Assurance on a Greenhouse Gas Statement
This is a completed project.
Prof. Roger Simnett, former IAASB member (co-chair)
Caithlin Mc Cabe, IAASB member (co-chair)
Dan Montgomery, IAASB member
Denise Esdon, IAASB Technical Advisor
Christine Schuh, External Member
Yoichi Mori, External Member
Lynton Richmond, External Member
Objective(s) of project
To develop a new International Standard on Assurance Engagements (ISAE) addressing professional accountants' responsibilities with respect to assurance engagements on a Greenhouse Gas (GHG) Statement.
With the increasing attention given to the link between GHGs and climate change, many entities are quantifying their GHG emissions for internal management purposes, and an increasing number are also preparing a GHG statement:
- As part of a regulatory disclosure regime;
- As part of an emissions trading scheme; or
- To inform investors and others on a voluntary basis. Voluntary disclosures may be, for example, published as a stand alone document; included as part of a broader sustainability report or in an entity's annual report; or made to support inclusion in a "carbon register."
With this in mind, the IAASB approved a project proposal on this topic at its December 2007 meeting.
The focus of this project is on an entity's GHG statement, it does not include requirements or guidance on assuring emissions offsets.
While not a primary focus of this project, an ISAE on this topic will likely be of assistance to financial statement auditors when considering the carrying value of emission trading rights in a financial statement audit.
Task Force progress / Board discussions to date
During 2008, a Project Advisory Panel (PAP) was set up and four roundtables were held in Oceania (Sydney and Melbourne), North America (Toronto), and Europe (Brussels).
Each roundtable had approximately 25-30 participants. Participants were from a diverse range of stakeholder groups, including: accounting firms and accounting bodies; government regulators and policymakers; reporting companies; public sector auditors; non-accounting assurers and standard-setters; institutional investors; non-government organizations; academics; and legal professionals.
The Oceania roundtables were principally open, exploratory discussions to consider whether an ISAE should be developed and, if so, to identify key issues and seek initial direction (May 2008 - notes available here). The North American roundtable debated key issues identified at the Oceania roundtables, using a "straw man" skeleton ISAE to focus discussions (September 2008 - notes available here). The European roundtable provided feedback on an Issues Paper prepared on the basis of input received at the previous roundtables (December 2008 - notes available here).
The Issues Paper was subsequently discussed at the IAASB's December 2008 meeting and the IAASB agreed that developing an ISAE would be consistent with its public interest mandate.
In early 2009, therefore, the IAASB Emissions Task Force was set up. That Task Force developed a preliminary working draft of an ISAE, which the IAASB considered at its June 2009 meeting.
At its September 2009 meeting, the IAASB considered a further working draft and also discussed a draft Consultation Paper. The IAASB decided at that meeting to issue the Consultation Paper so as to seek feedback prior to finalizing an exposure draft.
35 responses had been received on the Consultation Paper at the time of the March 2010 meeting, at which an overview of the responses was discussed. A full analysis of the responses and a revised working draft were reviewed at the June 2010 meeting. A further revised draft was considered at the September 2010 meeting and at the December 2010 meeting a proposed ISAE was approved for public comment through June 10, 2011.
41 responses were received on the proposed ISAE and at its December 2011 meeting, the IAASB considered significant comments received on the proposed exposure draft. Topics discussed included:
- cross-over issues with projects to revise ISAE 3000, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, and International Standard on Review Engagements (ISRE) 2400, Engagements to Review Historical Financial Statements;
- flow of the procedures for a limited assurance engagement under the proposed standard;
- the distinction between procedures for a limited assurance engagement and reasonable assurance engagement
- the requirements and guidance in the proposed standard for comparative information; and
- the content and wording of the limited assurance report, particularly relating to the description of the procedures performed
At its March 2012 meeting, the IAASB discussed the remaining significant issues including:
- Description of procedures in the limited assurance report
- Consistency of the Requirements, and Application and Other Explanatory Material, with the Illustrative Assurance Reports
- Comparative information – requirements and further guidance
- “Trigger point” for additional procedures when the practitioner believes there may be a material misstatement.
The IAASB approved ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, at its March 2012 meeting. The ISAE is effective for assurance reports covering periods ending on or after September 30, 2013. A Basis for Conclusions provides background to the project, main comments received on the exposure draft, and the IAASB’s conclusions regarding these comments in developing the final standard. A staff-prepared At-A-Glance document provides an overview of the final standard.
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