:
Author Note

1AUDITING THEORY AND PRACTICE
Table of Contents
Answer to Question 1 (a).................................................................................................................2
Answer to Question 1 (b).................................................................................................................4
Answer to Question 1 (c).................................................................................................................4
Answer to Question 1(d)..................................................................................................................6
Answer to Question 2 (a).................................................................................................................6
Answer to Question 2 (b).................................................................................................................8
Answer to Question 2 (c).................................................................................................................8
References......................................................................................................................................10

2AUDITING THEORY AND PRACTICE
Answer to Question 1 (a)
The issue that has been mentioned in the question refers to the structure and content of
the GHG Emission disclosure that has been mentioned in the sustainability report of the
concerned company. The particular structure that has been utilized by the management of
Woodside Petroleum Limited is that it has provided sufficient disclosure in its sustainability
report in regards to the GHG emission disclosure by the company for the particular financial year
of 2017. It has mentioned the product and the description of the product has also been involved
in the annual report of the company. The other heads that has been included in GHG emission
disclosure are the “Taxonomy, project or methodology used to classify product/s as low carbon
or to calculate avoided emissions” , “ % revenue from low carbon product/s in the reporting
year” and “% R&D low carbon products in the reporting year”. Moreover, other relevant
information has also been included in the GHG emission disclosure. Furthermore, it has been
mentioned in the reports of the organization inn regards to the voluntary disclosures and the
related documents have also been attached.
In the case of AGL Energy Limited, the disclosure that has been provided in regards to
the GHG emission disclosure reflects the fact that the corporate entity is moving towards a
carbon constrained future. It has been further mentioned in the sustainability report of the
company that the company has a commitment to limit the level of global warming to less than 2º
C above pre-industrial levels. The structure and content that has been included in the GHG
emission disclosure of the company have been segregated into three methods that have been
utilized for the purpose of measuring the GHG emissions of the corporate entity (Agevall,
Broberg, & Umans, 2018). These methods are as follows:

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 The operational greenhouse gas footprint results in the covering of the emission in
regards to the activities or the operations of the company that results in emissions
 The equity greenhouse gas footprint refers to the share that has been experienced by the
company in regards to the emissions from partly or fully owned assets irrespective of the
fact that to whom the ownership of the particular asset belongs to.
 The energy supply greenhouse gas foot print on the other hand leads to the estimation of
the supply chain emissions that have been associated with the energy that is sold to the
customers of the business entity.
However, an issue with the GHG emission disclosure of the company has been that there
have been no voluntary disclosures in the sustainability report of the firm in regards to the
greenhouse gas or carbon emission for the particular financial year(Agevall, Broberg, & Umans,
2018).
The particular standard that has been established by the NGER Act is the Clean Energy
Regulator leads to the encouragement of the voluntary compliance by emphasizing on providing
he required guidance and assistance to their clients for the purpose of understanding the rights,
obligations and entitlements. The fundamental standards that have been mentioned by NGER are
as follows:
 Production of energy and consumption has been accurately reported and categorized
 Reporting and measurement of the emissions regards to flaring has been accurate
 Reporting of the location of the facility has been accurate.
Therefore, it can be evidently concluded that both the corporate enteritis of Woodside
Petroleum Limited and AGL Energy Limited has adhered to the standards as established by the

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NGER Act. However, a particular issue with the sustainability report of the corporate entity of
AGL Limited has been that it has not undertaken any voluntary disclosures in regards to the
GHG emissions or carbon emission in the GHG emission disclosure of the corporate entity for
the stipulated financial year (Agevall, Broberg, & Umans, 2018).
Answer to Question 1 (b)
The NGER audit requirements have been as follows:
 The audit team is solely responsible for ensuring the fact that the team has the required
degree of skills for the purpose of successfully carrying out the all the aspects in regards
to the committed management procedures (Agevall, Broberg & Umans, 2018).
 The team leaders should in all probabilities ensure the fact that the audits have been
carried out and reported in compliance with the auditing standards as mentioned in the
Australian Auditing and Assurance Standards Board. Section 2.5 (c) of the NGR audit
determination states the fact that this includes ASAE 3000. Moreover, depending on the
subject matter of the audit the auditors might need to apply ASAE 3100, ASAE 3410 and
ASAE 3450 (Agevall, Broberg & Umans, 2018).
 The second consideration is that the auditor must be independent of the subject of the
audit such as program applicant or project participant to that extent when the conflict of
the interest situation does not arise in the audit of the subject matter (Agevall, Broberg &
Umans, 2018).

5AUDITING THEORY AND PRACTICE
Answer to Question 1 (c)
The type of assurance opinion provided in the sustainability report of Woodside
Petroleum’s sustainability report is that the third party verification or assurance process is in
place. The opinion that has been provided in regards to assurance refers to the fact that annual
process has limited assurance and that the assurance in regards to the GHG emission disclosure
has reasonable assurance.
The subject matter for limited assurance has been the full content of the report in regards
to the activities of Woodside Petroleum Limited. The Global Reporting Initiatives G4 disclosures
has also been the subject matter for limited assurance (Axelsen, Green & Ridley, 2017). On the
other hand, the subject matter for reasonable assurance are as follows:
 Anti-bribery and transparency
 Regulatory compliance
 Change in climate
 Prevention of the major incidents
 Responsiveness in regards to major incidents
 Health and safety performance
The criteria that has been applicable to the report are the Principles for Defining Report
Content and the GRI Principles for Ensuring Report Quality and the Global Reporting
Initiative’s (GRI) G4 Reporting Guidelines.
In case of AGL Energy Limited , the type of assurance opinion that has been provided in
the sustainability report of the company has been that of the type pf limited assurance

