UK Government Updates ESOS Guidelines

Britain?s Environment Agency has produced an update to the ESOS guidelines previously published by the Department of Energy and Climate Change. Fortunately for businesses much of it has remained the same. Hence it is only necessary to highlight the changes here.

  1. Participants in joint ventures without a clear majority must assess themselves individually against criteria for participation, and run their own ESOS programs if they comply.
  2. If a party supplying energy to assets held in trust qualifies for ESOS then these assets must be included in its program.
  3. Total energy consumption applies only to assets held on both the 31 December 2014 and 5 December 2015 peg points. This is relevant to the construction industry where sites may exchange hands between the two dates. The definition of ?held? includes borrowed, leased, rented and used.
  4. Energy consumption while travelling by plane or ship is only relevant if either (or both) start and end-points are in the UK. Foreign travel may be voluntarily included at company discretion. The guidelines are silent regarding double counting when travelling to fellow EU states.
  5. The choice of sites to sample is at the discretion of the company and lead assessor. The findings of these audits must be applied across the board, and ?robust explanations? provided in the evidence pack for selection of specific sites. This is a departure from traditional emphasis on random.

The Environment Agency has provided the following checklist of what to keep in the evidence pack

  1. Contact details of participating and responsible undertakings
  2. Details of directors or equivalents who reviewed the assessment
  3. Written confirmation of this by these persons
  4. Contact details of lead assessor and the register they appear on
  5. Written confirmation by the assessor they signed the ESOS off
  6. Calculation of total energy consumption
  7. List of identified areas of significant consumption
  8. Details of audits and methodologies used
  9. Details of energy saving opportunities identified
  10. Details of methods used to address these opportunities / certificates
  11. Contracts covering aggregation or release of group members
  12. If less than twelve months of data used why this was so
  13. Justification for using this lesser time frame
  14. Reasons for including unverifiable data in assessments
  15. Methodology used for arriving at estimates applied
  16. If applicable, why the lead assessor overlooked a consumption profile

Check out: Ecovaro ? energy data analytics specialist 

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User-Friendly RASCI Accountability Matrices

Right now, you’re probably thinking that’s a statement of opposites. Something dreamed up by a consultant to impress, or just to fill a blog page. But wait. What if I taught you to create order in procedural chaos in five minutes flat? ?Would you be interested then?

The first step is to create a story line ?

Let’s imagine five friends decide to row a boat across a river to an island. Mary is in charge and responsible for steering in the right direction. John on the other hand is going to do the rowing, while Sue who once watched a rowing competition will be on hand to give advice. James will sit up front so he can tell Mary when they have arrived. Finally Kevin is going to have a snooze but wants James to wake him up just before they reach the island.

That’s kind of hard to follow, isn’t it ?

Let’s see if we can make some sense of it with a basic RASCI diagram ?

Responsibility Matrix: Rowing to the Island
Activity Responsible Accountable Supportive Consulted Informed
Person John Mary Sue James Kevin
Role Oarsman Captain Consultant Navigator Sleeper

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Now let’s add a simple timeline ?

Responsibility Matrix: Rowing to the Island
? Sue John Mary James Kevin
Gives Direction ? ? A ? ?
Rows the Boat ? R ? ? ?
Provides Advice S ? ? ? ?
Announces Arrival ? ? A C ?
Surfaces From Sleep ? ? ? C I
Ties Boat to Tree ? ? A ? ?

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Things are more complicated in reality ?

Quite correct. Although if I had jumped in at the detail end I might have lost you. Here?s a more serious example.

rasci

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There?s absolutely no necessity for you so examine the diagram in any detail, other to note the method is even more valuable in large, corporate environments. This one is actually a RACI diagram because there are no supportive roles (which is the way the system was originally configured).

Other varieties you may come across include PACSI (perform, accountable, control, suggest, inform), and RACI-VS that adds verifier and signatory to the original mix. There are several more you can look at Wikipedia if you like.

Spreadsheet Fraud

To any company executive or business owner, the mere possibility of fraud can be enough to send alarm bells ringing – for good reason. In a prolonged recession, the last thing investors would want to discover is a huge, gaping hole where supposedly a neat profit should have been. Also to find out that such loss was brought about by deliberately falsified accounting and poor spreadsheet controls only makes the situation even more regrettable.

Why?

Because these losses would not have occurred had there been a stronger risk management program in place and more stringent quality control on critical data to begin with.

