Part 6: Gas certificates and gas audits

6.1
In this Part, we discuss our findings on the process the Board used for gas certificates and gas audits, including:

• the process the Board used for the purchase of gas certificates;
• the process the Board used for filing and checking gas certificates;
• the gas audit system the Board used; and
• the recent focused gas audit work that the Board has carried out.

Summary of our findings

6.2
Overall, we found that:

• the online system was not widely used by craftsman gasfitters;
• the manual system used for issuing gas certificates had a weak system of controls, which the Board had known about for some time before the problems with a number of gasfitters arose in late 2009;
• the Board did not check the accuracy of certificates that were required to be returned to the Board;
• the gas audit system used for checking the competency of gasfitters was not mandatory, although the Board thought it was;
• auditors checked only a small number of gas certificates issued by each craftsman gasfitter;
• there were practical problems with the gas audit system;
• the recent focused gas audit work the Board has carried out indicated that the gas audit did not provide an adequate check on either the competency of craftsman gasfitters or the practice of certification of gas installations; and
• it is likely that there are a greater number of non-compliant gas installations that have been certified by gasfitters than has ever been identified by the gas audit process.

Introduction

6.3
All gas installations must be certified, as a basic public safety check. The certificate must be signed by the craftsman gasfitter responsible for the work. That person must certify that the gasfitting work they have carried out (or that has been carried out under their supervision or direction) is safe and complies with the requirements of the Gas Act 1992 and regulations made under that Act. Craftsman gasfitters must buy the certificates from the Board and return a completed copy to it. There is no independent inspection of gasfitting work. Rather, the policy behind the legislation is to focus on ensuring the competence of those certifying the work.

6.4
The Board operated a system of gas audits to check the competency of craftsman gasfitters. The auditors selected one or more jobs carried out by the craftsman gasfitter, or a person supervised by them, and inspected that work. We discuss the gas audit system in more detail below.

6.5
Towards the end of our inquiry, the Ministry of Economic Development told us about a problem with the purchase of gas certificates. A concern had arisen that a craftsman gasfitter was using certificates inappropriately, and letting other unqualified people issue these certificates without the craftsman gasfitter actually checking the work. Copies of the certificates were not returned to the Board.

6.6
The Minister, and the Associate Minister of Energy and Resources, asked whether the Auditor-General could, as part of this inquiry, take account of these events. The Board and the Ministry of Economic Development conducted detailed investigations into tracking all the unauthorised gasfitting certificates and checking potentially unsafe gas installations. Their work was to ensure public safety and to consider whether disciplinary or criminal proceedings should be instituted (because these are all outside the scope of our inquiry).

6.7
During our inquiry, we examined the processes the Board used to issue gas certificates. We also carried out some additional work as a result of the request to take these events into account. In this Part, we summarise our views on the gas certification system and the gas audit system.

Gas certificates and the process used to issue them

6.8
The Board has been issuing gas certificates since 1993. The procedure for obtaining gas certificates was that craftsman gasfitters requested the gas certificate forms from the Board. The forms were sold in books of 10, and each certificate cost $25. Board staff checked that the applicant held a current licence as a craftsman gasfitter and that the payment was correct before posting out the forms. Each certificate had four copies, colour coded as follows:

• blue – craftsman's copy;
• yellow – gas supplier's copy;
• white – consumer's copy; and
• pink – Board's copy.

6.9
The Board also had an online system for purchasing gas certificates. However, most gas certificates were still purchased manually when we did our initial fieldwork.

6.10
Once the gasfitting work was certified, the craftsman gasfitter had to send the pink copy back to the Board. The Board stored tens of thousands of copies. The Board sometimes received requests to search for copies of the forms, and this was a major exercise for staff. The Board could also be asked to provide a copy of a gas certificate and charged $25 for a copy.

