NGER and AASB S2 Restatement: What to Do When You...

You found an error. Maybe a supplier sent corrected fuel data three months after you locked the period. Maybe the assurance team flagged a Scope 2 factor that was pulled from the wrong year of the NGA workbook. Maybe a meter on a single site was reading 10x because of a CT ratio configuration that nobody caught for two years.

The report has been submitted. The board has signed. The auditor has issued an opinion. And now you have a number that is wrong.

The next 72 hours determine whether this becomes a paperwork exercise or a regulator-grade incident.

The audit that should be on your wall

The ANAO performance audit of the NGER scheme reviewed 545 reports and found that 72% contained errors, with 17% containing what the regulator classified as significant errors. That audit was published in 2024 and is the most cited piece of evidence in current Clean Energy Regulator surveillance work.

Read that the right way. The base rate of error in NGER reports is not low. The base rate of finding the error before the regulator does is what separates a controlled restatement from an enforcement action.

ASIC has now started its first wave of AASB S2 surveillance on Group 1 reporters. The first Group 1 disclosures were filed in 2025 and 2026. Group 2 starts for financial years beginning 1 July 2026. Restatement activity is going to spike across both regimes, and the playbook below is what we use to walk customers through it.

Three error categories. Pick yours first.

Before anyone files anything, the question is materiality. Get this wrong and you either over-disclose into an enforcement spotlight, or under-disclose and find the regulator doing the work for you.

The three categories we use in practice:

Immaterial. Under the 5% rule of thumb against the reported total, not part of a pattern, and not connected to a control failure. These get documented in your basis of preparation, noted in next year's report, and that is the end of it.

Material but not significant. The number is wrong by enough to matter to a user of the report, but the magnitude does not put the original disclosure into "false or misleading" territory. This is a formal NGER revised report under section 22 of the NGER Act, plus an AASB S2 restatement of the prior period through the next disclosure.

Significant. The error is audit-failing in magnitude, compounds across multiple years, or sits on top of a control failure. This is a regulator notification, an immediate board and audit committee briefing, and an external counsel conversation before the revised numbers go anywhere near a regulator portal.

The 5% rule of thumb is exactly that. It is not in the NGER Act and it is not in AASB S2. It is a working threshold most assurance practitioners use, and it should be written into your basis of preparation document with the rationale for why 5% (or 3%, or 10%) is the right number for your business. If your basis of preparation does not contain a quantitative materiality definition, that is the first gap to close before you do anything else.

One more thing. Aggregation matters. Five errors that are each 1.5% of total emissions are not five immaterial errors. They are a 7.5% restatement if they share a common cause, and the regulator will treat them that way.

The NGER restatement mechanics

Section 22 of the NGER Act 2007 is the operative provision. It allows the controlling corporation to submit a revised report at any time after the original submission, and the Clean Energy Regulator maintains the EERS portal pathway for doing so.

Read the Clean Energy Regulator's audit framework before you file. It distinguishes between revisions the regulator considers mandatory (where the original report is materially incorrect) and revisions the corporation may submit voluntarily. The framing matters because a voluntary revision filed promptly carries a very different risk profile to a mandatory revision that is filed only after the CER opens an audit.

The mechanics:

Open a revised report against the original reporting year in EERS
Restate the affected facility-level data with the corrected figures
Provide a written explanation of the cause, the calculation methodology change (if any), and the assurance position
Re-lodge through the same authorisation chain that signed the original report

Timing is the part that catches people. A revised report can be filed at any time, but the further you are from the original 31 October submission, the harder it is to argue that the error was discovered and corrected in the ordinary course of business. If the restatement happens 18 months later because an assurance provider found the issue during the next year's NGER audit, that is a very different conversation with the regulator than a revision filed in February for the prior October.

Criminal penalties under the NGER Act go up to two years imprisonment for dishonest or fraudulent reporting. Civil penalties are denominated in penalty units ($364 each for offences from 1 July 2026, indexed). Records must be kept for five years from the end of the reporting year, which is the window during which the CER can audit. If you cannot produce the source documentation, the revised number is hearsay regardless of how confident you are that it is correct.

For a fuller treatment of how the CER actually conducts these reviews, our NGER audit preparation evidence pack walks through the document requests to expect in practice.

The AASB S2 restatement mechanics

AASB S2 inherits the prior-period error mechanics from AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors. The hook is paragraph B23 of AASB S2 (the consequential amendments to other standards section), and the practical effect is that material prior-period errors in climate-related disclosures are treated the same way as material prior-period errors in financial statements.

That means:

The comparative period is restated, not just disclosed
The nature of the error is described in the notes
Each affected line item is quantified for each prior period presented
The cumulative effect at the start of the earliest period presented is disclosed

AASB S2 paragraph 21 deals with changes in consolidation method, and paragraphs 31 to 34 govern metrics and targets disclosure, including how restated comparatives are presented when scope, methodology, or factor versions change between reporting periods. If you switched from AR5 to AR6 GWP values, or moved a facility between operational control and equity-share consolidation, those are not errors. They are methodology changes, and they get disclosed differently to a genuine prior-period error.

