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VALIDATIONGUIDEApprovedbytheEITIBoardon27May2016
ThefollowingdocumentprovidesguidancetotheEITIBoardonassessingtheEITIprovisions.Insomecases,thereisspecificevidencethattheEITIBoardmustseetoensurethataprovisionhasbeensatisfied.Inothercases,therearedifferentapproachesthatacountrymighttaketoaddressanEITIprovision,andthisguidanceprovidesexamplesofthetypesofevidencethattheEITIBoardmightconsider.WheredocumentationsupportingtheEITIBoard’sconclusionisavailable,areferencetothesourceshouldbeprovided.Forthepurposeoftheguidancebelow,therequirementsintheEITIStandardarereferredtoas‘provisions’inordertoavoidambiguityaboutwhichdisclosuresare‘required’,‘expected’and‘recommended/encouraged’.Wheredisclosuresare‘recommended/encouraged’,theguidancebelowclearlystatesthatthefindingsfromValidationshouldnotbeconsideredintheoverallassessmentofcompliancewiththeEITIStandard.Wheredisclosuresare‘expected’,theguidancebelowclearlystatesthattheEITIBoardshouldevaluatetheevidenceprovidedbytheMSG,butthatthefindingsshouldnotbeconsideredinassessingoverallcompliancewiththeEITIStandard.TheassessmentoftheEITIprovisionsshouldbestructuredinthreepartsaspertheillustrationbelow.PartIistheassessmentoftheMSGoversightoftheEITIprocess(provisions1.1.–1.5);PartIIistheassessmentoftheEITIdisclosureprovisionsincludingthetimeliness,comprehensivenessandreliabilityoftheinformation(provisions2-6);andPartIIIistheassessmentoftheoutcomesandimpactofEITIimplementation(provision7).TheValidationmay,whereappropriate,makerecommendationsonstrengtheningimplementationincludingembeddingtheEITIingovernmentsystems.
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PartI:MSGoversightMSGoversight
EITIprovisions Guidancetovalidators
GovernmentoversightoftheEITIprocessEITIprovision1.1.
Thevalidatorisexpectedtodocument1whether:
• thegovernmenthasissuedapublicstatementofitsintentiontoimplementtheEITI(1.1.a);
• thegovernmenthasappointedaseniorindividualtoleadontheimplementationoftheEITI(1.1.b);
• Thegovernmentisfully,activelyandeffectivelyengagedintheEITIprocess(1.1.c).EvidencecouldincludeinputtoandattendanceatMSGmeetings,submissionofdatarequiredfortheEITIreportingprocess,commitmenttoresolvingbottleneckssuchaslegalbarrierstodisclosureorprocurementissues,provisionoffundingfortheEITIprocess,outreachtostakeholdersthatarenotmembersoftheMSG,useofEITIdataandotherinformationtopromotepublicdebate,etc.
• seniorgovernmentofficialsarerepresentedontheMSG(1.1.d).
CompanyengagementEITIprovision1.2.
Thevalidatorisexpectedtodocumentwhether:
• companiesarefully,activelyandeffectivelyengagedintheEITIprocess(1.2.a).EvidencecouldincludeinputtoandattendanceatMSGmeetings,submissionofdatarequiredfortheEITIreportingprocess,commitmenttoresolvingbottleneckssuchaslegalbarrierstodisclosureorprocurementissues,provisionoffundingfortheEITIprocess,outreachtostakeholdersthatarenotmembersoftheMSG,useofEITIdataandotherinformationtopromotepublicdebate,etc.
• thereisanenablingenvironmentforcompanyparticipationintheEITIbyanalysinghowrelevantlaws,regulations,andadministrativerulesaswellasactualpracticeinimplementationoftheEITIhaveaffectedcompanyparticipationintheEITIprocess.Wherelaws,regulationoradministrativeruleshaveconstitutedanobstacletoimplementation,orwherethereisanenablinglegalenvironmentbutactualpracticediffers,thevalidatorshoulddocumentthecircumstancesofthecaseandanyeffortstoaddresstheissuebeitproactiveremovalofpotentialobstaclesorreactiveactiontoaddressanyobstaclesthathave
1Theterm‘document’isusedinterchangeablywithtermssuchas‘assess’,‘review’,and‘comment’.Wherewrittenevidenceisavailable,thevalidatorshouldprovideareferencetothesource.
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arisen.Thevalidatorshouldcitestakeholders’viewsonwhetheranyobstaclestocompanyparticipationhavebeenremoved.(1.2.b-c).
CivilsocietyengagementEITIprovision1.3.
Inassessingcivilsocietyengagementandtheenvironmentforcivilsocietyparticipation,thevalidatorisexpectedtoapplytheguidancesetoutinthecivilsocietyprotocol.
MSGgovernanceandfunctioningEITIprovision1.4.
Thevalidatorisexpectedtoconfirmthatamulti-stakeholdergrouphasbeenformedandthatitcomprisestheappropriatestakeholders.Theevidenceshouldinclude:
• InformationaboutoutreachtostakeholderspriortotheestablishmentoftheMSG(1.4.a.i),includingwhethertheinvitationtoparticipateinthegroupwasopenandtransparent;
• Informationonthemembershipofthemulti-stakeholdergroup,andtheprocessbywhicheachstakeholdergroupnominatedtheirrepresentatives(1.4.a.ii).WithregardstorepresentationontheMSG,thevalidatorshouldprovideevidencethatcivilsocietyandcompanieshaveappointedtheirownrepresentatives.Thiscouldforexampleinclude:
- evidenceofcivilsocietyandcompanyoutreacheffortstoengageadiverserangeofstakeholdersintheEITIprocesspriortonominationofMSGrepresentatives,includingoutreachactivities,stakeholdermappingetc.;
- detailsaboutthecivilsocietyandcompanyMSGrepresentationnominationprocess,includinginformationaboutelectionprocesses,anycriteriafordiverserepresentationagreedbycivilsociety(regional,ethnic,indigenous,gender,issues,communitygroupsetc.)andcompanies(sectors,international,domestic,industrybodiesetc.)whereapplicable;and
- whereMSGmembershavechanged,detailsaboutthereasonsforthechangeandtheprocessforre-nominatingmembers.
