other assignments Flashcards
sustainability assurance engagements
-investors demanding more info
-green info is competitive advantage for organisations
-increased demand for independent assurance on sustainability information
-commercial opportunity for assurance providers
what is the proposed sustainability standard issued by IAASB?
IAASB has proposed the standard ISSA 5000
-only exposure draft has been issued
-it is profession agnostic, can be used by both accountant and non accountant assurance providers
-it will apply to sustainability info across any topic
two key principles of ISSA 5000
1) Intended to apply under multiple frameworks. companies may be using diff frameworks so its imp that it can be applied in all cases (diff standards like GRI, ID or TFCD (task force of climate related disclosures), ISSB has also issued 1 standards IFRS S1, IFRS S2.)
2)
definition of sustainability
sustainability matters are ESEC (environmental,social,economic, cultural matters) including the impacts of an entity’s activities, products and services on the ESEC or the impacts on the entity; and the entity’s policies, performance, plans, goals and governance relating to such matters’.
Examples of sustainability information
-Climate, including emissions.
-Energy, such as type of energy and consumption.
-Water and effluents, such as water consumption and water discharge
-Biodiversity, such as impacts on biodiversity or habitats protected and restored.
-Labour practices, such as diversity and equal opportunity, training and education, and occupational health and safety.
-Human rights and community relations, such as local community engagement, impact assessments and development programs.
-Customer health and safety.
-Economic impacts, such as government assistance, tax strategy, anti-competitive behaviour, anti-corruption and market presence.
application of ISSA 5000
-can be applied to both RAE or LAE
-can be applied to all or some sustainability disclosures
objectives of ISSA 5000
1) to obtain reasonable or limited assurance whether the sustainability info is free from misstatements
2) express conclusion through written report
3) communicate further as required by this ISSA or further ISSA.
pre conditions for sustainability work
ISSA 5000 requires assurance practitioners to evaluate whether preconditions are present:
the preconditions are:
-Understanding the scope of the work
-The sustainability information to be reported
-The reporting boundary (information, including activities and resources, to be included in the entity’s sustainability information)
-The existence of suitable criteria, and
-Determining the level of assurance to be provided.
planning a sustainability engagement
-understanding is crucial of what is being reported, how and internal control processes
-risk assessment procedures
-fraud procedures must also be performed
materiality in sustainability engagements
-significant issue
-bifurcated approach to be used (qualitive materiality must be considered and quantitative must be determined for disclosures)
-org will have its own materiality process, or “double materiality”
double materiality means asessing impact of sustainability matters on organisation itself and on external world (impact materiality)
if double materiality exists then it should be considered when determining materiality for planning and performing the engagement- it wont always exist
however org’s materiality is separate from firm’s own materiality process
-materiality and PM will be bot quantative and qualitative in nature
obtaining evidence
for RAE:
-qualitative info + future looking info are difficult areas to obtain evidence
-significant professional judgement must be exercised
-Sustainability info is often forward looking and based on estimates and future plans
-estimates, management bias, uncertainty
-experts
-parties within entity’s value chain
sustainability assurance- reporting
-explain to users level of assurance being provided
The report must state that ‘the procedures in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement and, consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed’.
risks in sustainability reporting
Greenwashing- organisation makes false or misleading statements about sustainability information.
greenwashing can be considered fraudulent reporting
-sustainability reporting requirements are new and subject to change so risk of error and deliberate misstatement
-risk of issuing inappt assurance opinion due to difficulties mentioned above as well as evidence probs
-reputation risk if incorrect or exaggerated report issued
-skepticism and documentation due to greenwashing risk
ethical threats for sustainability assurance
-same as iesba code of ethics
-most obvious is professional competence
-self review threat if 2 services audit and sustainability consulting- separate teams must be used
-professional behavior, commercial interests must not be prioritized over integrity
