New assurance standards will help practitioners meet the changing needs of their clients. Jo Iwasaki shares some recent developments.
Changes in regulatory, market and business reporting needs are creating a pressing demand for robust standards for various non-audit assurance services. When the International Auditing and Assurance Standards Board (IAASB) convened in March, the agenda featured the latest drafts of International Standard on Assurance Engagements (ISAE) 3410 Greenhouse Gas Statements and International Standard on Review Engagements (ISRE) 2400 Engagements to Review Historical Financial Statements.
A growing number of entities measure and report greenhouse gas (GHG) emissions, for various motives: internal management reasons, emissions trading schemes, regulatory disclosure, or to inform investors, consumers and others on a voluntary basis. Both management and other stakeholders are looking for more independent support for claims that GHG data is credible, and as society and market focus on environmental performance increases, assurance on sustainability information will also be in higher demand.
An assurance standard on GHG data will add robustness to the transparency required in this area and enhance confidence in sustainability information as a whole. As there is currently no equivalent standard in the UK, specific guidance for GHG emissions assurance engagements from the IAASB would be helpful. The international standard covers both limited assurance and reasonable assurance engagements, which should help practitioners provide services according to their clients’ needs.
Environmental reporting is likely to remain a challenging area because the role of practitioners and assurance is not always understood. There is limited understanding at times of why management is reporting on sustainability and for whom. ICAEW produced a brief guide to help, addressed primarily to management called Sustainability Assurance: Your Choice.