But given the nature of a spreadsheet system i.e. its sheer flexibility and easy accessibility, plus the fact that they were never intended to be enterprise-level tools, there are no hard and fast rules for auditing spreadsheets. Also because of the lack of internal controls for end user computing (EUC) applications, in this case spreadsheets, you can’t expect these systems to yield consistently accurate results.

In fact, most managers assume that major spreadsheet errors should result in figures that are blatantly out of touch with how things stand in the real world, making these errors easily detectable.

Well they assumed wrong. You’ll find cases where the losses ran to millions of dollars without anyone being the wiser.

In instances of fraud, the problem becomes more complicated as these errors are deliberately hidden and cleverly disguised, perhaps one erroneous cell at a time. Even if these cover-ups started out with smaller figures that may have had negligible impact on a company?s operation, the cumulative costs of these ?insignificant? errors multiply exponentially as the spreadsheets are reused and utilised as bases for other related reports.

While there is no generally accepted definition of the term ?spreadsheet fraud?, its quite easy to identify one when a case crops up. Fraud arising from spreadsheets are typically characterised by:

Fallacious inputs – correct figures are deliberately replaced with false values.

Erroneous outputs owing to data alteration – hyperlinks are linking to the wrong spreadsheets or cells; use of macros or special lines of code which are understandable only to the person who developed the code.

Concealment of critical information – can be done with easy ?tweaks? such as hidden rows and columns, using the same colour for both the font and the background, or hard coding additional values into a cell.

There is nothing really highly-sophisticated or technical in any of these methodologies. But without internal spreadsheet controls in place, it would take a discerning eye and a thorough review to catch the inconsistencies contained in a spreadsheet fraught with errors. Also, if these errors are knowingly placed there, the chances of finding them are close to nil.

Learn more about our server application solutions and discover a better way to protect your company from spreadsheet fraud.

More Spreadsheet Blogs


Spreadsheet Risks in Banks


Top 10 Disadvantages of Spreadsheets


Disadvantages of Spreadsheets – obstacles to compliance in the Healthcare Industry


How Internal Auditors can win the War against Spreadsheet Fraud


Spreadsheet Reporting – No Room in your company in an age of Business Intelligence


Still looking for a Way to Consolidate Excel Spreadsheets?


Disadvantages of Spreadsheets


Spreadsheet woes – ill equipped for an Agile Business Environment


Spreadsheet Fraud


Spreadsheet Woes – Limited features for easy adoption of a control framework


Spreadsheet woes – Burden in SOX Compliance and other Regulations


Spreadsheet Risk Issues


Server Application Solutions – Don’t let Spreadsheets hold your Business back


Why Spreadsheets can send the pillars of Solvency II crashing down

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A Business Case for Sharing

We blogged about sharing services in a decentralised business context recently, and explained why we think why these should be IT-Based for speedy delivery. This is not to say that all shared services projects worldwide have been resounding successes. This is often down to the lack of a solid business case up front. We decided to lay out the logic behind this process.

Management Overview ? The overview includes a clear definition of why the current situation is unacceptable, the anticipated benefits of sharing, and an implementation plan were it to go ahead. The project should not proceed until the stakeholders have considered and agreed on this.

Alternatives Considered ? The next stage is to get closer to the other options in order to determine whether an alternative might perhaps be preferable. Substitutes for shared services are often doing nothing, improving the current method, and outsourcing the service to a third party.

The Bottom Line in Business ? Sharing services comes at an initial cost of infrastructure changes, and the impact on human capital (the latter deserves its own blog). The following need careful consideration from the financial angle:

Numbers to Work Through

  • Manpower to design and roll the project out in parallel with the existing organisation.
  • Capital for creating facilities at the central point including civil works, furniture and equipment and IT infrastructure.
  • The costs of travel, feeding and accommodation. These can be significant depending on the time that implementation takes.
  • The opportunity loss of diverting key staff – and the cost of temporary replacements – if appointing line staff to the project team.
  • Crystal-clear project metrics including (a) the direct, realisable savings (b) the medium and long-term effects on profit and (c) where to deploy the savings

Risk Management

Shared services projects don’t go equally smoothly, although planning should reduce the risk to manageable levels. Nonetheless it is important to imagine potential snags, decide how to mitigate them and what the cost might be.

We believe in implementing shared services on a pilot basis in the business unit that eventually provides them. We recommend building these out to other branches only when new processes are working smoothly.

Moving On From a Decision

We recommend you revisit your management overview, the logic behind it, the assumptions you made, and the costs and benefits you envisage before deciding to go ahead

The final step in proving a business case is doable should be fleshing out your roadmap into a detailed operations plan with dependencies on a spreadsheet.

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