• Wheremulti-stakeholdergroupmembershiphaschanged,documentationofwhethertherehasbeenanysuggestionofcoercionorattemptstoincludemembersthatwillnotchallengethestatusquoandwhetherinternalrulesforchangingMSGrepresentativeshavebeenfollowed(1.4.a.ii;1.4.b.vi).
• Stakeholderviewsonwhethertheyareadequatelyrepresented,includinganyevidencethatstakeholdershaveprovidedinputtoandagreedwiththeMSG’spolicyregardingthenumberofMSGrepresentativesfromeachstakeholdergroup,alternatesandrotation(1.4.a.ii)aswellasstakeholderviewsonwhethertheirrepresentationsufficientlyreflectsthediversityoftheir
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constituency.(Note:Thereisnorequirementthatstakeholdersareequallyrepresentednumerically.)
Thevalidatorisexpectedassesswhether:
• civilsocietyMSGmembersareoperationallyandinpolicytermsindependentofgovernmentandcompanies(1.4.a.ii).Inmakingthisassessment,thevalidatormaywishtoconsider:
- Evidenceofanycivilsocietyconstituencydiscussionsoragreedconsistencypoliciesrelatedtoensuringpolicyandoperationalindependencefrommembersofparliamentfromtherulingparty,otherpoliticalpartiesalignedwiththegovernment,orextractivecompanies.
- EvidencethatanypotentialconflictofinterestsorissuesaffectingcivilsocietyMSGmembers’independencehavebeentransparentlydisclosed.
- Detailsaboutthearticlesofassociation,objectives,workprogrammesandfundingsourcesofcivilsocietyorganisationsrepresentedontheMSG.
• the MSG includes appropriate stakeholders and whether MSGmembers appear to have sufficient capacity to carry out theirduties(1.4.b.i).
• decision-making is conducted in an inclusive way which treatseach constituency as a partner (1.4.b.vi) (for guidance on theinterpretationofthisprovisionpleaseseeGuidanceNote14).Thevalidatorisexpectedtoassesswhetherthedecision-makingrulesagreed by the MSG are being followed including by consultingdocumentation and stakeholder views on how MSG decisionshave been taken and whether all stakeholders are involved indecision-making.
ThevalidatorisexpectedtoconfirmthattheMSGhasagreedTermsofReference(TORs)thatgivetheMSGasayoverimplementation.TheValidatorisexpectedtodocumentwhethertheTORs:• outlinetheroleandresponsibilitiesofMSGmembersand
whetherMSGmembersareeffectivelycarryingouttheirtasks,includingevidenceofoutreachactivitiesandliaisonwithconstituencygroups(1.4.b.i-iii);
• givetheMSGamandatetoapproveworkplans,theappointmentoftheIndependentAdministratorincludingtheTermsofReferencefortheIndependentAdministrator’swork,EITIReportsandannualactivityreports(1.4.b.iv-v);and
• includeinternalgovernancerulesandprocedures(1.4.b.vi-viii),andassesswhetherthesearefollowed,includingwhetherperdiempracticeshavebeenpublished.
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ThevalidatorisalsoexpectedtonoteanyconcernswithregardstoadherencetotheTOR.
WorkplanEITIprovision1.5
ThevalidatorisexpectedtodocumentthatapubliclyaccessibleEITIworkplanhasbeenagreedbytheMSG,andassesswhetheritincludes:• ObjectivesforimplementationthatarelinkedtotheEITI
principlesandreflectnationalprioritiesfortheextractiveindustries(1.5.a).TheValidatorshoulddocumentanyeffortstoconsultkeystakeholdersontheobjectivesforimplementation(1.5.b);
• Measurableandtime-boundactivitiestoachievetheagreedobjectives(1.5.c);
• Activitiesaimedataddressinganycapacityconstraintsidentified(1.5.c.i);
• ActivitiesrelatedtothescopeofEITIreporting(1.5.c.ii);• Activitiesaimedataddressinganylegalorregulatoryobstacles
identified(1.5.c.iii);• PlansforimplementingtherecommendationsfromValidation
andEITIreporting(1.5.c.iv):• Costingsandfundingsources,includingdomesticandexternal
sourcesoffundingandtechnicalassistance(1.5.d);• Atimetableforimplementation(1.5.g).Ifthetimetableisnot
beingmet,thevalidator–basedonevidencefromkeystakeholdersandothers–shouldgiveanopiniononwhetherthedelaysinmeetingthetimetablearereasonable.Thevalidatorisinvitedtocommentontheoverallprogressinimplementingtheworkplan.
Thevalidatorisexpectedtodocumentwhethertheworkplanhasbeenmadewidelyavailabletothepublic(1.5.e)andhasbeenreviewedandupdatedannually.ThevalidatorisexpectedtonotewhetherornottheMSGhasconsideredextendingthedetailandscopeofEITIreportingtoaddressissuessuchasrevenuemanagementandexpenditure,transportationpayments,discretionarysocialexpenditures,ad-hocsub-nationaltransfers,beneficialownershipandcontractswhenreviewingtheworkplan(1.5.f).
