Balancing and Settlement Code BSC Service Description for BSC Audit Version 5.0 Date : 29 March 2019 |
BSC SERVICE DESCRIPTION FOR BSC AUDIT
Date | Version | Description of Change | Changes Included | Mods/ Panel/ Committee Refs |
21/06/04 | 1.0 | Final Version | - | - |
BETTA Effective Date | 2.0 | BETTA 6.3 | BETTA 6.3 | 89/015 |
26/11/08 | 3.0 | P207 Release | P207 | 144/09 |
01/10/13 | 4.0 | P293 | P293 | P213/07 |
29/03/19 | 5.0 | 29 March 2019 Standalone Release | P369 | P258/12 |
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This document is the BSC Service Description for the BSC Auditor, appointed by the Balancing and Settlement Code Company (“BSCCo”), to undertake an operational audit (the "BSC Audit") in relation to each Audit Year on behalf of Parties and such other ad hoc operational audits as the Balancing and Settlement Code Panel (the “Panel”) may require from time to time. The requirement for the BSC Auditor to undertake the BSC Audit is set out in Section H5.1.1 of the Balancing and Settlement Code (the “Code”).
1.2 Structure of this Document
Section 2 sets out the general scope and obligations of the BSC Audit;
Section 3 details the service requirements;
Section 4 details the non-functional requirements; and
Section 5 details the service levels required of the BSC Auditor.
1.3 The Balancing and Settlement Code Company
1.3.1 The Panel is supported in the discharge of its duties and obligations under the Code by BSCCo, which procures, manages and operates services and systems that enable the ‘Balancing Mechanism and Imbalance Settlement’ processes to operate.
2.1.1 The objective of the BSC Audit shall be to provide assurance (to such level as the Panel considers appropriate) that the provisions of the Code and Code Subsidiary Documents in relation to Settlement, and in relation to the calculation of Funding Shares, have been complied with in the Audit Year1. This objective is specified in Section H5.1.2 of the Code. The level of assurance required by the Panel is the level set out in paragraph 3.1.1.1.
2.1.2 The BSC Auditor shall ensure that the BSC Audit is undertaken in such a way so as to ensure that the BSC Auditor is in the position to provide the Panel with the BSC Audit Opinion stating whether the BSC Auditor is able to provide this assurance.
2.1.3 This BSC Service Description is established under Section E of the Code ‘BSC Agents’. The terms of this BSC Service Description for BSC Audit may, from time to time, be amended by the Panel pursuant to Section H5.2.1 of the Code (and in accordance with Section F of the Code and BSCP40 ‘Change Management’).
2.2.1 The BSC Auditor shall undertake all the functions and responsibilities described in the Code and in any Code Subsidiary Documents as being the functions and responsibilities:
2.2.1.1 of the BSC Auditor; and
2.2.1.2 applicable to the BSC Agents generally.
2.2.2 The ‘BSC Audit Scope Document’ acts as the formal terms of reference for the BSC Auditor described in Section H and sets out the Materiality Threshold for the BSC Audit. The BSC Audit Scope Document sets out the detailed requirements in respect of the BSC Audit.
2.2.3 The BSC Auditor Contract may further require the BSC Auditor to provide routine or ad-hoc services (necessary for or reasonably incidental to giving effect to the Code) in addition to those set out in this BSC Service Description for BSC Audit.
2.2.4 The BSC Auditor shall, as part of the BSC Audit, undertake an audit of the activities, processes and matters set out in Section H5.1.3 of the Code. Namely:
2.2.4.1 the submission and application of standing and periodic data used in connection with Settlement by Parties and Party Agents;
2.2.4.2 the processes applied to such data pursuant to the Code and Code Subsidiary Documents;
2.2.4.3 the determinations and calculations made by Market Index Data Providers in the provision of Market Index Data (but only to the extent provided in the relevant Market Index Data Provider Contract);
2.2.4.4 the determinations and calculations made by BSC Agents for the purposes of Settlement; and
2.2.4.5 the systems, processes and procedures used and applied (by BSC Agents and BSCCo) for the purposes of, or in connection with, paragraphs 2.2.4.1 to 2.2.4.4 inclusive, provided that the Panel may determine a different scope for the BSC Audit with respect to Supplier Volume Allocation.
2.2.5 The BSC Auditor, as part of the BSC Audit, shall if requested by BSCCo, carry out checks of all processes associated with the matters referred to in the BSC Audit Scope Document and monitor compliance with the Code and Code Subsidiary Documents within the limits of the ‘Materiality Threshold’, and in sufficient depth, to be able to provide BSCCo with a ‘BSC Audit Opinion’ for each Audit Reporting Period.
