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Assurance challenges in the context of CSRD: Navigating qualifications, emphasis of matter, and limitations of scope in the assurance opinion


Published: 20 Mar 2024

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Polly Tsang, Senior Financial Services Regulatory Manager considers some of the challenges of assurance over CSRD.

With the introduction of the Corporate Sustainability Reporting Directive (CSRD), assurance practitioners face new challenges in providing assurance over a host of new information in a meaningful way to stakeholders , while navigating the interaction of CSRD findings and the assurance opinion. This article, the second in the series on CSRD, delves into the uncertainties and considerations surrounding Qualifications, Emphasis of Matter, and Limitations of Scope in the context of CSRD. We will also explore some insights and questions raised for practitioners regarding these challenges.

The first article in this series introduced the CSRD, setting out an overview of its requirements, as well as high level questions for practitioners to consider now in preparation for the directive’s initial implementation in early 2025.

The next article in this series sets out what we think the assurance requirements CSRD entails and areas where we would welcome further clarity from the European Commission, particularly around double materiality.

Challenges in identifying weaknesses and omissions in the DMA Process

Assuming we have clarity from the European Commission around double materiality, due consideration will still need to be given to any weaknesses or significant omissions identified in the process , for example, where a risk of the process has been identified as not giving rise to being able to include all the necessary disclosure areas within ESRS 2.

The key question here is what the expectation of assurance practitioners is – would practitioners be expected to just report anomalies, and if so, how? While qualification may not be an option due to the entity’s compliance with ESRS requirements, practitioners might consider incorporating an "other matter" paragraph to address and draw attention to such issues.

Practitioners might need to consider how to communicate weaknesses or omissions identified in the DMA process without qualifying the assurance conclusion . It is important for practitioners to consider risk factors that this may introduce if it is a process opinion, for example, ensuring that the public opinion is not undermined by any direct reporting of weaknesses/omissions to management and/or what is reported in an “other matter” paragraph.

Alternatively, would practitioners be expected to challenge and obtain explanations for weaknesses and omissions? For example, ask why any justification for omission was not documented as part of the process, and for the reported process to be amended to reflect the justification?

These are some of the possible outcomes which needs to be considered by the audit profession and it is crucial firms come together to agree a common approach, so that CSRD outputs are comparable, thus helping investors and stakeholders to make informed choices in the transition to net zero.

Suitability of Criteria and Handling Non-Assured Outcomes

Certain ESRS requirements may not meet the characteristics of suitable criteria: for example, ‘resilience of a strategy’ does not result from criteria that are can be reliably assured. The challenge is in clearly communicating to readers of the opinion that these aspects have not undergone assurance. Determining whether such non-assured elements become 'other information' and clarifying the practitioner's responsibilities in such cases becomes imperative.

A potential solution could be that non-assured items could be grouped together and included in an ‘other matter’ or even a qualified conclusion. So rather than modifying by disclosure requirement or data point, any modification/other matter would be applied to the whole ‘group’ of such information. This remains an area where clarity is sought by practitioners.

Assurance at the Disclosure Requirement or Data Point Level?

Practitioners need clarity on whether t hey should focus on specific disclosure requirements or extend assurance to every data point – while authorities may provide guidance and / or illustrations, there is likely to still be a need for assurance judgment. As assurance practice evolves, this will drive consistency over time. At the disclosure requirement level, practitioners would focus on disclosure related metrics, with the remaining information being ancillary narrative disclosure to the quantitative information, similar to financial statement disclosures under IFRS. Assurance at a data point level could be considerably more onerous.

The level at which assurance is applied—whether at the disclosure requirement level or data point level—significantly impacts testing approaches, assurance provider materiality assessments, and the way any exceptions or misstatements are considered.

Special consideration needs to be given particularly for limited assurance engagement which - under ISAE 3000 (Revised) - requires consideration of ‘areas’ where a misstatement is likely to arise (and therefore assurance work at that ‘area’ level, rather than at the assertion level). Identifying what constitutes as an ‘area’ in CSRD (for example, would that be a topic, a sub-topic, or sub-sub topic?) is a challenge practitioners will need to grapple with.

Proxies, Modelled Data, and Obtaining Sufficient Appropriate Evidence

When criteria allow for a) proxies or b) modelled data, practitioners must delineate what is permissible and reasonable under the circumstances versus what is overly onerous in being able to obtain sufficient appropriate evidence.

Transparency in disclosing assumptions, sources, and uncertainties is key.

With the use of proxies, reporters can disclose assumptions and sources used in the basis of preparation alongside with any uncertainties and / or data quality score involved, with practitioners potentially involving further explanation in an Emphasis of Matter where relevant.

Obtaining sufficient appropriate evidence for modelled data can be difficult for practitioners due to complexities arising from black box machinations and is likely the approach to auditing these models will be bespoke to each instance and practitioners will need to mediate between adequate disclosure of methods used to provide assurance and maintaining proprietary model mechanics. The reporter should ensure that disclosures in the basis of preparation are sufficiently detailed to enable this.

Emphasis of Matter, Limitations of Scope, and Qualifications

Limitations of scope should not serve as explanations to avoid qualifications, and Emphasis of Matters should not be used to highlight unacceptable alternatives to suitable criteria.

For example, if the criteria used by the entity in CSRD assessment are not relevant, reliable, complete, neutral and understandable (and/or the disclosures do not display the ESRS ‘qualitative characteristics of information’), it may not be appropriate for the practitioner to only include this in an Emphasis of Matter, even if the entity explains their approach in their ‘basis of preparation’.

Clear communication of inherent limitations and challenges in the CSRD process is essential, and modifications to the opinion should be considered when the disclosure is inadequate or misleading.


In conclusion, as CSRD reshapes the landscape of sustainability reporting, practitioners face multifaceted challenges in interpreting the assurance demands of the directive and working out the interplay between the output under CSRD with the financial statement opinion. Clear principles, collaborative efforts, and consistent approaches across the profession are vital to navigating the complexities of assurance in the evolving world of ESG reporting. Clarity on when and how to apply the judgments discussed above is crucial for fostering consistency within the profession. ICAEW is exploring with industry avenues for dialogue and guidance to establish best practices and foster a uniform and robust assurance framework under CSRD.