Transition into Risk Based Audit Reliability Compliance Using ISO31000 Methodology

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Courtesy of 360Factors, Inc.

HISTORY
The Energy Policy Act of 2005 (the Act) created a committee to monitor and enforce reliability issues affecting the Bulk Electric System of North America. The entities that make up the compliance monitoring and enforcement body are the Federal Energy Regulatory Commission, the Electric Reliability Organization and eight regional entities. Per provisions of the Act, the
body’s primary responsibilities are to develop standards, promote and monitor compliance with those standards and enforce acts of non-compliance with the standards.

In 2007, North American Electric Reliability Corporation (NERC) applied to become the electric reliability organization (ERO) and filed the NERC Rules of Procedure to support their application. Based on the Rules of Procedure, NERC’s compliance enforcement scope is limited to the NERC approved reliability standards.

CURRENT STATE OF COMPLIANCE MONITORING

What is the basis for a NERC audit?
The NERC standards are the basis for all NERC audits. When carrying out compliance monitoring activities, NERC compliance enforcement staff reviews the documentation that a registered entity provides as proof of compliance. If the entity’s documentation is found to map to the standard requirement and the entity’s stated performance criteria, the entity passes the
review.

When the Compliance Monitoring & Enforcement Program (CMEP) was initially developed, a registered entity’s risk to the Bulk Electric System (BES) was determined by their registered functions and that registration type determined the entity’s audit cycle. This was the case regardless of its true risk to the BES. For example, a wind farm registered as a Generator Operator (GOP) would have the same audit cycle as a reliability must-run (RMR) generation unit.

What are the current auditing standards?

The US Government Accountability Office and its Government Auditing Standards, known as the Yellow Book , provide the professional standards for NERC auditors. Primarily, the focus has been on Section 7 of the Yellow Book as it describes performance audits rather than financial audits. The Yellow Book will continue to provide the professional auditing standards for NERC auditors into the future.

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