2.2.6 In addition, the BSC Auditor shall, if required to do so by BSCCo as a result of a request from the Panel made pursuant to Section H5.1.5 of the Code, undertake ad hoc operational audits, tests, reviews or checks. Such ad hoc operational audits, tests, reviews or checks may include a review of all or any of the Code Subsidiary Documents for the purposes of determining whether they are appropriate to give effect to the Code in accordance with the objectives set out in Section B1.2 of the Code.
2.3 Period of Responsibility
2.3.1 The BSC Auditor shall perform the responsibilities and obligations set out in this BSC Service Description for the duration of the BSC Audit and Qualification Agreement.
2.3.2 The BSC Auditor shall comply with the service levels that the BSC Audit and Qualification Agreement requires to be achieved in relation to the delivery of the BSC Audit Services.
3.1.1 The BSC Auditor shall conduct the BSC Audit in such a way as to enable the BSC Auditor to as part of the BSC Audit Opinion form an independent opinion on whether:
3.1.1.1 the calculations and allocations performed by BSC Systems have been performed in accordance with the Code. The BSC Audit shall be performed by the BSC Auditor so as to provide a reasonable, but not absolute, level of assurance that the calculations and allocations performed by BSC Systems are in accordance with the Code, taking into account the Implementation Date of any Approved Modification; and
3.1.1.2 the amounts shown on the FAA’s quarterly statements, or daily Advice Notes produced by the FAA for those days not yet covered by a quarterly statement, are in accordance with the amounts calculated by the BSC Systems, and are free from material misstatement, whether caused by fraud or other irregularity or error.
3.2.1 The BSC Audit for the relevant Audit Year shall examine the following:
3.2.1.1 all Initial Settlement Runs in respect of Settlement Days within the Audit Year, or as determined by the Panel; and
3.2.1.2 all Reconciliation Settlement Runs (regardless of the Audit Year in which the relevant Settlement Day arises) processed from the date of the Initial Settlement Run for the first Settlement Day of the Audit Year to the date of the Initial Settlement Run for the last Settlement Day of the Audit Year, or as determined by the Panel.
3.3.1 The BSC Auditor shall produce annually the 'BSC Audit Approach' and the 'Funding Shares Audit Approach' Documents which shall be based on the requirements set out in this BSC Audit Service Description and the BSC Audit Scope and BSC Funding Shares Scope Documents. The BSC Audit and Funding Shares Audit Approach Documents shall be produced by a date to be determined by BSCCo and shall be submitted to BSCCo for approval. The BSC Audit and Funding Shares Audit Approach Documents shall specify the methodology and approach to be adopted by the BSC Auditor in providing the BSC and Funding Shares Audits and shall include the methodology and structure for providing each of the documentary deliverables stipulated in paragraph 3.6 of this BSC Service Description.
3.3.2 The BSC Auditor shall in each Audit Year submit, by a date to be determined by BSCCo, the ‘Programme of Activities’. This document, to be approved by BSCCo, shall set out the activities to be undertaken by the BSC Auditor for the relevant Audit Year. The Programme of Activities shall:
3.3.2.1 include each activity to be undertaken together with a detailed timetable for each such activity;
3.3.2.2 form the baseline for the BSC Audit for the Audit Year; and
3.3.2.3 be kept up-to-date by the BSC Auditor to record any variances or relevant matters agreed by BSCCo at a monthly Service Review Meeting.
3.3.3 The BSC Audit shall be comprised of the following three stages, which shall be defined further in the BSC Auditor Contract:
3.3.4 BSCCo shall use all reasonable endeavours to ensure that each BSC Agent (other than the BSC Auditor) provides the BSC Auditor with sufficient access to the following in order to enable the BSC Auditor to properly undertake the BSC Audit:
3.3.4.1 the systems, system specifications and other systems documents used by that BSC Agent in connection with performing its obligations and functions as BSC Agent; and
3.3.4.2 its premises, personnel, data, information and records.
3.4.1 The BSC Auditor shall make a judgement as to whether the existence of an issue or matter should give rise to a qualification of the BSC Audit Opinion. In doing so, the BSC Auditor shall take into account the Materiality Threshold against which the BSC Audit has been undertaken, the nature of the issue or matter, and whether it has been, or shall be, corrected in the normal course of operation of the Balancing Mechanism and Imbalance Settlement processes.
3.5.1 Unless otherwise instructed by the Panel, and in accordance with Section H5.4.1 of the Code, the results of the BSC Audit shall be reported at a time set out in the terms of reference for the BSC Auditor (BSC Audit Scope Document) with the delivery of an opinion (the "BSC Audit Report").
