Introduction. General assurance processes

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2 1 Introduction We understand that customers and other stakeholders want information about our performance and that the information needs to be accessible and understandable. We are committed to providing information that is reliable and can be trusted. Our overall approach to assurance is set out in Our Assurance Framework which can be viewed on the Anglian Water website. This submission has been completed within that framework. In March 2017 we published our Final Assurance Plan after consulting with stakeholders on our draft plan. This document outlined the results of our PRC (process, risks, controls) assessment of the risk to data quality for each of our AMP6 Outcome Delivery Incentives (ODIs) and the approach that we intended to take to provide assurance for our performance information. General assurance processes We have a Business Management System (BMS) that is certified to the ISO 9001 quality management systems standard, which covers the processes for ensuring the collection and storage of reliable performance data. We have established processes and procedures that we adopt when compiling performance data for publication into the public domain: Roles and responsibilities are established, including the allocation of named data providers for each line of data Methodologies for compiling data are documented in procedures if necessary Draft data and commentaries are reviewed by the Economic Regulation team, who are independent of the processes being reviewed Data may be subject to review by our third party assurance provider, Halcrow, or our independent financial auditors, Deloitte. In addition to the BMS for performance data, as a company we have other BMSs that cover key activities that we undertake. For example, our Water and Water Recycling activities are also certified to ISO 9001, while our Asset Management function is certified to both PAS 55 and ISO standards and our Central Laboratory is certified to ISO/IEC for competence to carry out tests and / or calibrations, including sampling and this year we have also gained accreditation to ISO9001 for sampling. Our response to feedback on Data Assurance Summary In the Company Monitoring Framework Report for Anglian Water Ofwat gave the following feedback on our Data Assurance Summary. We have indicated how we have responded to each point: "The company published a succinct and comprehensive summary of the data assurance carried out throughout the year." - We have maintained our succinct and comprehensive approach to our Data Assurance Summary, only adding more detail where improvements have been identified. "A summary of assurance review is presented in a tabular format. The table indicates which external assurer has looked at what topic area. We note all the annual performance report assurance activity is presented in a single line. It would be helpful for this to be expanded commensurate with the size of the annual performance report." - While the table was not intended to reflect the detail and breadth of the assurance provided for each area described, we have changed the way that we are reporting our APR assurance within this document to also include actions taken internally to mitigate risks to data quality. "The data assurance summary could be improved by setting out the detail on each assurance review carried out and the results." - Detail of each of the financial assurance steps has been

3 Data Assurance Summary included in the Financial Data section below and we have added a table of findings to our summary of assurance reviews in Appendix 1. "The data assurance summary is written as a self-standing document that is easy to read and is prominent on the company's website." - We have maintained a self-standing document and published in the same location on our website as in Specific assurance processes for performance information As proposed in our Final Assurance Plan we have carried out the assurance activities in two stages: Stage 1 in-year assurance reviews Stage 2 year-end assurance reviews The assurance reviews were prioritised based on the results of the PRC assessment that we carried out. We documented the results of this assessment, in our Performance Reporting document that was published in November The Performance Reporting document contains our assessment of the strengths and weaknesses of our assurance framework and includes analysis of stakeholders' information needs relating to reporting of performance. In response to feedback in our 2016 Company Monitoring Framework Assessment, for we have provided more detail about our assurance activities relating to our Annual Performance Report and we have also added in additional assurance activities. Stage 1 in-year assurance reviews Halcrow (our independent third party assessor) or employees of Anglian Water (who are independent of the processes being reviewed) completed a series of reviews of ODIs that were judged to be high impact, high risk to: Confirm whether the identified risks to data quality appear to be reasonable and that the controls, if implemented, should mitigate them Examine in detail the risk assessments, including how controls are implemented and checked Validate calculations carried out by the company to provide information related to data which are publicly available via a regulator Identify areas for improvement Verification to check the completion of actions resulting from previous audits. In addition, our Internal Audit provider, Pricewaterhouse Coopers, has carried out a number of ODI reviews during the course of the report year. These reviews focused on the overall governance arrangements for the ODIs and the controls applied to ensure the completeness, accuracy and validity of associated data. No issues which materially affect any of the reported ODI data were found in these reviews. A summary of all the in-year assurance reviews is listed in Appendix Data Assurance Summary anglianwater.co.uk Stage 2 year-end assurance reviews Halcrow carried out year-end assurance reviews of the 22 ODIs where the highest inherent likelihood risks to data quality fall. The reviews were carried out between 4 and 11 May The results of each review were documented in summary audit reports, including information about the tests applied and the results, along with details of recommendations for longer term improvements. Any outstanding data issues were addressed prior to finalising the data.