6.11
Gas certificates are important documents. The gas certificate recorded the gas work that was carried out at a property, who carried out the work, when the work was checked, and the name of the craftsman gasfitter who certified the work. The certificates ensured that there was a record that established accountability for the gas work and were intended to safeguard public safety. For this reason, each certificate had a unique number and was issued to craftsman gasfitters for their use only.

What we found in 2008/09

Online system was not widely used by craftsman gasfitters

6.12
In 2003, the Board decided to develop an online gas certificate system. The Board believed that "The public and registered persons alike should be able to interact at every level via the online system." A project was established to allow online purchasing of licences and gas certificates, and online filing of gas certificates. The project also provided for the public to be able to view the status of a registered person. Testing of the online gas certificate system went into its final phase in late 2005, and the system went live a year later.

6.13
We expected that, almost three years after introducing the system, most gas certificates would be purchased online. However, of the 40,000 gas certificates purchased from the Board each year, only about 7000 were purchased online.

6.14
Purchasing certificates online was less labour intensive for Board staff and allowed for better checks and controls. Online certificates could not be ordered in bulk but were issued singly for each job. Each craftsman gasfitter had a password for accessing the online system.

6.15
We were told that the reason for the much smaller than expected use of the online gas certificate system may have been because of the large number of gasfitters who were in an older age group and who were not comfortable with the use of online systems. However, when the system was introduced, a Board newsletter said that the favourable comments received by industry representatives who tested the system "reinforced the Board's approach in ensuring that all those who will use the system are able to do so regardless of their computer skills, speed or technology they are using". The Board had clearly intended that the online system would be easy to use for all craftsman gasfitters.

6.16
A more likely reason for the lack of use of the online system is that, despite the assurances that the system had been fully tested before it was introduced, there had been numerous problems. Significant staff time had been spent trying to correct problems.

Manual system for issuing gas certificates had a weak system of controls

6.17
The system used by the Board for manually purchasing bulk supplies of gas certificate forms had a weak system of controls. In particular, people other than craftsman gasfitters could purchase an unlimited number of gas certificates. The Board had no manual of standard procedures for the purchase and filing of gas certificates. Processing the forms had been the responsibility of junior staff, and the lack of clear instructions meant there was a risk of staff developing their own individual approach to carrying out this work.

6.18
Because the system had a weak system of controls, it was open to misuse.

The Board had known about the weak system of controls for some time

6.19
The Board had been aware of the weak system of controls and its potential for misuse for several years. It had not changed the system despite evidence of misuse.

6.20
As a result of investigations in 2004 and 2005, the Board became aware that certificates might be being misused. It found examples of craftsman gasfitters using or completing certificates issued to other craftsman gasfitters (despite the statement on the gas certificates that the certificates were non-transferable), and of a gasfitter adding work to a certificate after it had been signed by the craftsman gasfitter and without his knowledge.

6.21
They also found that crucial information was missing from the certificates. For example, the name and registration number of the gasfitter who carried out the work was missing, and details of the certificate owner were not included. The Gas Regulations 1993 required the certification of gasfitting to be completed within 10 working days of the gasfitting work. The forms that were examined by the investigations had examples of work that had been certified weeks – and, in one case, three months – after the work had been carried out. The investigations made no comment on these breaches of the Gas Regulations.

6.22
The Gas Regulations also required a copy of the certificate to be sent to the Board within five working days of certifying the gas work. None of the certificates that we saw, which had been reviewed as part of the Board's investigations, were submitted to the Board within five working days. The investigations by Board staff did not comment on this further breach of the Gas Regulations.

6.23
In 2005, the Board conducted an inquiry into a craftsman gasfitter for failing to check the work that he was certifying. The craftsman gasfitter admitted that he had pre-signed a gas certificate for the installation of a particular type of gas fire without carrying out any inspections. The Board imposed a fine of $2,500. Board staff, as part of their inquiry, questioned the craftsman gasfitter and asked how many of these gas fire installations he had certified. They were told that he had certified 50-60 such installations. When asked if he had inspected all these installations before signing the certificates, the notes of the interview stated that "No conclusive answer was obtained."