3.5.2 Delivery of reports relating to the other ad-hoc operational audits referred to in Section H5.1.1 of the Code shall be at the discretion of the Panel.
3.5.3 The BSC Statement of Significant Matters shall be in the form of a report providing information on any issues arising from the BSC Audit which are considered by the BSC Auditor to be significant. The BSC Statement of Significant Matters shall be in sufficient detail for Trading Parties to determine how such issues may affect their respective financial statements. The BSC Statement of Significant Matters shall be included in the BSC Audit.
3.5.4 The BSC Statement of Significant Matters shall relate to the period covered by the BSC Audit Status Report or which the BSC Auditor, as at the date of the BSC Audit Status Report, considers to be the appropriate for inclusion in the BSC Statement of Significant Matters.
3.5.5 The BSC Auditor shall not be required to report in respect of particular matters with a potential financial impact below the Materiality Threshold.
3.5.6 The BSC Audit Report shall, in accordance with Section H5.4.3 of the Code, be addressed to the Panel for and on behalf of Trading Parties and the National Electricity Transmission System Operator (NETSO) in the Audit Year, and shall include all of the BSC Auditor’s findings and conclusion. The BSC Auditor shall provide a copy of the BSC Audit Report to BSCCo.
3.5.7 The BSC Auditor shall deliver the BSC Audit Report to the Panel (pursuant to Section H5.4.4 of the Code), and shall upon request from the Panel, send copies of the report to the PAB, each Trading Party, the NETSO and the Authority.
3.5.8 The BSC Auditor shall produce a version of the BSC Audit Report that is suitable for publication and distribution from the BSC Website (in accordance with Section H5.4.5 of the Code). BSCCo shall (pursuant to Section H5.4.6) be entitled to provide a copy of this version of the BSC Audit Report to any person upon request.
3.5.9 The BSC Auditor shall attend all Panel and Panel Committee Meetings which it is directed to attend by BSCCo.
3.5.10 The BSC Auditor shall, at the request of BSCCo, highlight non-compliances with the Code and Code Subsidiary Documents by individual organisations, specific to but not limited by the following:
Audited Entities,
BSCCo, and
The Market
3.6 BSC Audit Documentation Service
3.6.1 The BSC Auditor shall, in furtherance of Section E1.3.1 of the Code, provide the ‘BSC Audit Documentation Service’, which shall comprise the preparation, development and ongoing maintenance of the documents contained in Table 1:
Table 1: BSC Audit Documentation Service
BSC Audit Approach Document |
Programme of Activities |
Funding Shares Audit Approach Document |
Quality Manual |
Security Policy |
Disaster Recovery Plan |
Exit Management Plan |
3.6.2 The documents included in the BSC Audit Documentation Service shall be updated by the BSC Auditor, and approved by BSCCo, at least annually. The documents shall be made available to BSCCo in both hard copy and electronic form. The BSC Auditor Contract shall set out any further requirements concerning the documentation to be prepared and maintained by the BSC Auditor.
3.7.1 The BSC Auditor shall, if requested by BSCCo, provide BSCCo with assistance in relation to any investigation into the Balancing Mechanism and Imbalance Settlement. The BSC Auditor shall provide such investigations as part of the ‘Ad hoc Services’.
4 Non-Functional Requirements
4.1 The BSC Auditor shall be required to:
4.1.1 if requested by such external auditors, fully co-operate and liaise with the external auditors of each Trading Party and the NETSO in accordance with normal professional standards, including the provision of access to its working papers (in accordance with Section H5.3.1(b) of the Code); and
4.1.2 report to BSCCo forthwith any material concerns with respect to matters forming the subject of a BSC Audit (in accordance with Section H5.3.1(c) of the Code).
4.2.1 The Contractor shall provide a point of contact who can answer queries in respect of any matters related to the Service and/or Deliverables including, but not specifically in relation to the following:
4.2.2.1 operational support;
4.2.2.2 problem resolution; and
4.2.2.3 management of change.
4.2.2 The BSC Auditor shall make provision for the efficient and effective dissemination of Audit related documentation and information pursuant to the delivery of service requirements outlined in Section 3.
4.4 Disaster Recovery and Security Service
4.4.1 The BSC Auditor shall provide a ‘BSC Audit Disaster Recovery and Data Security Service’. The Disaster Recovery and Data Security Service shall, without limiting the generality of the foregoing, ensure that a copy set of data collected, or produced, for the BSC Audit Services is held in addition to the original or working set in order to provide protection against and to minimise or avoid the effects of a disaster. The requirement for the provision of a Disaster Recovery Service is set out in Section E1.3.1(c) of the Code.