4 3 Halcrow stated, 'on the basis of our sample checks we are satisfied that, for those ODIs we were asked to examine, there are no material issues with the ODI reporting methodologies or the resultant ODI information the Company intends to publish. We confirm ODI metrics provide a fair and reasonable account of Anglian Water s performance in 2016/17. Some minor errors and inconsistencies were found which were corrected. We noted some procedures require minor updates to reflect current processes and responsibilities. These do not affect the quality of the reported performance.' The remaining ODI data for , which are assessed as lower risk, were subject to assurance review by employees of Anglian Water (who are independent of the processes being reviewed). Details of the company based assurance reviews were also documented in summary audit reports, similar to those produced by Halcrow. Details of the year-end assurance reviews are listed in Appendix 1. Halcrow's Technical Assurance Executive Summary is included as Appendix 2. Director sign-off As part of our process for assuring the performance information, each ODI was allocated to a specific Management Board Director, who was responsible for signing-off the data prior to the AWS Board approving them on 25 May At the same meeting the Annual Performance Report (APR), Risk and Compliance Statement and Annual Report and Accounts (ARA) were also approved. All our ODI performance information has been included in the ARA. Financial data Our Regulatory Accounts have been prepared in accordance with the Regulatory Accounting Guidelines issued by Ofwat and were subject to review by the company s independent financial auditors, Deloitte, to ensure compliance with Condition F of the Instrument of Appointment as a water and sewerage undertaker under the Water Industry Act Our auditor has provided its audit opinion that our Regulatory Accounting Statements fairly present the state of our affairs for the year ending 31 March 2017 and that they have been properly prepared in accordance with requirements. The full audit opinion is included in our ARA. We have reviewed the processes that govern the preparation of our regulatory accounts tables and have identified a number of risks that could, without further controls, result in mis-statement in our APR. Having identified these risks and the further controls we have applied them for reporting to build on and reinforce controls already in place. The following table reports the risks, controls and how we have implemented the controls for reporting. Issue Risk Further control for What we have done in Spreadsheet based consolidation process Errors may arise from input errors, formula errors and maintaining version control Additional validation tests to be built into APR spreadsheets Collective reviews to be held of all tables with table and line owners to be held with Financial Controls team Validation spreadsheet in use which includes analysis of year-on-year movements for all financial tables. Reconciliations performed as part of final review process to ensure consistency throughout the APR tables.

5 Data Assurance Summary Issue Risk Further control for What we have done in Detailed reviews of all tables held with Economic Regulation, Financial Controls team and table/line owners. Final joint review of all tables held with key table/line owners. Internal process has no direct link to Ofwat tables Ofwat tables and company spreadsheets are both standalone with the risk that data may be copied incorrectly Detailed review at line item detail and sign off with table/line owners to ensure consistency between spreadsheets and Ofwat return Detailed reviews of all tables held with Economic Regulation, Financial Controls team and table line owners. Final sign-off for all tables by table/line owners. Comprehensive audit trail required for manual adjustments Post close adjustments and other adjustments to reported figures have the potential to be done in isolation with the result that the impact may not be correctly reflected in other areas of the return Spreadsheet tracker of changes made to APR table to be kept for all changes following specified cut-off date Password protection in place on master APR table to ensure all changes are made via Financial Controls team after specified cut-off date Defined version control for all key APR tables Master APR spreadsheet password protected by Financial controls team on 17 May All changes after this date made through Financial Accountant. Version control in place for APR spreadsheet and associated word document for APR published document. Shared spreadsheets Risk of data corruption and/or data loss due to more fragile nature of shared files Back up of spreadsheets to be taken on a daily basis at key times during the APR production process APR spreadsheet backed-up on a regular basis following any changes Data Assurance Summary anglianwater.co.uk Continuity of Personnel Some knowledge centred around a few key individuals with the risk that unplanned absence will lead to lower knowledge base and more risk of error Detailed procedure notes to be updated for all APR tables Work instructions completed for most tables. To be brought up-to-date now the tables have been completed to cover any changes.