PartII:EITIdisclosuresInassessingtheEITIdisclosureprovisions(Provisions2-6below),thevalidatorisexpectedtostateaclearviewbasedonavailableevidenceonthreeoverarchingissuesinadditiontoapplyingthedetailedguidancesetforthbelow:
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(1) Thetimelinessofthedatadisclosed.Inaccordancewithprovision4.8,datadisclosedshouldbenoolderthanthesecondtolastcompleteaccountingperiod.
(2) Thecomprehensivenessofthedatadisclosed.ItshouldbenotedthattheEITIRequirementsrelatedtocomprehensivenessreferstothefinancialdatadisclosedinaccordancewithProvision4.However,thevalidatorisexpectedtocommentonanyMSGdiscussionsrelatedtoensuringthattheinformationdisclosedinaccordancewithProvision2,3,5and6iscomprehensive,andwhetherthereareanygapsintheinformationprovided,includingwhetherallentitiescompliedwiththeagreedproceduresfordisclosureandprovidedtherequestedinformation.
(3) Thereliabilityofthedatadisclosed.ItshouldbenotedthattheEITIRequirementsrelatedtodataassurancereferstothefinancialdatadisclosedinaccordancewithProvision4.However,thevalidatorshouldalsocommentonanyMSGdiscussionsrelatedtoensuringthattheinformationdisclosedinaccordancewithProvision2,3,5and6isreliable,andwhetherthereareanyreliabilitygapsintheinformationprovided.
Awardofcontractsandlicenses
EITIprovisions Guidancetovalidators
LegalframeworkEITIprovision2.1.
• Thevalidatorisexpectedtodocumentwhetherasummarydescriptionofthefiscalregimehasbeendisclosed,includingtheleveloffiscaldevolution,anoverviewoftherelevantlawsandregulations,andinformationontherolesandresponsibilitiesoftherelevantgovernmentagencies(2.1.a).
• ThevalidatorisexpectedtodocumentwhethertheEITIReportincludesanyinformationaboutreformsthatareunderway(2.1.b).Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
LicenseallocationsEITIprovision2.2.
• Thevalidatorisexpectedtodocumentwhethertheinformationabouttheprocessforawardingortransferringthelicense(s)setoutinprovision2.2.ahasbeencomprehensivelydisclosedforanylicenseawardsortransferspertainingtothecompaniescoveredbytheEITIReportduringthefinancialyearcoveredbytheEITIreport.ThevalidatorshouldalsocommentonthediscloseofinformationregardinglicenseawardsandtransfersmadeduringthefinancialyearcoveredbytheEITIreportthatdidnotgeneratematerialrevenuesinthatperiod,butareexpectedtogeneratematerialrevenuesinthefuture,includinganylegalandpracticalbarrierstosuchdiscslosures(2.2.a)
• WherecompaniescoveredbytheEITIReportholdlicensesthatwerenotawardedortransferredduringthefinancialyearcoveredbytheEITIReport,thevalidatormaywishtocommentonthedisclosureofinformationrelatedtheallocationoftheselicenses.Thevalidator’sfindingswillnothaveimplicationsfor
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compliancewiththeEITIStandard(2.2.b).• Thevalidatorisexpectedtodocumentwhetherthegovernment
hasdisclosedthelistofapplicantsandthebidcriteriarelatedtoanybiddingprocessesthattookplaceintheaccountingperiodcoveredbytheEITIReport(2.2.c).
• ThevalidatorisexpectedtodocumentwhethertheEITIReportincludesanyadditionalinformationabouttheallocationoflicenses,includingwhethertheEITIReportincludescommentaryontheefficiencyandeffectivenessofthesesystems(2.2.d).Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
LicenseregistersEITIprovision2.3.
• Thevalidatorisexpectedtodocumentwhethertheinformationsetoutinprovision2.3.a-bhasbeendisclosedforallthelicensesheldbycompaniescoveredintheEITIreportingprocess.
• Thevalidatorisexpectedtodocumentwhethertheinformationsetoutinprovision2.3.bisalsoavailableforthelicensesheldbyentitiesnotcoveredbytheEITIreportingprocess,andifnot,documentthereasonsforanygaps(2.3.b-c).Comprehensivedisclosureisexpected,butnotrequiredforcompliancewiththeEITIStandard.WhereinformationaboutlicensesheldbyentitiesnotcoveredbytheEITIreportingprocessismissing,thevalidatorisexpectedtoevaluatewhethertheMSGhasdocumentedandexplainedthebarrierstoprovisionofthisinformationandanygovernmentplanstoovercomethesebarriers.
ContractsEITIprovision2.4.
• Thevalidatorisexpectedtodocumentwhetherthegovernment’spolicyoncontracttransparencyhasbeendisclosed.Thisshouldincluderelevantlegalprovisions,actualdisclosurepracticesandanygovernmentreformsthatareplannedorunderway(2.4.b).
• ThevalidatorisexpectedtodocumentwhethertheEITIReportincludesdisclosuresofcontractsandlicenses.SuchdisclosuresareencouragedbutnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIprovisions(2.4.a).Wherecontractsaredisclosed,thevalidatorisexpectedtodocumentwhethertheEITIReportprovidesanoverviewofthecontractsandinformationonhowthesecanbeaccessed(2.4.b).
BeneficialownershipEITIprovision2.5
• ThevalidatorisexpectedtodocumentwhethertheEITIReportdocumentsthegovernment’spolicyandMSG’sdiscussionondisclosureofbeneficialownershipinaccordancewithprovision2.5.b.i.
