validation guide - eiti.org · the eiti board should evaluate the evidence provided by the msg ......

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.

EITIValidationGuideMay2016

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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


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


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


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


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


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


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:


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:


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


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:


Revenueallocations

OverviewAssessmentofEITIprovisionson:- distributionofrevenues(#5.1)- sub-nationaltransfers(#5.2)- informationonrevenuemanagementandexpenditures(#5.3)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>

Summaryassessmenttable:Revenuemanagementanddistribution


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Distributionofrevenues(#5.1) <Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>

Sub-nationaltransfers(#5.2)

Informationonrevenuemanagementandexpenditures(#5.3)

Overallassessment:


SocialandeconomicspendingOverviewAssessmentofEITIprovisionson:- Socialexpenditures(#6.1)- SOEquasifiscalexpenditures(#6.2)- Contributionoftheextractivesectortotheeconomy(#6.3)Assessmentoftimeliness,comprehensivenessandreliabilityoftheinformationdisclosed<Summaryassessmenttable>

Summaryassessmenttable:Socialandeconomicspending


Socialexpenditures(#6.1) <Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>

SOEquasifiscalexpenditures(#6.2)


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Contributionoftheextractivesectortotheeconomy(#6.3)

Overallassessment:


PartIII:OutcomesandImpactOverviewAssessmentofEITIprovisionson:- Publicdebate(#7.1)- Dataaccessibility(#7.2)- Lessonslearnedandfollowuponrecommendations(#7.3)- Outcomesandimpactofimplementation(#7.4)<Summaryassessmenttable>Summaryassessmenttable:Outcomesandimpact


Publicdebate(#7.1)

<Provisionmet,satisfactoryprogress><Provisionunmet,withmeaningfulprogress><Provisionunmetwithinadequateprogress><Provisionunmetwithnoprogress>

Dataaccessibility(#7.2)

Lessonslearnedandfollowuponrecommendations(#7.3)

Outcomesandimpactofimplementation(#7.4)

Overallassessment:


Impactanalysis(nottobeconsideredinassessingcompliancewiththeEITIprovisions)Annexes

Listofstakeholdersconsulted.ListofMSGmembersandcontactdetails.


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Listofreferencedocuments

validation guide - eiti.org · the eiti board should evaluate the evidence provided by the msg ......

Documents