The need for high quality sustainability reporting and assurance is growing with increasing scrutiny of an organisation’s sustainability data from stakeholders and wider society, alongside greater focus internally by senior management and audit committees.

Accountants are well-versed in generating, managing and assuring financial information which puts ICAEW members in good stead to take on the mantle of sustainability assurance. The latest ICAEW research into the UK’s mid-tier accountancy firms confirmed that ESG service lines were seen to be a key growth area over the next three years with close to half of those surveyed planning to start offer such services. 

For those in industry investing in and overseeing data management systems, clear communication strategies, as well as adopting standardised reporting frameworks, and a commitment to fostering strong stakeholder relationships are core aspects of the job in terms of financial data.

Although sustainability data is radically different to financial data, the systems and processes will be more familiar to accountants’ skillset than other professionals.

ICAEW’s Sustainability Accelerator Programme (SAP) – a free e-learning resource for ICAEW members - has now launched a specific course on sustainability assurance. The new course is broken into bite-sized elements that take users through sustainability reporting, introducing some of the relevant frameworks. It then moves on to providing a reminder of what the building blocks of an assurance engagement are and describing requirements of assurance standards.

Assurance standards

Like sustainability reporting, sustainability assurance has evolved significantly over the past few years. The International Auditing and Assurance Standards Board (IAASB) has established a new standard, International Standard on Sustainability Assurance (ISSA) 5000 with the aim of enhancing trust and confidence in  sustainability-related data.

ISSA 5000 sets out the criteria for the entire process of a sustainability assurance engagement, from acceptance and continuance to reporting, ensuring a consistent and rigorous approach. 

The standard promotes comparability in sustainability assurance practices across different organisations and industries. This ensures that sustainability information is reliable and comparable, regardless of the reporting framework used.

In the UK, the FRC has recently concluded a consultation on the issuing a version of ISSA 5000 for use on a voluntary basis. In its response, ICAEW was supportive of UK adoption and alignment of the FRC's proposed version with international practice, but challenged the government to mandate it as soon as feasible.

As sustainability reporting grows, more requests will come from assurance practitioners for evidence to support material disclosures being reported on sustainability.

Assurance practitioners will need to read and consider any available sustainability information that needs to be reported to ensure consistency between and within reports, including annual reports and financial statements.

New skills for a new regime

Accountants will need to update their skills and capabilities to better understand the breadth of subject matter. And given ISSA 5000’s rigorous prerequisites, ICAEW members who have done similar work in the past using different standards will need to be familiar with the new standard and then identify any gaps and update their methodology. 

Besides training, preparing for the application of ISSA 5000 will include mapping their firm’s system of quality management to align with the standard and ensuring compliance of ethical requirements when applying ISSA 5000. A well-designed system of quality management will help monitor any deficiencies that may occur in such engagements.   

The IAASB has published an Implementation Guide which provides practical non-authoritative guidance to support implementation, and plans to publish further guidance and materials.

Fresh perspectives

As explained in the SAP’s new resources, before accepting an assurance engagement, practitioners must gain an understanding of the client’s sustainability reporting processes, and the suitability of the criteria used for reporting.

A detailed plan will then involve understanding the client’s business, identifying key risks and determining the scope of the assurance procedures to be carried out.

Assurance providers will have to gather sufficient appropriate evidence to support their assurance conclusion. This is likely to include performing analytical procedures, and may also include tests of controls and substantive procedures to verify the accuracy of the reported data.

Crucially, the standard emphasises the importance of exercising professional scepticism throughout the engagement, something that ICAEW members are used to doing in other engagements.

Finally, the concluding assurance report will concisely outline - among other things - the scope of the engagement, the criteria used, the assurance procedures and the practitioner’s conclusion.

Accountancy skills: foundation for the future

Undoubtedly, there will be obstacles to overcome in this evolving area of assurance. The availability and quality of data sourced from multiple systems and locations will likely provide some challenges.

Determining what information is material to stakeholders can also be subjective and vary by industry and context. So, engaging early with stakeholders to understand their concerns and expectations can help in making more informed materiality assessments. Professional judgement is a key aspect of chartered accountants’ skillsets and never more important than in sustainability assurance forming a continuing theme throughout the assurance course. 

Sustainability assurance offers an opportunity to further build on skills and knowledge, and help support organisations with their ESG commitments. The latest addition to the SAP offers members a great way to get to grips with the fundamentals of sustainability assurance and be on the front foot for future developments in the sector, such as the potential introduction of a voluntary registration regime for assurance providers in the UK.