ACCA, CA ANZ release practical guidance on sustainability assurance

A recently released report from CA ANZ and ACCA has provided guidance for accountants on the new ISSA 5000 sustainability standard.

According to the two bodies, sustainability assurance professionals are entering a pivotal new phase this year thanks to this development. Providing professionals with a high-quality, consistent framework for verifying environmental, social, and governance (ESG) information, it also comes at a time when assurance over information is both more important and more complex.

With estimates central to sustainability reporting, targets, transition plans, and projections now play a key role in decision making. The two accounting bodies acknowledged that the standards come at a crucial time as organisations increasingly rely on this information to inform investors and stakeholders.

At the same time, this information is, by its nature, inherently uncertain and dependent on professional judgement, assumptions and future events that may not be within an organisation’s control.

The joint report, A case study: Demystifying the assurance of estimates and forward-looking information in accordance with ISSA 5000, examined the practical application of professional judgement within one of the most difficult areas of sustainability reporting, forward-looking information (FLI) and estimates.

Sustainability reports are often more subjective than historical financial data because they rely on calculations of things that cannot be measured directly, and as such, auditors must apply a specific application of ISSA 5000 to these uncertainties.

The case study identified four critical areas of the assurance process: assessing the methods and models management uses, applying professional scepticism and being wary of management bias or favourable data selection, questioning the “reasonableness” of internal and external evidence, and disclosing limitations.

Head of audit and assurance with ACCA’s policy and insights team, Antonis Diolas, said the report “reinforces a critical distinction: assurance over such information relates to its preparation and disclosure, not to whether future outcomes will ultimately be achieved. Our work in this area underlines how the role of the accountant is being defined.”

Reporting and assurance leader at CA ANZ, Amir Ghandar, added: “By bringing the requirements on estimates and forward-looking information together and grounding them in a practical case study, this report provides much-needed guidance for assurance practitioners.”

“Most importantly, it reinforces the central role of professional judgement in delivering assurance that users can actually rely on.”