• Effectiveasof1January2017thevalidatorisexpectedtodocumentwhethertheMSGhaspublishedaroadmapforbeneficialownershipdisclosureinaccordancewithprovision2.5.b.ii,includingprogresswithimplementationoftheroadmap.
• Effectiveasof1January2020,thevalidatorisexpectedto
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documentwhetherbeneficialownershiphasbeendisclosedinaccordancewithprovisions2.5.c-f.
• Thevalidatorisalsoexpectedtodocumentsiftheimplementingcountryhasapubliclyavailableregisterofthebeneficialownersinaccordancewithprovision2.5.a.Suchdisclosuresarerecommended,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
State-ownershipEITIprovisions2.6
• Thevalidatorisexpectedtodocumentwhetherthereareanystate-ownedenterprisesengagedintheextractivesector,andifso,whethertheprevailingrulesandpracticesregardingthefinancialrelationshipbetweenthegovernmentandstate-ownedenterpriseshavebeendisclosed(2.6.a).ThiscouldincluderulesandpracticesgoverningtransfersoffundsbetweentheSOE(s)andthestate,retainedearnings,reinvestmentandthird-partyfinancing.
• ThevalidatorisexpectedtodocumentwhetherthegovernmentandSOE(s)havedisclosedtheirlevelofownershipinmining,oilandgascompaniesoperatingwithinthecountry’soil,gasandminingsector,includingthoseheldbySOEsubsidiariesandjointventures,andanychangesinthelevelofownershipduringthereportingperiodinaccordancewithprovision2.6.c.Wherechangestoownershiphaveoccurred,thevalidatorisexpectedtoconfirmwhetherthetermsofthetransactionshavebeendisclosedandthereasonsforanygapsindisclosure.Reportingonchangestoownershipisexpected,butnotrequiredandshouldnotbeconsideredinassessingforcompliancewiththeEITIStandard.Whereinformationaboutchangestoownershipisnotdisclosed,thevalidatorisexpectedtoevaluatewhethertheMSGhasdocumentedandexplainedthebarrierstoprovisionofthisinformationandanygovernmentplanstoovercomethesebarriers.
• Thevalidatorisexpectedtodocumentwhetherdetailsaboutanyloansorloanguaranteestomining,oilandgascompaniesoperatingwithinthecountryhavebeendisclosed(2.6.c).
Explorationandproduction
EITIprovisions Guidancetovalidators
ExplorationactivitiesEITIprovision3.1.
Thevalidatorisexpectedtodocumentwhetheranoverviewoftheextractiveindustries,includinganysignificantexplorationactivities,hasbeendisclosed(3.1).
ProductiondataEITIprovision3.2.
Thevalidatorisexpectedtodocumentwhethertotalproductionvolumesandthevalueofproductionbycommodityhavebeendisclosed,includingwhetherthisinformationisfurtherdisaggregated
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bystate/regionwhererelevant(3.2).WheretheMSGhasdisclosedthesourcesofproductiondataandinformationonhowproductiondatahasbeencalculated,thevalidatorshouldtakenoteofthis.Reportingonsuchinformationisencouraged,butnotrequiredandshouldnotbeconsideredinassessingforcompliancewiththeEITIStandard.
ExportdataEITIprovision3.3.
Thevalidatorisexpectedtodocumentwhethertotalexportvolumesandthevalueofexportsbycommodityhavebeendisclosed,includingwhetherthisinformationisfurtherdisaggregatedbystate/regionoforiginwhererelevant(3.3).WheretheMSGhasdisclosedthesourcesofexportdataandinformationonhowexportdatahasbeencalculated,thevalidatorshouldtakenoteofthis.Reportingonsuchinformationisencouraged,butnotrequiredandshouldnotbeconsideredinassessingforcompliancewiththeEITIStandard.
Revenuecollection
EITIprovisions Guidancetovalidators
ComprehensivedisclosureoftaxesandrevenuesEITIprovisions4.1.
Thevalidatorisexpectedtodocumentwhether:• TheMSGhasagreedonamaterialitydefinition,includingany
reportingthresholds,aswellastheoptionsconsideredandtherationaleforthematerialitydefinition(4.1.a).
• TherevenuestreamsconsideredmaterialarelistedanddescribedintheEITIReport(4.1.a).
• Thevalidatorisexpectedtodocumentwhethertherevenuestreamslistedinprovision4.1.bhavebeenconsidered.WheretheMSGhasagreedtoexcludecertainrevenuestreamsfromtheEITIReport,thevalidatorisexpectedtodocumentandevaluatetherationalefortheirexclusion(4.1.b).
• TheMSGhasidentifiedthecompaniesmakingmaterialpaymentsandwhetherthesecompaniesfullyreportedallpaymentsinaccordancewiththematerialitydefinition(4.1.c;andtheIATOR).
• TheMSGhasidentifiedthegovernmententitiesreceivingmaterialrevenuesandwhetherthesegovernmententitiesfullyreportedallreceiptsinaccordancewiththematerialitydefinition(4.1.candtheIATOR).
• Thegovernmentfullyreportedallrevenues,includinganyrevenuesbelowthematerialitythresholds.(Note:thisinformationcanbeprovidedinaggregate.)Wherethegovernmenthasnotfullydisclosedallrevenues,thevalidatorisexpectedtodocumentthejustificationprovidedbytheMSG(4.1.d).
• Wherecompaniesorgovernmententitiespayingorreceiving
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materialrevenueshavenotsubmittedreportingtemplates,orhavenotfullydisclosedallthepaymentsandrevenues,thevalidatorisexpectedtodocumentwhethertheEITIReportdocumentstheseissuesandincludesanassessmentoftheimpactonthecomprehensivenessofthereport.