4.4.2 The Disaster Recovery and Security Service shall ensure that a copy set of audit data collected, or produced, for the BSC Audit Service is held in addition to the working set so that there will be no need for re-collection or reproduction of the audit data in the case of a disaster.
4.4.3 The BSC Auditor shall develop and maintain ‘Disaster Recovery Plans’ as approved by BSCCo, and in accordance with the BSC Audit and Qualification Agreement.
4.4.4 The BSC Auditor shall test the BSC Audit Disaster Recovery Plans once every year, against scenarios approved by BSCCo. The BSC Auditor shall inform BSCCo of the results of all tests.
4.4.5 BSCCo reserves the right to witness any testing, by the BSC Auditor, of the BSC Audit Disaster Recovery Plans, and the BSC Auditor shall provide reasonable notice to BSCCo of any forthcoming testing associated with the aforementioned BSC Audit Disaster Recovery Plans.
4.4.6 Following a disaster, the Disaster Recovery and Security Service shall be capable of ensuring that the BSC Auditor can provide the full BSC Audit Service to BSCCo until the full, primary operational environment can be restored and the transfer of all services to that environment can be planned and executed within timescales as set out in the Disaster Recovery Plans.
4.4.7 The BSC Auditor shall provide physical and logical data security in accordance with its ‘Security Guidelines Policy’.
4.4.8 The BSC Auditor shall submit the Security Guidelines Policy to BSCCo for approval.
4.4.9 The BSC Auditor shall develop and maintain BSC Audit Contingency Plans in place, in accordance with Section E1.3.1(c)(i) of the Code. The BSC Audit Contingency Plans shall stipulate the designated actions to be taken and procedures to be followed by the BSC Auditor in the event of any situation (excluding a disaster) which may or does adversely affect either the provision by the BSC Auditor of the BSC Audit Services or its ability to otherwise perform its obligations under the BSC Auditor and Qualification Agreement. The designated actions shall be such as to ensure that the BSC Auditor can avoid or mitigate the effects of such situation and ensure the restoration and continuity of the services provided by the BSC Auditor and the performance of its obligations in accordance with the BSC Audit and Qualification Agreement.
5.1 The ‘Service Levels’ which the BSC Auditor is required to achieve shall be set and approved by BSCCo, and will be specified in full in the BSC Audit and Qualification Agreement.
Appendix A – Terms and Definitions
Terms | Definitions |
Ad-hoc Services | Additional services that the BSCCo may require from time to time pursuant to paragraphs 2.2.4 and/or 3.7. |
Programme of Activities | The programme of audit activities to be undertaken in the course of the BSC Audit referred to in paragraph 3.3.2. |
BSC Audit Approach Document | The document prepared by the BSC Auditor in accordance with paragraph 3.3.1 and approved by BSCCo. |
Audit Year | Each successive period of 12 months beginning 1 April in each year and ending on 31 March. |
Balancing Mechanism and Imbalance Settlement | The systems and processes that support the operation of the trading arrangements under the Code. |
Disaster Recovery and Security Service | The Disaster Recovery and Security Service described in paragraph 4.4. |
Disaster Recovery Plans | The plans which define the actions to be taken by the BSC Auditor to make BSC Audit Service available following a disaster. |
BSC Audit Documentation Service | The BSC Audit Documentation Service referred to in paragraph 3.6.1. |
BSC Audit Exit Management Plans | The document defining the actions to be undertaken by the BSC Auditor on termination of the BSC Auditor Contract. |
BSC Audit Opinion | The BSC Audit Opinion to be provided by the BSC Auditor in accordance with the requirements of this BSC Service Description and further referred to in paragraph 3.5.1. |
BSC Audit Quality Plan | The document setting out the BSC Auditor’s approach to ensuring quality in the work performed in respect of the BSC Audit Services. |
BSC Audit Report | The report of the BSC Auditor concerning the BSC Audit referred to in paragraph 3.5.3 and produced in compliance with this BSC Service Description. |
BSC Audit Scope Document | A document prepared by BSCCo to define the scope of the BSC Audit and further referred to in paragraph 2.2.2. |
BSC Audit Security Guidelines | Documentation detailing the security features of the BSC Audit Service. |
BSC Audit Service | Services provided by the BSC Auditor in accordance with the BSC Audit and Qualification Services Agreement. |
BSC Statement of Significant Matters | The report referred to in paragraphs 3.5.3 and 3.5.4. |
Materiality Threshold | The threshold determined by the Panel from time to time pursuant to Section H5.4.2 of the Code. |
Service Credits | The Service Credits described in the BSC Audit and Qualification Services Agreement. |
Service Review Meeting | A meeting between the BSC Auditor and BSCCo to review the BSC Audit Service. |
Other abbreviations and terms in this document are defined in Section X of the Code.