6.24
The fact that 50-60 certificates may have been signed without the gas fire installations being inspected did not result in any further action by the Board. There was, for example, no review of the process for issuing gas certificates to see if procedures needed to be tightened.

The Board did not check copies of gas certificates that were returned to it

6.25
Once a craftsman gasfitter has certified a gas installation, a copy of the certificate had to be sent to the Board. These copies were a key part of the Board's gasfitter audit system, which is discussed in more detail below. The Board would send the gas auditor a number of certificates certified by a craftsman gasfitter. The auditors then selected from the gas certificates those gas installations that they wished to audit.

6.26
Given the importance of ensuring that all completed certificates were returned, we assumed that the Board would regularly reconcile the certificates that had been issued against the copies of the certificates that had been returned. The Board had no such system to reconcile the certificates. It might be expected that the most "at risk" certificates were those that had not been returned. Anyone using, or misusing, a certificate would know that failing to return a certificate meant that the Board's auditors would never check the gasfitting work.

6.27
The former Registrar told us that he had put in place a process to check the gas certificates and that he had been assured by staff that this process was followed. We saw no evidence of such a system.

6.28
The ability of Board staff to reconcile outstanding certificates was greatly hampered by the filing system that they used for gas certificates. Before 2007, the returned copies of the gas certificates were filed under the name of the craftsman gasfitter. Since then, they have been filed by the date on which they are received.

6.29
It appears that Board staff had not, until recently, checked the details of the completed gas certificates sent to them. Therefore, gas certificates could be incomplete or contain information that might have suggested that the gas installation was unsafe. In work carried out by the Board recently, staff reviewed a large number of certificates and identified that one-third of them did not meet requirements (for example, they were incomplete, or pressure testing information was outside normal ranges). We note that there was no express legal requirement for the Board to check gas certificates returned to them.

6.30
It appears that the Board had earlier absolved itself of responsibility for this role. The Board's manual on registration had a section on gas audits. One part of this section said that:

A craftsman gasfitter is expected to be competent to fill out gasfitting certificates and it is not the Board's role to check each certificate for accuracy and completeness. However the gas auditor will check that the gasfitting certification certificates are completed and filed correctly at the time of the gas audit.

6.31
As noted, the former Registrar told us that he had later put in place a system for checking the gas certificates, which he understood was working until the recent problems arose.

Conclusion

6.32
In our view, for many years Board staff, and staff contracted by the Board to audit craftsman gasfitters, did not pay enough attention to the need to check the gas certificates to ensure that they had been completed correctly and that the requirements set out in the Gas Regulations 1993 had been complied with.

6.33
The certificates were not transferable, yet Board staff raised no objection to evidence showing that craftsman gasfitters were using forms that had not been issued to them. Time requirements for certifying the work and filing the certificates were not adhered to. Selling the gas certificates was a major source of revenue for the Board, and the approach by Board staff seemed to be dominated by the need to make it as simple as possible for craftsman gasfitters to purchase the certificates. Order forms for the gas certificates could be easily downloaded from the Board's website, sent to the Board together with the appropriate payment, and bulk supplies of gas certificates obtained.

The gasfitter audit system

6.34
The gasfitter audit system was introduced from 1992, along with certification of gas installations by gasfitters, continuing professional development, and competency-based licensing.

6.35
The Board used gasfitter audits to check the competency of craftsman gasfitters. The Board has explained that it used this audit system to:

… determine and monitor the ongoing knowledge and practical competence of the individual Craftsman gasfitter and exemption holder ensuring their work is to a safe and acceptable standard. The Gas Audit, in conjunction with the Board's ongoing professional development requirements, will determine whether a Craftsman Gasfitter or exemption holder is competent to be licensed to practise.⁷

6.36
Each craftsman gasfitter was audited every two years. The audit had two parts: an interview with the gasfitter to assess whether their knowledge and skills were up to date, and site visits to inspect work that has been done either by the craftsman gasfitter or by someone under their supervision. The main part of the audit was the interview, which took up to an hour and a half. The focus of the interview was meant to be on public health and safety issues.