• InaccordancewiththeIATOR,thevalidatorisexpectedtoprovideasummaryofthekeyfindingsfromtheIndependentAdministrator’sassessmentwithregardstothecomprehensivenessoftheEITIdisclosuresandcoverageofthereconciliation.
In-kindrevenuesEITIprovision4.2
• ThevalidatorisexpectedtodocumentandevaluatetheMSG’sdefinitionofmaterialitywithregardstoin-kindrevenues.Wherein-kindrevenuesexistandareconsideredmaterial,thevalidatorisexpectedtodocumentwhetherthesehavebeenfullydisclosedinaccordancewithprovision4.2.
• ThevalidatorisexpectedtocommentonwhethertheEITIReportincludesdisclosuressuchasthetypeofproduct,price,marketandsalevolume,andwhetherthevolumessoldandrevenuesreceivedarereconciled.Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
InfrastructureprovisionsandbarterarrangementsEITIprovision4.3
• ThevalidatorisexpectedtodocumentandevaluatetheMSG’sdefinitionofmaterialitywithregardstoinfrastructureprovisionsandbarterarrangements.Whereinfrastructureprovisionsandbarterarrangementsexistandareconsideredmaterial,thevalidatorisexpectedtodocumentwhethertheserevenueflowsorvaluetransfershavebeenfullydisclosedinaccordancewithprovision4.3
TransportationrevenuesEITIprovision4.4
• ThevalidatorisexpectedtodocumentandevaluatetheMSG’sdefinitionofmaterialitywithregardstotransportationrevenues.Wheretransportationrevenuesexistandareconsideredmaterial,thevalidatorisexpectedtodocumentwhethertheserevenueflowshavebeenfullydisclosedinaccordancewithprovision4.4.
• Disclosureofmaterialtransportationrevenuesisexpected,butnotrequiredforcompliancewiththeEITIprovisions.Wheretransportationrevenuesarematerialbutnotdisclosed,thevalidatorisexpectedtoevaluatewhethertheMSGhasdocumentedandexplainedthebarrierstoprovisionofthisinformationandanygovernmentplanstoovercomethesebarriers.
• ThevalidatorisalsoexpectedtocommentonwhethertheEITIReportincludesadditionaldisclosuresinaccordancewithprovision4.4.i-v.Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliance
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withtheEITIStandard.TransactionsbetweenSOEsandgovernmententitiesEITIprovision4.5
• ThevalidatorisexpectedtoverifythattheEITIReportdescribestheroleofanySOEsoperatinginthecountry.WhereSOEsmakepaymentstothegovernment,collectmaterialrevenuesonbehalfofthestate,orboth,andwherefinancialtransfersbetweengovernmententitiesandSOEsexistandarematerial,thevalidatorisexpectedtodocumentwhethertheyhavebeenfullydisclosedinaccordancewithprovision4.5
SubnationaldirectpaymentsEITIprovision4.6
• ThevalidatorisexpectedtodocumentandevaluatetheMSG’sdefinitionofmaterialitywithregardstodirectsubnationalpayments.Wheredirectsubnationalpaymentsexistandareconsideredmaterial,thevalidatorisexpectedtodocumentwhethertheserevenueflowshavebeenfullyreconciledanddisclosedinaccordancewithprovision4.6.
LevelofdisaggregationEITIprovision4.7
• Thefinancialdatadisclosedisdisaggregatedbyindividualcompany,governmententityandrevenuestream.
• Thefinancialdataisdisaggregatedbyproject,providedthatitisconsistentwiththeUnitedStatesSecuritiesandExchangeCommissionrulesandtheEuropeanUnionrules(4.7).
DatatimelinessEITIprovision4.8
• ThevalidatorisexpectedtodocumentwhethertheimplementingcountryhasproducedtimelyEITIReportsinaccordancewithprovision4.8.
DataqualityEITIprovision4.9andtheIATOR
• ThevalidatorisexpectedtodocumentifandwhentheMSGendorsedtheselectionoftheIndependentAdministrator(4.9).
• ThevalidatorisexpectedtoreviewtheTORsagreedbytheMSGandtheIndependentAdministratoranddocumentwhethertheTORsareinaccordancewiththestandardTORsforEITIreports.Thevalidatorisexpectedtohighlightanymajordeviations.(4.9).
• InaccordancewiththeIATOR,thevalidatorisexpectedtodocumentifandwhentheMSGandtheIndependentAdministratorhave:- Agreedonreportingtemplates;- Undertakenareviewoftheauditandassuranceproceduresin
companiesandgovernmententitiesparticipatinginEITIreporting;
- AgreedontheassurancestobeprovidedtotheIndependentAdministratorbytheparticipatingcompaniesandgovernmententitiestoassurethecredibilityofthedata,includingthetypesofassurancestobeprovided,theoptionsconsideredandtherationalefortheagreedassurances;
- Agreedonappropriateprovisionsforsafeguardingconfidentialinformation.
• InaccordancewiththeIATOR,thevalidatorisexpectedto:
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- verifythattheEITIreportdocumentswhetherreportingcompaniesandgovernmententitieshadtheirfinancialstatementsauditedinthefinancialyear(s)coveredbytheEITIreport,andwhetheranygapshavebeenidentified;
- provideasummaryofthekeyfindingsfromtheIndependentAdministrator’sassessmentwithregardstothereliabilityofthedata;
- verifythatanycontextualinformationnotcollatedbytheIndependentAdministratorisclearlysourced;
• verifythatrelevantelectronicdatafileshavebeenpublishedtogetherwiththeEITIReportandthatsummarydatafromtheEITIReporthasbeensubmittedelectronicallytotheInternationalSecretariataccordingtothestandardisedreportingformatprovidedbytheInternationalSecretariat.