6 5 Issue Risk Further control for What we have done in Security of access to data and tables The need to strike a balance between access for all key individuals whilst maintaining security of data and the likelihood of unauthorised changes Password protection and restricted access in place for key APR spreadsheets Master APR spreadsheet password protected by Financial controls team on 17 May All changes after this date made through Financial Accountant. Robust change management process The need to ensure that all changes are logged with version control fully functional and a detailed reconciliation between versions Password protection in place on master APR table to ensure all changes are made via Financial Controls team after specified cut-off date Defined version control for all key APR tables Master APR spreadsheet password protected by Financial controls team on 17 May All changes after this date made through Financial Accountant. Version control in place for APR spreadsheet and associated word document for APR published document. Potential uncertainty or ambiguity in Ofwat ARA guidance Potential ambiguity around some of the Ofwat guidance leading to inconsistencies in the way in which the RAGs are applied, both internally and between other companies Comprehensive commentary setting out our assumptions and approach to ensure internal and external understanding Internal commentaries completed for all APR tables. Consistency between submitted tables and APR Risk that due to manual completion processes, final tables may not be 100% consistent Full consistency checks between statutory accounts and APR tables prior to final sign-off of APR, followed by subsequent lock-down of APR table master spreadsheets Full consistency checks performed both by line/table owners and as part of final reviews by Financial Controls team. Detailed reviews of all tables held with Economic Regulation, Financial Controls team and table/line owners. Intra-table consistency Potential lack of consistency between tables showing different Separate, off line tables to reconcile different versions of APR tables that show the 'same thing'. Reconciliations performed as part of final review process to ensure consistency throughout the APR tables.

7 Data Assurance Summary Issue Risk Further control for What we have done in versions of the "same" number (e.g. Total operating costs may be shown including or excluding depreciation) Feedback We welcome feedback from stakeholders on all aspects of our performance reporting. contact us in any of the following ways: You can call: We undertake to share the feedback we receive and explain how we have responded to it Data Assurance Summary anglianwater.co.uk

8 7 Appendix 1: Summary of assurance reviews carried out for ODIs in The table below shows the assurance activities carried out during by the range of assurance providers, both 'in-year' and at 'year-end'. Every ODI has been subject to at least one review during the course of the report year, with some being reviewed on three occasions. In-year Year-end Description PwC Halcrow AWS Halcrow AWS Water supply interruptions Properties at risk of persistent low pressure Properties flooded internally from sewers Properties flooded externally from sewers Sewerage capacity schemes incorporating sustainable solutions Qualitative SIM score - WASC rank Combined SIM score Customer satisfaction index score Water quality complaints Value for money perception - water Value for money perception - water recycling Fairness of bills perception Affordability perception Mean Zonal Compliance Population served by a single supply system Frequency of service level restrictions (number in rolling 10 year period) Security of supply index - dry year annual average Security of supply index - critical period (peak) demand Per property consumption Leakage SSSIs (by area) with Favourable status Bathing waters attaining Excellent status

9 Data Assurance Summary In-year Year-end Description PwC Halcrow AWS Halcrow AWS Pollution incidents Environmental compliance (water) Environmental compliance (water recycling) Operational carbon Embodied carbon reduction from 2010 baseline Survey of community perception Serviceability - water infrastructure (overall assessment) Unplanned Supply Interruptions > 12 hours Reactive burst mains - variation from model Customer contacts discolouration Distribution Maintenance Index Serviceability - water non-infrastructure (overall assessment) WTW with coliforms detected Service reservoirs with coliforms detected in more than 5% of tests WTW Turbidity: 95%ile greater than or equal to 0.5NTU Serviceability - sewerage infrastructure (overall assessment) Number of serviceability pollution incidents (CSO + RM + FS) Total number of gravity sewer collapses Properties internally flooded (all causes) Data Assurance Summary anglianwater.co.uk Total number of sewer blockages Serviceability - sewerage non-infrastructure (overall assessment) WRC Compliance: PE served by WRCs in breach of their consent WRC Compliance: % of WRCs failing numeric consents including MD109 exceptions

