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We audit building certifiers because we want to build trust in the building and construction industry.
On this page:
Key information
Background
Our audit strategy
Why we audit building certifiers
How we choose who to audit
The audit process
Possible audit outcomes
Related links
Key information
- We audit building certifiers because we want to build trust in the building and construction industry.
- Certifiers are responsible for undertaking critical assessments in the construction of buildings and structures. Audits help to keep certifiers accountable to the people of NSW.
- We will use a risk analysis which includes the previous conduct of the certifier, compliance and complaints data, project complexity and the potential for a project to impact a large number of people.
- This audit strategy outlines a risk analysis framework, our approach to an audit, and what can happen after the audit has been completed.
Background
Accountability of building certifiers is part of the NSW Government’s strategy to rebuild public confidence in the building industry. As public officials, certifiers check compliance of proposed development with planning, building and other legislated requirements.
In 2018, the Building Confidence report [PDF] to the Building Ministers Forum made several key recommendations to improve the accountability of building industry practitioners including:
- the provision of broad powers to audit building work and take effective compliance and enforcement action
- the implementation of proactive jurisdictional audit strategies for regulatory oversight of the Commercial building sector.
Addressing and improving the practice of registered certifiers is also a focus of the Construct NSW reform program. As part of that program, a Practice Standard for registered certifiers was developed and released in September 2020.
The Building and Development Certifiers Act 2018 (the Act) provides for the registration and governance of certifiers in carrying out certification work, which includes:
- the exercise of a function of a certifier (including a principal certifier) specified in section 6.5 of the Environmental Planning and Assessment Act 1979
- the determination of an application for a strata certificate within the meaning of the Strata Schemes Development Act 2015
- the inspection of swimming pools under Division 5 of Part 2 of the Swimming Pools Act 1992 and the issuing of certificates of compliance and notices under that Division.
Our audit strategy
The building certifier audit strategy will enable us to proactively review the conduct of registered building certifiers undertaking certification work in both the private sector and in local councils. We want to ensure that the work is completed in accordance with legislative requirements.
The primary focus of the audit program is to identify issues associated with building certification work and activities.
Why we audit building certifiers
The important role certifiers play in the construction industry
Certifiers are responsible for undertaking critical assessment functions associated with the construction of buildings and structures as well as land and strata subdivision.
When a certifier does not complete their functions appropriately, it can have substantial detrimental impacts upon property owners, neighbours and the wider community. Substandard certification work can therefore be said to place at risk the following regulatory outcomes:
- health and safety of the property owners, neighbours and community;
- amenity of the property owners, neighbours and community;
- functionality of buildings, structures, land and the surrounding areas;
- quality of the built and natural environment.
Our audit aims
We audit building certifiers with the aim to:
- promote building certifiers’ obligations with regulatory requirements;
- ensure that certifiers, following the taking of education/disciplinary action, have rectified their conduct;
- minimise harm or loss to the community as a result of non-compliance;
- use a range of enforcement options where the certifier does not comply with requirements and standards;
- capture data regarding certification practice which will be used to inform better regulation of certification and associated areas which are the responsibility of Fair Trading;
- identify areas of certification practice which need to be brought to the attention of all certifiers.
This audit strategy applies to the compliance obligations of registered building certifiers under the Act and to their authorised work.
Our legislative authority to conduct audits
Under section 106 (3) of the Act, the Secretary may conduct an audit of a registered certifier or an accreditation authority at any time.
As part of this authority, an officer authorised by the Secretary may require a certifier to provide information and records, to provide answers and further information, and to take possession of records to be used as evidence for authorised purposes, such as an audit. This is provided for under Part 7 of the Act.
Registered certifiers under the Act must comply with any direction by an authorised officer to provide such information, answers, or records under section 91 and 92 of the Act.
Under section 100 of the Act, if a person obstructs or interferes with an authorised officer exercising an authorised function, or fails to comply with any such direction, a maximum penalty of $110,000 (for body corporates) or $22,000 (in any other case) applies.