Revenuemanagementanddistribution
EITIprovisions Guidancetovalidators
DistributionofrevenuesEITIprovision5.1.
• ThevalidatorisexpectedtodocumentwhethertheEITIreportindicateswhichextractiveindustryrevenuesarerecordedinthenationalbudget.Whererevenuesarenotrecordedinthebudget,thevalidatorisexpectedtodocumentthattheallocationoftheserevenueshasbeenexplained,withlinksprovidedtorelevantfinancialreportsasapplicable(5.1.a).
• ThevalidatorisexpectedtocommentonwhethertheMSGhasreferencedanynationalrevenueclassificationsystemsorinternationaldatastandards(3.1.b).Suchreferencesareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
Sub-nationaltransfersEITIprovision5.2.
• Thevalidatorisexpectedtodocumentconstitutional,statutoryandothermandatoryrevenuesharingrequirementsandtheMSG’sdefinitionofmaterialityregardingmandatorysubnationaltransfers.Wheremandatorysubnationaltransfersexistandarematerial,thevalidatorisexpectedtodocumentwhetherthesehavebeendisclosedinaccordancewithprovision5.2.atogetherwithanyrevenuesharingformula.
• Thevalidatorisalsoexpectedtodocumentifmandatorysubnationaltransfershavebeenreconciled.Reconciliationisencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
• ThevalidatorisexpectedtodocumentwhethertheMSGhasincludedad-hocsubnationaltransfersintheEITIreportingprocess.Disclosuresofad-hocsubnationaltransfersareencouraged,butnotrequiredandshouldnotbeconsideredin
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assessingcompliancewiththeEITIStandard(5.2.b).AdditionalinformationonrevenuemanagementandexpendituresEITIprovision5.3
• ThevalidatorisexpectedtocommentonwhethertheEITIReportincludesadescriptionofanyextractiverevenuesearmarkedforspecificprogrammesorgeographicregions,includingadescriptionofthemethodsforensuringefficiencyandaccountabilityintheiruse,inaccordancewithprovision5.3.a.Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
• ThevalidatorisexpectedtocommentonwhethertheEITIReportincludesadescriptionofthecountry’sbudgetandauditprocessesandlinkstopubliclyavailableinformationaboutbudgetingandexpenditure(5.3.b).Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
• ThevalidatorisexpectedtocommentonwhethertheMSGhasdisclosedanyfurtherinformationrelatedtothebudgetcycle,productionandcommoditypriceassumptionisandrevenuesustainability,resourcedependence,andrevenueforecasting(5.3.c).Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
Socialandeconomicspending
EITIprovisions Guidancetovalidators
SocialexpendituresEITIprovision6.1
• ThevalidatorisexpectedtodocumenttheMSG’sdefinitionofmaterialitywithregardstomandatorysocialexpenditures.Wheremandatorysocialexpendituresexistandarematerial,thevalidatorisexpectedtoverifywhetherthesehavebeendisclosedandreconciledinaccordancewithprovision6.1.a,includinganygaps.
• ThevalidatorisexpectedtodocumentwhethertheMSGhasdiscloseddiscretionarysocialexpendituresinaccordancewithprovision6.1.b.Suchdisclosuresareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
SOEquasifiscalexpendituresEITIprovision6.2
• ThevalidatorisexpectedtodocumenttheMSG’sdefinitionofmaterialitywithregardstoquasi-fiscalexpendituresbySOEs,includingSOEsubsidiariesandjointventures.Wheretheseexistandarematerial,thevalidatorisexpectedtodocumentthereportingprocessdevelopedbytheMSGfordisclosureofquasi-fiscalexpendituresandverifythattheseexpenditureshavebeendisclosedaccordingly(6.2).
Contributionoftheextractive • Thevalidatorisexpectedtodocumentwhetheravailable
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sectortotheeconomyEITIprovision6.3
informationaboutthecontributionoftheextractiveindustriestotheeconomyforthefiscalyearcoveredbytheEITIreporthasbeendisclosedinaccordancewithprovision6.3.
PartIII:OutcomesandimpactofEITIimplementation
Outcomesandimpact
EITIprovisions Guidancetovalidators
PublicdebateEITIprovision7.1
ThevalidatorisexpectedtodocumentandevaluatewhethertheEITIdisclosures,includingtheEITIReport,arecomprehensible,havebeenactivelypromoted,arepubliclyaccessibleandhavecontributedtopublicdebate(7.1).ThisshouldincludepublicationoftheEITIreportvirtuallyandinhardcopies;availabilityinappropriatelanguages;andtheaccessibilityofdisseminationactivities.ThevalidatorshouldalsodocumentiftheMSGhasagreedapolicyontheaccess,releaseandreuseofEITIdata.
DataaccessibilityEITIprovision7.2
ThevalidatorisexpectedtocommentonanyeffortsbytheMSGtomakeEITIReportsmachinereadable,andtocodeortagEITIReportsanddatafilessoastoenableEITIdatatobecomparedwithotherpubliclyavailabledata(7.2).ThiscouldforexampleincludecaseswheretheMSGhasdecidedtoreferencenationalrevenueclassificationsystems,andinternationalstandardssuchastheIMFGovernmentFinanceStatisticsManual;producedsummaryreportsorothertypesofanalysisaimedatimprovingpublicunderstandingofthedataandinformationfromthereports;orenabledautomatedEITIdisclosures.Sucheffortsareencouraged,butnotrequiredandshouldnotbeconsideredinassessingcompliancewiththeEITIStandard.