10 9 Findings from the year-end assurance reviews (the most recent reviews for each ODI) are set out in the table below. Halcrow AWS Findings Water supply interruptions Properties at risk of persistent low pressure Properties flooded internally from sewers Properties flooded externally from sewers Sewerage capacity schemes incorporating sustainable solutions Qualitative SIM score - WASC rank Combined SIM score Non-material observation - Suggestion that AW should focus equally on all sizes of events rather than those affecting greater number of customers Minor concern - a risk of missing the target was identified Minor concern - Some sustainable schemes could not yet be reported due to lack of flexibility in internal reporting Non-material observation - Additional complaints included in the Hartelpool region - change was immaterial. Customer satisfaction index score Water quality complaints Minor concern - confidence grades not provided Value for money perception - water Value for money perception - water recycling Fairness of bills perception Affordability perception Mean Zonal Compliance Population served by a single supply system Frequency of service level restrictions (number in rolling 10 year period) Security of supply index - dry year annual average Security of supply index - critical period (peak) demand Minor concern - Update had not been made to a population figure Minor concern - Update had not been made to a population figure

11 Data Assurance Summary Halcrow AWS Findings Per property consumption Leakage SSSIs (by area) with Favourable status Bathing waters attaining Excellent status Pollution incidents Environmental compliance (water) Environmental compliance (water recycling) Operational carbon Embodied carbon reduction from 2010 baseline Survey of community perception Serviceability - water infrastructure (overall assessment) Unplanned Supply Interruptions > 12 hours Reactive burst mains - variation from model Customer contacts discolouration Distribution Maintenance Index Non-material observation - Suggestion that AW should focus equally on all sizes of events rather than those affecting greater number of customers Non-material observation - A single burst main was identified as being incorrectly coded Minor concern - confidence grades not provided Serviceability - water non-infrastructure (overall assessment) WTW with coliforms detected Data Assurance Summary anglianwater.co.uk Service reservoirs with coliforms detected in more than 5% of tests WTW Turbidity: 95%ile greater than or equal to 0.5NTU Serviceability - sewerage infrastructure (overall assessment) Number of serviceability pollution incidents (CSO + RM + FS)

12 11 Halcrow AWS Findings Total number of gravity sewer collapses Properties internally flooded (all causes) Total number of sewer blockages Minor concern - A small proportion of excluded and included collapses were identified as being incorrectly categorised Minor concern - A small proportion of excluded blockages were identified as being incorrectly excluded Serviceability - sewerage non-infrastructure (overall assessment) WRC Compliance: PE served by WRCs in breach of their consent WRC Compliance: % of WRCs failing numeric consents including MD109 exceptions Minor concern - A delay in population figures affecting one measure Minor concern - A delay in population figures affecting one measure