How we choose who to audit
Risk analysis tools
We use risk analysis tools to assess which certifiers we audit.
We will progressively analyse complaints data and other intelligence about certifier conduct to identify the source of risk to regulatory outcomes, their incidence through the actions of particular registered certifiers and the consequences of those risks.
The risk factors that will be used to conduct this analysis and identify candidates for audit may include:
- Certifiers who have previously been the subject of enforcement of disciplinary action.
- Certifiers who have been the subject of a complaint, investigation or other intelligence including in the areas being targeted by the audit.
- High technical complexity of building projects which have been undertaken by certifiers.
- Certifiers who have worked on projects which have the potential to affect a large number of people.
- Certifiers who have worked on projects which involve high risk materials (e.g. non-compliant cladding).
- Swimming pool inspectors who are carrying out their statutory obligations under the Swimming Pools Act 1992.
- Serious defects in building elements or building projects observed from building audits under other NSW Fair Trading legislation, such as those conducted under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020.
The audit process
The key likely steps in an audit are set out in this section. The actual process used during an audit process may vary.
1. Identify the audit focus
A risk analysis taking into account risk factors outlined in the Risk Analysis section of this document will be used to provide guidance in identifying audit topics.
While the focus of the audit will be the registered certifier and their compliance obligations, the audit may choose to focus on a particular project, or projects, undertaken by the certifier or particular aspects of their regulated work.
2. Review of certifier's history
Initially we review the certifier's history and look into any complaints or data about their previous work.
If we have received complaints about a certifier, we may visit their place of business.
3. Formal notification to audit
The certifier will be notified that their certification work and activities will be audited. They receive this notification in writing.
4. Request for documentation
The certifier will be required to submit relevant records. These may include those records required under Part 7 of the Building and Development Certifiers Regulation.
In circumstances where audit matters have been identified outside the standard audit matters, specific documents relating to the matters will be requested, such as the certifier’s complaint register (clause 267A of the Environmental Planning & Assessment Regulation 2000).
5. Review and assessment
The submitted documents will be reviewed and compliance assessed against all relevant legislation.
6. Audit report and submissions
A report will be prepared based on the compliance assessment.
If a report identifies any non-compliance, it will be provided to the certifier for comment on its findings.
Where relevant, a decision regarding a disciplinary outcome or action will be made subsequent to certifier comments on the audit report.
7. Annual reporting and data collection
Annual reporting
Following the conclusion of an audit program, we will provide an annual report which provides information and findings from the program conducted that year. This will promote transparency about the audit process. The report will include the:
- number of audits conducted
- subject of audits (for example, high risk practitioners, high risk work)
- results of audits in terms of findings and action taken in response.
Industry, co-regulator and community feedback and continuous improvement
Data collected from the audit program will be used to develop educational strategies to improve certifier practice.
Audit program findings will also be used as case studies to communicate the consequences of contraventions and breaches to industry and the community.
Possible audit outcomes
1. No action
No conduct or compliance issues were identified during the audit.
2. Regulator actions
There are a range of possible compliance and audit tools available to the regulator under the Act. Their use will depend on whether certifier conduct issues are identified during the audit, as well as on factors such as the nature of any non-compliance and the risk posed by the non-compliance.
Any education/ disciplinary action shall be undertaken in accordance with our Guidelines for Determining a Disciplinary Action Outcome [PDF].
3. Education / disciplinary action
Education / disciplinary action outcomes may include:
- No further action
- Education – which may include clarification of legislative requirements or a referral to specific training
- Caution or reprimand
- Penalty Infringement Notice – imposition of a fine for an identified offence
- Written Undertakings (see section 104 of the Act) regarding the manner in which certification work will be carried out or conduct the certifier’s business.
- Warning Notice (see section 103 of the Act)
- Referral to another NSW Fair Trading division for further consideration.
4. Recording of enforcement actions
We maintain a register of registered building certifiers (section 102 of the Act). The register records details, including:
- Disciplinary action taken against the certifier
- Offences for which the certifier has been convicted
- Undertakings provided by the certifier
- Warning notices published relating to the certifier.