LessonslearnedandfollowuponrecommendationsEITIprovision7.3
ThevalidatorisexpectedtodocumentthegovernmentandMSG’sprogressintakingstepstoactuponlessonslearned,identifying,investigatingandaddressingthecausesofanydiscrepanciesinEITIreporting,andprogressinrespondingtotherecommendationsmadebytheIndependentAdministrator(7.3).
OutcomesandimpactofEITIimplementationonnaturalresourcegovernanceEITIprovision7.4.
ThevalidatorisexpectedtodocumenttheMSG’seffortstoreviewoutcomesandimpactofEITIimplementationonnaturalresourcegovernance,includingwhetherannualactivityreportshavebeenproducedandcontaintheinformationsetoutinprovision7.4.a.ThevalidatorisalsoexpectedtocommentonanyconsultationsundertakenbytheMSGtowardgivingallstakeholdersanopportunitytoprovidefeedbackontheEITIprocessandtheimpactoftheEITI,andhavetheirviewreflectedintheannualactivityreport(7.4.b).
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Inadditiontotheaboveassessmentofprovisions7,theValidationshouldincludeanimpactanalysis.Theanalysiswillnotbeusedinassessingthecountry’scompliancewiththeEITIprovisions.RatheritprovidesstakeholderswithadditionalinformationabouttheimpactofEITIimplementationandrecommendationsforstrengtheningtheEITIprocesstobeconsideredbytheMSG.
Theanalysisshouldaddressthefollowing:
• TheimpactoftheEITI,includingprogressagainstthenationalprioritiesfortheextractiveindustriesasidentifiedinthemulti-stakeholdergroup’sworkplan.AnyobstaclestotheimpactoftheEITIshouldalsobenoted.Specifically,thevalidatorshould:
- ProvideareviewandanassessmentoftheimpactoftheEITIprocessin-countrytodate.HavetheobjectivesagreedtobytheMSGbeenachievedandledtothedesiredoutcomes?Whereobjectiveshavenotbeenachieved,isthereaspecificimpedimentthatcanbeidentifiedandcanthisberemoved?Arespecificactionsneededonthepartofgovernment,civilsocietyorcompaniestomakeprogressagainstMSGobjectives?WhataretheoutcomesofdisseminationofEITIdata?HastheEITIledtopublicdebate,andstrengthenedaccountabilitymechanisms?Istherevisibleproofofstructuralimprovementsingovernmentandcompanysystems,procedures,policiesandreputation,inadditiontoanecdotalevidence?Canpossiblechangesin,forexample,(extractiveindustry)governanceindices,civilsocietyrelatedindicators,orinvestmentratingsbedirectlyorindirectlyattributedtoEITIimplementation?
- ProposewaysinwhichtheEITIcanmakeagreaterimpact,andincreaseitsrelevanceinthecountry.BasedonstakeholderconsultationsundertakenbytheMSGinrelationtoprovision1.5.a,4.1,and7.4,dotheobjectivesforimplementationandtheEITIprocessreflectnationalprioritiesfortheextractivesector?Whataretheinnovativeaspectsintheobjectivesandactivities?Whatarethelinkstonationalreformefforts,inparticularregardingtransparencyandaccountability?Whereareopportunitiestoincreaseimpact?
• Thesustainabilityoftheprocess.Specifically,thevalidatorshould:
- DescribetheoutlookfortheEITIin-country.HowdostakeholdersseetheEITIdeveloping?WhataretheaimsandambitionsoftheMSG,andhasthisbeencapturedinastrategyoroutlookdocument?HavefinancialorlegalprocessesbeenestablishedtoprovidearegulatorybasisandfundingfortheEITI?Aretherelonger-termplansforintegratingtheEITIingovernmentsystems?
• Anyinnovationsandactionsbeingundertakenbythemulti-stakeholdergroupthatarecomplementarytoandexceedtheEITIProvisions,e.g.goodpracticeaswellaseffortstodeepenandwidenthescopeoftheEITI.Specifically,thevalidatorshould:
- AssesstowhatextenttheEITIreportandtheEITIprocessareeffectiveinstrumentsinimprovingtransparencyandstrengtheningaccountability.Doreportsprovidetherightdataandinformationtoservestakeholders’needs?WhichinnovativeapproachestodisclosurehavebeendevelopedandistherefurtherpotentialforuseofEITIreports?
• Conclusions,lessonslearntandrecommendationsforincreasingthewiderimpactoftheEITIprocess,includinganyopportunitiesandrecommendationsforembeddingtheEITIingovernmentsystems.AretherepartsoftheEITIreportingprocessthatcanbeintegratedwithexistinggovernmentsystems,forexamplewithregardstolicensingdatabases,nationalstatisticaldata,auditprocedures,companyfilings
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ofproductiondataandtaxpayments,openbudgetdata,etc.?AretherereformsunderwayintheareascoveredbytheEITIStandardwherethereareopportunitiesformainstreamingEITIdisclosures?
• [TobecompletedbytheMSG:WheretheMSGwishesthatvalidationpaysparticularattentiontoassessingcertainobjectivesoractivitiesinaccordancewiththeMSGworkplan,theseshouldbeoutlinedhereupontherequestoftheMSG.]
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TemplateforValidationReports
InaccordancewiththeEITIStandard,thefindingsfromValidationshouldbepresentedinaccordancewiththetemplatetableofcontentsbelow.