13 Data Assurance Summary Appendix 2: Halcrow's Technical Assurance Executive Summary Anglian Water Services Limited commissioned Halcrow Management Sciences Limited to provide independent technical assurance on a number of high risk/impact Outcome Delivery Incentives (ODIs) which Ofwat requires the Company to submit in Table 3A of the 2017 Annual Performance Report. Our assurance activity provides Anglian Water s Audit Committee and Board independent assurance of the robustness of reporting methodologies, assumptions and resultant data associated with the ODIs. Joint approach Anglian Water uses its comprehensive Process Risks & Controls (PRC) risk assessment to identify the need for in-year audits and which ODIs require independent assurance in a year-end audit. As part of our audit planning the updated PRC assessment was shared with us. In-year audits were applied to six key areas (sewer flooding, water balance/leakage, interruptions to supply, SIM, population and delivery of environmental outputs). Audits and reporting were completed before the end of the Regulatory Year. 22 individual ODIs and serviceability measures (including all those assessed as red or amber in Anglian s Assurance Plan) were subject to year-end audit, together with Yearbook information which is a component of ODI reporting, e.g. property counts. Hartlepool s year-end data was also audited because this information is combined with relevant ODIs in Anglian to provide overall company performance. Anglian Water issued Terms of Reference for the scope of our audit which required us to confirm: Data stated in the tables supported by audit trails which are reliable, accurate and complete Resultant data reasonably aligned to other reported information (or otherwise explained) Suitable commentary provided which explains performance Confidence grades are appropriate and supported by evidence Methodologies documented, compliant with internal reporting requirements and assumptions reasonable Methodologies appropriately applied Changes from previous Yearbook submissions are adequately explained The technical assurance team was led by Graham Hindley and comprised technical and operational specialists. We used risk-based samples to trace data to calculation spreadsheets and wherever possible back to source information. Audits have been documented in Summary Audit Reports with RAG status Key findings and conclusion On the basis of our sample checks we are satisfied that, for those ODIs we were asked to examine, there are no material issues with the ODI reporting methodologies or the resultant ODI information the Company intends to publish. We confirm the ODI metrics provide a fair and reasonable account of Anglian Water s performance in 2016/ Data Assurance Summary anglianwater.co.uk Some minor errors and inconsistencies were found which were corrected. We noted some procedures require minor updates to reflect current processes and responsibilities. These do not affect the quality of the reported performance. We have made some recommendations which could improve processes for Anglian to consider. We provided a summary of our audit work and opinion to the Customer Engagement Forum at the meeting on 17 May Key findings of note are given in Appendix A. G D Hindley, Halcrow Technical Assurance Director, 19 May 2017

14 13 Appendix A: Key Findings As a result of our sample checks we did not find any material issues with the reporting methodologies or the quality of the resultant information to be published. We identified some minor issues to which we have alerted the Company via our audit discussions and Red/Amber/Green reporting in our Summary Audit Reports (there are no Red items). Key items of note, including areas we consider to be good practice, are detailed below. ODI Leakage I2S SIM Sewer collapses Summary findings by exception and/or good practice The leakage target has been met even with the challenge of a higher than usual rise in burst mains in January Success in achieving targets is due to a well orchestrated tactical response to these winter bursts, the ongoing success of the 172 program and network pressure optimisation. Anglian s methodologies have advanced to enable investigative studies that continue to reduce leakage. Both Anglian and Hartlepool performed well with I2S despite an increase in burst mains in both regions. Responsiveness in Hartlepool has improved resulting from the integration into Anglian s structure. Verification of the Flint Hill incident is a technically complex and comprehensive piece of work which supports the declared number of minutes lost. We noted in our in-year audit that cases remain of customers who have been incorrectly allocated between AW and AWB and are transferred between the two when this is identified. There is potential for companies to disagree as to whether particular customers should be in the market, resulting in confusion for the customer. AW may wish to develop a procedure for ensuring unwanted calls and written complaints from these customers are captured. AW s guidance or Ofwat s ODI definition do not provide a clear description of what should be included in this figure. There has been no change to the methodology that AW use and therefore this is considered to be appropriate. However, for clarity, this should be explicitly defined in future years. A secondary internal QA check could be undertaken by an appropriate staff member who has not contributed to the production of the dataset. This may be of use in providing further assurance to the data. This should be considered as part of ongoing internal assurance process. Sewer blockages We highlighted some areas of improvement with exclusions, however these are a very small proportion of the reported blockages and are captured within the B3 confidence grade. Further assessment of the exclusion action and impact codes could help to ensure that the process and dataset is robust. Residual risks and concerns We have not identified any residual material risks or concerns, which the Company is not already aware of. We understand that sign off of the ODIs by the Company s Senior Management is being progressed in advance of the Board meeting on 25 May Halcrow Management Sciences Limited is a CH2M Company. Halcrow Management Sciences Limited has prepared this report in accordance with the instructions of Anglian Water Services Limited for its sole and specific use. Any other persons or organisations using or relying on any information contained herein do so at their own risk.