6.37
The Board sent a number of gas certificates to the gas auditor, who then used these to identify a range of gasfitting jobs carried out by that craftsman gasfitter that would be checked. The Board's documents state that the site visit focused on "materials, installations and methods". If a copy of a gas certificate was not returned to the Board, that job would never be checked during an audit.

6.38
The Board contracted out the conduct of the audits to a private sector provider. The cost of the audit system was met from the fees charged for gas certificates.

6.39
The results of each gasfitter audit were reported to the Board. Before April 2010, a craftsman gasfitter who failed the audit would be re-audited after a period of time. For major concerns, that follow-up audit may have been within a few days to ensure that the problems had been addressed. For more minor matters, the follow-up may have been scheduled for some months or a year later. Once the Board had the results of the audit, it then decided what steps needed to be taken, if any, to respond to any problems. If serious concerns were identified, this may have included disciplinary proceedings. These proceedings were formal and lengthy. At the end of them, the Board had the power to impose a range of penalties, including removing a gasfitter from the register permanently or temporarily.

6.40
The Board suspended its biennial audit process on 1 April 2010 while it reviewed the effectiveness of the system (see paragraph 6.48).

What we found in 2008/09

The purpose and legal basis for the gasfitter audit system

6.41
We considered the purpose of the system and its legal basis. As noted, the Board has a statutory function to ensure an adequate level of competence in gasfitters. The Gas Act 1992 also contains provisions about the need for gas certificates. These include a power of entry for the Board or its authorised representative to inspect and test a gas installation and to check that the work has been properly certified. There are no other legislative provisions that support the system for auditing all certifying gasfitters. We have already explained that the 1976 Act included the capacity to introduce regulations to set conditions for renewing licences (including potentially a condition requiring participation in the gas audit system), but no such regulations were ever made.

6.42
We have already set out, in Part 4, the different views that we and the Board took on the Board's ability under the 1976 Act to require people to participate in the audit system as a condition of their licence.

Gas auditors checked only a very small number of gas certificates issued by a craftsman gasfitter

6.43
All craftsman gasfitters had a sample of their work checked every second year by a gas auditor. The Board supplied a number of completed gas certificates to the gas auditor, who used them to select which work to audit. The gas auditor reviewed the gas certificates issued by the craftsman gasfitter for that work to ensure that they were complete and accurate, and made site visits to inspect work certified by the craftsman gasfitter.

6.44
We expected that, as part of the audit, the gas auditors would review a large sample of the gas certificates to ensure that they were complete and accurate. However, the gas auditor checked only two certificates each audit. This meant that there was very little effective checking of most of the gas certificates.

Other practical problems with the adequacy of the system

6.45
We also identified some concerns with the practical operation of the audit system. Particular concerns included:

• The amount of notice given to craftsman gasfitters about which sites would be audited – The Board documents stated that the gasfitter would be given a minimum of 24 hours' notice of a site visit. We were told that, in practice, the auditors gave about eight weeks' notice. We accept that reasonable notice would be needed to ensure that a craftsman gasfitter was available to attend the site visit, but we were concerned that eight weeks' notice may allow a craftsman gasfitter time to revisit the site and ensure that the work was up to standard.
• The number of sites that are audited – The Board policy stated that only one installation would be audited if a craftsman gasfitter had issued fewer than 20 certificates in the last two years. For craftsman gasfitters who had issued more than 20 certificates, a minimum of two sites would be visited. We understand that the standard practice was to visit only two sites. This was not a big sample from which to judge a person's competence.

Recent changes

Response to issues raised about gas certificates

6.46
The Board carried out a substantial amount of work in late 2009 to check some gas installations and gas certificates, after concerns were raised about the practices of gasfitters in three districts. As a result, the Board has begun disciplinary proceedings and some District Court prosecutions against a number of individuals.

