IFAC leads global sustainability assurance dialogue with new publication

Posted on July 7, 2024 by Editor

The International Federation of Accountants (IFAC) has released a new publication that provides insight into what accountants should expect from the future of sustainability reporting assurance – in which they will play a key role.

Regulators worldwide are rapidly developing mandatory sustainability reporting and assurance frameworks. With this new publication, IFAC encourages accountants to embrace their role in this evolution, reminding stakeholders that the application of these new requirements will take time to mature. Sustainability assurance may also differ from traditional assurance of financial reporting, potentially including modifications to reflect ongoing change.

Companies will need to develop governance structures, processes, systems, and controls to support rigorous sustainability reporting. This shift is key for providing reliable data and narrative information about companies’ greenhouse gas emissions and other sustainability matters.

IFAC also suggests a phased approach to assurance in this arena will help keep pace with company development and learning-ins this field. Initially, assurance engagements may be limited, and cover only specific topics, like climate change.

The accountancy profession, along with market regulators, preparers, and investors, must collaborate to deliver reliable, harmonised sustainability assurance. IFAC calls for assurance to meet global standards set by the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA), ensuring high-quality, independent assurance alongside financial audits.

We agree that sustainability assurance will help ensure quality sustainability data. For a truly effective framework, however, the digital layer needs to be considered. Sustainability reporting provides an opportunity for assurance to cover both the reported information and, crucially, the XBRL tagging, so that users can fully trust in the computer-readable data and make use of digital analysis. Week on week we develop a greater understanding of the expanded reliance that users, counterparties, regulators and intermediaries will have on digital sustainability disclosures. Assurance around the tagging of this information will prove vital.

To find IFAC’s new publication visit the website.

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