1. StandardtableofcontentsforValidationreports
ExecutiveSummary1.Overallconclusions2.Recommendations3.Assessmentcard
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Figure1–Assessmentcard
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IntroductionOverviewandbackgroundofEITIimplementation,including
- Briefrecapofthesign-upphase- Objectivesforimplementationandoverallprogressinimplementingtheworkplan- HistoryofEITIReporting- Summaryofengagementbygovernment,civilsocietyandindustry
KeyfeaturesoftheextractiveindustryExplanationofthevalidationprocess(objectives,timeline,ToR,etc.)PartI:MSGoversightOverviewAssessmentofEITIprovisionson:- GovernmentoversightoftheEITIprocess(#1.1)- Companyengagement(#1.2)- Civilsocietyengagement(#1.3)- MSGgovernanceandfunctioning(#1.4)- Workplan(#1.5)<Summaryassessmenttable>
Summaryassessmenttable:MSGoversight
EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions
GovernmentoversightoftheEITIprocess(#1.1)
<Provisionmet><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress>
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<Provisionunmetwithnoprogress>
Companyengagement(#1.2)
Civilsocietyengagement(#1.3) MSGgovernanceandfunctioning(#1.4)
Workplan(#1.5) Overallassessment:
Conclusionsandrecommendations:1….2…
PartII:EITIdisclosures
AwardofcontractsandlicensesOverviewAssessmentofEITIprovisionson:- legalframework(#2.1)- licenseallocations(#2.2)- licenseregisters(#2.3)- contractdisclosures(#2.4)- beneficialownershipdisclosure(#2.5)- state-participation(#2.6)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>
Summaryassessmenttable:Awardofcontractsandlicenses
EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)
Legalframework(#2.1) <Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>
Licenseallocations(#2.2) Licenseregisters(#2.3) Contractdisclosures(#2.4) Beneficialownershipdisclosure(#2.5)
State-participation(#2.6)
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Overallassessment:
Conclusionsandrecommendations:1….2…
ExplorationandproductionOverviewAssessmentofEITIprovisionson:- theoverviewoftheextractivesector,includingexplorationactivities(#3.1)- productiondata(#3.2)- exportdata(#3.3)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>
Summaryassessmenttable:Monitoringandproduction
EITIprovisions Summaryofmainfindings Recommendation oncompliance with the EITIprovisions(tobecompletedfor‘required’provisions)
Overviewoftheextractivesector,includingexplorationactivities(#3.1)
<Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>
Productiondata(#3.2) Exportdata(#3.3) Overallassessment:
Conclusionsandrecommendations:1….2…
RevenuecollectionOverviewAssessmentofEITIprovisionon:- comprehensivedisclosureoftaxesandrevenues(#4.1andIATOR)- in-kindrevenues(#4.2)- barterandinfrastructuretransactions(#4.3)- transportrevenues(#4.4)- subnationaldirectpayments(#4.5)- transactionsbetweenSOEsandgovernment(#4.6)
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- levelofdisaggregation(#4.7)- datatimeliness(#4.8)- dataquality(#4.9andIATOR)<Summaryassessmenttable>
Summaryassessmenttable:Revenuecollection
EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)
Comprehensivedisclosureoftaxesandrevenues(#4.1.aandIATOR))
<Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provision unmet with noprogress>
In-kindrevenues(#4.2) Barterandinfrastructuretransactions(#4.3)
Transportrevenues(#4.4) Subnationaldirectpayments(#4.5)
TransactionsbetweenSOEsandgovernment(#4.6)
Levelofdisaggregation(#4.7) Datatimeliness(#4.8) Dataquality(#4.9andIATOR) Overallassessment:
Conclusionsandrecommendations:1….2…
Revenueallocations
OverviewAssessmentofEITIprovisionson:- distributionofrevenues(#5.1)- sub-nationaltransfers(#5.2)- informationonrevenuemanagementandexpenditures(#5.3)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>
Summaryassessmenttable:Revenuemanagementanddistribution
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EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)
Distributionofrevenues(#5.1) <Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>
Sub-nationaltransfers(#5.2)
Informationonrevenuemanagementandexpenditures(#5.3)
Overallassessment:
Conclusionsandrecommendations:1….2…
SocialandeconomicspendingOverviewAssessmentofEITIprovisionson:- Socialexpenditures(#6.1)- SOEquasifiscalexpenditures(#6.2)- Contributionoftheextractivesectortotheeconomy(#6.3)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>
Summaryassessmenttable:Socialandeconomicspending
EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)
Socialexpenditures(#6.1) <Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>
SOEquasifiscalexpenditures(#6.2)
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Contributionoftheextractivesectortotheeconomy(#6.3)
Overallassessment:
Conclusionsandrecommendations:1….2…
PartIII:OutcomesandImpactOverviewAssessmentofEITIprovisionson:- Publicdebate(#7.1)- Dataaccessibility(#7.2)- Lessonslearnedandfollowuponrecommendations(#7.3)- Outcomesandimpactofimplementation(#7.4)<Summaryassessmenttable>Summaryassessmenttable:Outcomesandimpact
EITIprovisions Summaryofmainfindings RecommendationoncompliancewiththeEITIprovisions(tobecompletedfor‘required’provisions)
Publicdebate(#7.1)
<Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>
Dataaccessibility(#7.2)
Lessonslearnedandfollowuponrecommendations(#7.3)
Outcomesandimpactofimplementation(#7.4)
Overallassessment:
Conclusionsandrecommendations:1….2…
Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions)Annexes
Listofstakeholdersconsulted.ListofMSGmembersandcontactdetails.
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Listofreferencedocuments
Recommended