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engagement. The subject matter of the report that has been presented in the sustainability
framework of the company are as follows:
 AA1000 principles – the particular corporate entity of AGL Energy Limited has applied
the accountability principles standard in regards to the management and reporting of the
sustainability performance of the company.
 Sustainability targets of has been another subject matter of audit
The reporting criteria has been that the principles of “inclusivity”; “materiality” and
responsiveness that has been set out in AA1000 APS are applied. The next reporting criteria that
has been utilized for the next subject matter of audit are the approaches and the definitions that
have been described in the sustainability framework section contained in the sustainability
framework of AGL Energy Limited for the financial year of 2016.
The assurance standard that has been employed by the auditor is the AA1000
Principles (Axelsen, Green & Ridley, 2017).
Answer to Question 1(d)
The most important auditing assertions that would be included for the purpose of GHG
reporting are as follows:
 The rights and obligations of the required standards have been met with
 The completeness of the sustainability report has been met with the required standdads of
reporting.

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Answer to Question 2 (a)
The case that has been presented in the question is that CFW Ltd was taken over by
Warehousing Ltd. However, the particular fact had been that the auditors had not attended all
stocktakes at the year end. There had been discrepancies in regards to the closing balance of the
inventories. The inventories had been overvalued and the particular issue that had been raised by
the management was that the auditors had been very negligent. The particular case study that can
be proceeded with is the Twomax Ltd v Dickson, Mcfarlane & Robinson where the cour had
given out the particular ruling that the defendant auditor would be liable to make payments for
the loss that had been suffered by the company. To be more precise, the third party investors who
had trusted in the audited proceedings of the corporate entities had experienced reasonable loss
for executing specific decision making skills in regards to the result of the audit. The acquiring
company had suffered the majority of the loss due to the fact that the CFW had essentially been
taken over by Warehousing Limited on the basis of the inventory balance of the acquired
company. However, the overvaluing of the inventories of the acquired company led to a huge
loss that had been suffered by Warehousing Limited (Axelsen, Green & Ridley, 2017).
Moreover another case law that can be discussed in regards to this particular issue is the
Haig v Bamford. In this particular case the tests that could be applied for the purpose of proving
negligence on the part of the auditor are as follows:
 Foresee ability in regards to the utilization of the financial statements and the report of
the auditor thereon by the plaintiff and reliance thereon
 The actual knowledge in regards to the class that is limited in relation to the utilization of
the financial statements of the corporate entities and reliance on such issued statements

8AUDITING THEORY AND PRACTICE
 Actual knowledge of the specific plaintiff who will utilize and put efficient reliance on
the statements.
It must be noted here that the above three mentioned tests have been adapted in the
common law jurisdiction in order to facilitate an Australian court for finding the persuasive
authority for the adoption of any test that it might choose (Schnader, Bedard & Cannon, 2015).
Therefore, the case that is created against the auditors of the CFW Ltd can be based upon the
following major criteria as follows:
 The auditors did not attend all stocktakes at year-end.
 CFW were present at those for the Sydney based operations of the company only, this
inventory is determined to have been overvalued by 35%.
 50% of the inventory of the inventory does not exist and the auditors of the company
have not highlighted this fact.
Answer to Question 2 (b)
The particular fact that Warehousing Limited has the grounds to indicate the fact that the
auditors have been negligent should be highlighted in the case. This means that the building of
the case should be based upon the fact that the auditors have been negligent. However, it must be
noted here that if the act of negligence is not been proved in regards to the case then
Warehousing Ltd will not be able to be successful in their legal action. This is due to the fact that
if the defendant is able to prove that there was no negligence on his part and the company had
committed the discrepancy then the winning of the particular case would be difficult. Moreover,
the particular fact that the auditor has raised that there had been much pressure by CFW to

9AUDITING THEORY AND PRACTICE
complete the audit within one month of the balance date, should be dealt with carefully
(Schnader, Bedard & Cannon, 2015).
Answer to Question 2 (c)
If Warehousing Ltd had written to the auditors telling them that they intended to buy
CFW and were relying on the audited financial statements to assist them in making their decision
then the case would be totally in support of Warehousing Limited. This is due to the fact that the
feature of negligence on the part of the auditor could have been proved with much ease
(Schnader, Bedard & Cannon, 2015).

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References and Bibliography
Agevall, L., Broberg, P., & Umans, T. (2018). The new generation of auditors meeting praxis:
Dual learning’s role in audit students’ professional development. Scandinavian Journal
of Educational Research, 62(2), 307-324.
Agevall, L., Broberg, P., & Umans, T. (2018). The new generation of auditors meeting praxis:
Dual learning’s role in audit students’ professional development. Scandinavian Journal
of Educational Research, 62(2), 307-324.
Axelsen, M., Green, P., & Ridley, G. (2017). Explaining the information systems auditor role in
the public sector financial audit. International Journal of Accounting Information
Systems, 24, 15-31.
Bae, G. S., Choi, S. U., Dhaliwal, D. S., & Lamoreaux, P. T. (2016). Auditors and client
investment efficiency. The Accounting Review, 92(2), 19-40.
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Auditing, 22(1), 1-12.

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