Introduction to the enhanced production audit program
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Introduction to the Enhanced Production Audit Program. ISA January 25, 2010. Outline. EPAP Goals Overview of EPAP Implementing EPAP Question Period. New Directive 076. Title: “Operator Declaration Regarding Measurement and Reporting Requirements” Effective January 4, 2010

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Introduction to the enhanced production audit program

Introduction to theEnhanced Production Audit Program

ISA

January 25, 2010


Outline

Outline

  • EPAP Goals

  • Overview of EPAP

  • Implementing EPAP

  • Question Period


New directive 076

New Directive 076

  • Title: “Operator Declaration Regarding Measurement and Reporting Requirements”

  • Effective January 4, 2010

  • Directive available for download at:www.ercb.ca

  • Operator’s Handbook


Two main goals

Two Main Goals

  • Raise level of assurance over compliance with ERCB measurement and reporting requirements

  • Raise level of compliance with ERCB measurement and reporting requirements


Epap overview

EPAP Overview


5 major components

5 Major Components

  • Declarations

  • Controls & Evaluation of Controls

  • Compliance Assessment

  • Action Items

  • Escalation


Declarations

Declarations

  • State key operator assertions

  • Involve senior executives

  • Report evaluations at a summary level

  • Create through EPAP system

Declaration does not require perfection


Controls evaluation of controls

Controls & Evaluation of Controls

  • Every well-managed business operates controls

  • EPAP is based on operators evaluating their measurement & reporting controls


Overview of relationship

Overview of Relationship

Evaluation of Control

Assesses

Control

Monitors

Business Process


Oil gas example

Oil & Gas Example

For sample of Well Tests,

examine review of the log

Assesses

Review Well Test log

Monitors

Conduct Well Tests


Compliance assessment

Compliance Assessment

  • Based on Compliance Assessment Report

    • Contains Registry and FIS data

    • Available monthly

  • Basis for regular contact

Indicators are not noncompliance events


Action items

Action Items

  • Some contacts become action items

  • EPAP system provides support

    • Documents discussion and actions

    • Communicates to operator

    • Provides basis for follow-up

Action items are enforceable


Escalation

Escalation

  • More information requested on:

    • Controls

    • Evaluation procedures

    • Evaluation results

  • Controls-based audit

  • Substantive audit


Connection to d 019

Connection to D-019

  • Lack of progress

    • Assistance

    • Education

  • Lack of co-operation

    • No or inadequate response

    • Failure to submit a declaration

Directive 019 Enforcement is avoidable


Epap philosophy

EPAP Philosophy

“Trust, but verify”

- Ronald Reagan


Epap approach

EPAP Approach

  • Use of judgment

  • Focus on collaboration

  • Continuous improvement takes time

    • Operators will need support


Implementing epap

Implementing EPAP


Implementation schedule

Implementation Schedule


Implementation activities 1

Implementation Activities - 1

  • Select your declaration month

  • Meet with senior executives

  • Build understanding of the controls-based audit approach

  • Build understanding of current work

  • Deliver a communication presentation about EPAP


Implementation activities 2

Implementation Activities - 2

  • Create an evaluation plan

  • Strengthen business processes and controls

  • Perform trial evaluations of controls

  • Act on the Compliance Assessment Report


Implementation resources

Implementation Resources

  • Questions:

    • www.ercb.ca

    • [email protected]

    • Assigned PAT member

  • IMG – Industry Measurement Group

  • CAPPA – Canadian Association of Petroleum Production Accounting

  • IIA – Institute of Internal Auditors


Future epap related events

Future EPAP Related Events

  • CSHM Conference – April 2010

  • IMG EPAP Course – later in 2010

  • EPAP Industry briefing – later in 2010

  • CAPPA Conference – October 2010


Question period

Question Period


Common misconception

Common Misconception

Low ComplianceAssessment scores

= ≠

High Compliance


Indicators of deficiencies in controls

Indicators of Deficienciesin Controls

  • Amendments

  • Compliance assessment report

  • Voluntary self-disclosures

  • Field inspections

  • Audit findings

  • ERCB Volumetric Noncompliance Report

  • Provisional assessments


Suggestions for continuous improvement

Suggestions for Continuous Improvement

  • Recent production audit findings

  • Recent field inspection findings

  • PAT Top 10 or 20 list of audit findings

  • ERCB Noncompliance Report

  • Integration

  • Schematics and drawings


Suggestions for continuous improvement1

Suggestions for Continuous Improvement

  • Data quality enhancement initiatives

  • Review current practices

  • Perform self-inspections

  • Review the findings of internal audits

  • Review the findings of recent joint venture audits


Suggestions for continuous improvement2

Suggestions for Continuous Improvement

  • Review noncompliance event list

  • Review items on the current ERCB risk matrix

  • Review the Registry warning report

  • Review Provisional Assessments

  • Synchronize property setup among:

    • Production accounting system

    • Field data gathering system

    • Financial accounting system


Suggestion for industry cooperation

Suggestion for Industry Cooperation

  • Participate on IMG subcommittee

  • Participate on CAPPA subcommittee

  • Work with Registry to implement enhancements

  • Work with PA and Field Data Gathering software vendors


Eventually all operators will

Eventually, all operators will

  • be aware of their state of compliance with ERCB requirements

  • have the infrastructure in place to mitigate risk of noncompliance

  • raise their level of compliance


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