6.47
We cannot discuss the details of those individual cases while they are before the courts. We simply note that the results of these investigations have raised concerns about the adequacy of self-certification and the gasfitter audit system as ways of ensuring safe and fully compliant work.

6.48
The Board suspended all biennial gas audits on 1 April 2010 and is reviewing the gas audit process to ensure that it is gathering the appropriate evidence of the work that gasfitters are doing. In the meantime, the Board is carrying out only special audits where risk has been identified and audits of those persons who are returning to the gas industry after years of absence. The Board told us that it is planning to pilot a new audit system by the end of August 2010.

6.49
In its Licensing Policy Statement, the Board sets out that it will take a risk-based approach to the outcomes of audits. That is, more serious failures of audits will result in more serious responses from the Board. The Licensing Policy Statement classifies audit failures into three types, with different responses by the Board depending on which type of failure has occurred.

Board staff are now checking copies of returned gas certificates

6.50
Staff now check every returned gas certificate to verify that all required data has been provided and that the test results for the gas installations are within the required parameters. If the test results are outside the required parameters, the form is referred for further review to a senior staff member who is also a certifying gasfitter. Where there is missing data or doubt about the test results, the forms are returned to the certifying gasfitter for an explanation. Copies of all returned gas certificates are now filed under the name of the certifying gasfitter.

Moves to remove manual purchasing system and replace it entirely with the online purchasing system

6.51
The Acting Registrar has since, with the Board's approval, begun planning for the introduction of a system that provides only for the online purchase of gas certificates. Online certificates can be accessed through individual passwords issued to each certifying gasfitter, and in that sense are a more secure and effective way of accounting for the certificates. There are plans to upgrade the current online system to ensure that certificates can be obtained only from the online system. This will ensure closer controls over the purchase and oversight of the gas certificates.

6.52
The Board has determined that, after 1 November 2010, it will no longer use hardcopy gas certificates. The Board told us that it intends to develop a user manual for electronic gas certificates. It has also set up a system to ensure that only limited numbers of gas certificate books are issued until November. It is also reconciling sold gas certificates with those returned, and it will actively pursue the outstanding gas certificates.

6.53
The Board told us that it will arrange an independent external review of the gas certificate process and audit of practitioner competence.

Issues that still need attention

Gas certificates

6.54
In our view, the Board will need to ensure that there are documented procedures governing the management of the gas certificates and that these procedures are adhered to. The Board will also need to consider revising the gas audit process so that a specified number of gas certificates are audited.

Need to give the gas audit system a legal basis

6.55
We have already discussed in Part 4 that the Board still needs to take steps to give the gas audit and competence review system a proper legal footing.

Gas audit system and self certification

6.56
In our view, the recent focused gas audit work carried out by the Board has indicated that the scale of non-compliance of gas installations is possibly greater than that identified by its routine gas audit work. The gas audit is designed to be a check on the quality of certification carried out by certifying gasfitters. This in turn raises questions about whether the gas audit process that the Board uses is effective in providing assurance about certification. It also raises questions about whether the current certification arrangements can provide adequate assurance to home and building owners that gas installations in their buildings are safe.

6.57
While the focused gas audit work has identified that gasfitters have incorrectly certified their work, it is impossible to determine whether there are more widespread problems with certification and therefore more non-compliant gas installations.

Recommendation 9
We recommend that the Plumbers, Gasfitters, and Drainlayers Board work with the Ministry of Economic Development and the Department of Building and Housing to consider what changes may be needed to enable the gas certification system to operate as an effective public safety protection.
Recommendation 10
We recommend that the Plumbers, Gasfitters, and Drainlayers Board work closely with the Ministry of Economic Development and the Department of Building and Housing to develop a gas audit process that provides adequate assurance of the safety of self-certified gas installations.

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7: Board News (March 2004), page 5.

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