The line your auditor will be looking for is the one that explains why the error occurred and how the control environment has been updated to prevent recurrence. ASIC will read that note the same way it reads a financial restatement note in the prior year accounts. Vague language about "data refinement" or "process improvements" is exactly the kind of disclosure the ACCC has prosecuted as greenwashing when the underlying cause is a substantive error rather than an estimate refinement.

What ASIC and the CER are actually going to do

The single best predictor of how the regulator responds is who found the error first.

Self-reported errors, filed promptly with a clear root cause analysis and a documented control remediation, are typically treated as compliance partners doing their job. The CER's enforceable undertaking with Beach Energy in July 2025 is a useful reference point. Errors found by the regulator first, where the company either denies or delays, are the Mercer, Vanguard, and Active Super pattern. Those cost the firms involved tens of millions in penalties and reputational damage that is still being unwound.

ASIC has been explicit that sustainability disclosure is now a surveillance priority. Our piece on ASIC's AASB S2 enforcement signals covers what the regulator has said publicly and what it implies for restatement disclosure language.

The practical decision rule we use:

If the error is material, file the revised NGER report within 30 days of discovery
If the error is significant, notify the CER in writing before filing
If the error affects an AASB S2 disclosure that has been signed by directors, the audit committee chair gets a written briefing before the revised number leaves the building

The audit trail problem this exposes

Here is what every restatement reveals about the company that is doing it.

If you cannot reconstruct exactly how the original (wrong) number was calculated, then the restatement note is impossible to write defensibly. You cannot explain the nature of the error without showing both the original methodology and the corrected one. You cannot quantify the line-item impact without re-running the calculation through the original emission factor set, the original consolidation boundary, and the original activity data.

This is why period locking, source document traceability, and methodology versioning are the technical foundation for survivable restatement. Not the recalculation, the reconstruction. The recalculation is easy. The reconstruction of what you actually did in March of the prior year is the part that breaks most teams.

Our deeper post on emission factor versioning and audit trail explains why this matters in detail, including the AR5 to AR6 transition that is going to drive a wave of NGER vs AASB S2 reconciliation work over the next two years.

The board disclosure question

ASRS Group 1 directors signed the first AASB S2 statement under the modified liability relief in section 1707D of the Corporations Act. That relief is time-limited and partial. It does not extend to the corrected disclosure once an error has been identified, and it does not protect against personal liability for failing to disclose a known material error.

The materiality threshold for board notification is almost always lower than the materiality threshold for restatement disclosure. A 2% error that is part of a pattern, or that points to a control failure, gets escalated to the audit committee chair even though it does not trigger formal restatement.

The conversation with the chair has three parts:

What is the magnitude of the error and what is the root cause
What is the control remediation and the timeline
What is the disclosure position, and who is the external assurance provider's contact on the response

If the answer to any of those is "we are still working on it," the chair will (correctly) want to know when they will get a complete answer. That is the moment the work stops being a sustainability function project and becomes a finance function project with sustainability input.

Year-2 disclosure mechanics

The restated comparatives appear in the next AASB S2 disclosure as restated prior-period figures, with the nature of the error explained in the notes and the line-item amounts quantified. Investors and analysts will read the restatement note before they read anything else in the report. The credibility signal a clean restatement note sends is significant, in both directions.

The most common failure mode is restating only the headline Scope 1 plus 2 number while leaving Scope 3 categories, intensity metrics, and target progress numbers unchanged. If the underlying activity data was wrong, every metric derived from it was wrong, and the restatement scope has to follow the data lineage all the way through.

Our AASB S2 climate risk register practical guide covers the metrics and targets disclosure structure that the restatement note has to plug into.

Where Carbonly fits

Period locking and source document traceability are what make a defensible restatement possible. Every emission record in Carbonly is tied back to the underlying invoice, fuel docket, or meter reading. Methodology, emission factor version (AR5 or AR6, NGA edition, location-based or market-based), and consolidation boundary are versioned per period. When a prior period is reopened, the system can produce both the original calculation chain and the corrected one, side by side, with the source documents attached.

That is the substrate the restatement note is written on top of. It is not the restatement itself. The judgement calls about materiality, about regulator engagement, about board disclosure, those remain where they should be, with the controller and the audit committee.

What to do in the next 72 hours

If you have just found an error in a submitted report, the practical sequence is:

Document the discovery (who, when, how) before you do anything else
Quantify the impact against the 5% materiality threshold and against your basis of preparation
Brief the CFO and the audit committee chair if material
Engage your assurance provider before filing
File the revised NGER report under section 22 if NGER is in scope
Plan the AASB S2 restatement note for the next disclosure
Update the control environment and document the remediation

The companies that come through restatement well are the ones that treat it as a control event, not a communications event. The ones that come through badly are the ones that try to bury it in next year's report.

If you want a walkthrough of how a period-locked, source-documented system handles this without three weeks of forensic work, get in touch at hello@carbonly.ai or join the waitlist. The post on carbon reporting mistakes and audit failures is also worth reading before your next assurance scoping conversation.