On November 12, 2024, Accountancy Europe and the International Federation of Accountants (IFAC) co-hosted a webinar called "Shaping the Future of Sustainability Assurance Engagements," drawing over 700 participants from 116 jurisdictions to explore the vital role of professional standards in sustainability assurance.
You can watch the full event here:
About one year after their in-person conference, Preparing for High-Quality Sustainability Assurance Engagements, Accountancy Europe and IFAC joined forces once again to drive forward the conversation on sustainability assurance. This reunion took place on the day that the International Auditing and Assurance Standards Board (IAASB) published its final International Standard on Sustainability Assurance (ISSA) 5000, "General Requirements for Sustainability Assurance Engagements" and its basis for conclusion, following approval by Public Interest Oversight Board (PIOB). This standard also received support from the International Organization of Securities Commissions (IOSCO) and IFAC.
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Following introductory remarks by Hilde Blomme, Deputy CEO of Accountancy Europe, distinguished speakers from the International Auditing and Assurance Standards Board (IAASB), the Committee of European Auditing Oversight Bodies (CEAOB), and the Nordic Federation of Public Accountants took the stage.
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Tom Seidenstein (IAASB Chair) and Willie Botha (IAASB Program and Technical Director), presented the ISSA 5000, approved in September 2024; Marjolein Doblado (CEAOB’s International Auditing Standards Subgroup Chair) presented the CEAOB’s non-binding guidelines on limited assurance for sustainability reporting published on 30 September 2024; and Helene Agélii (Secretary General, Nordic Federation of Public Accountants) shared insights on national standard setting activities around CSRD assurance in Nordic countries. David Madon, Director of Sustainability, Policy and Regulatory Affairs at IFAC, offered concluding remarks.
Sustainability assurance is key to building trust
Speakers made it clear that the system for sustainability information should be built on a foundation of high-quality reporting standards, complemented by robust assurance standards, supported by ethical and independence requirements, and overseen by empowered regulatory authorities.
“In my mind, the public interest also requires those frameworks to enable global comparability, encourage the development of a cadre of professionals capable of producing and assuring high quality reports, and maybe most importantly, be unapologetic in its commitment to quality and ethics,” said Tom Seidenstein.
The discussions underscored the pivotal role of assurance in building trust in sustainability disclosures, highlighting that sustainability reporting could only evolve towards reaching a level of credibility similar to financial reporting if assurance would become mandatory, like in the European Union. This shift also requires a change of mindset, with professionals viewing sustainability disclosures not as a compliance task, but as essential to corporate measurement, governance, and accountability.
Key features of ISSA 5000 and the CEAOB Guidelines
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To meet these needs, ISSA 5000 has been designed as the global standard for sustainability assurance, supporting harmonized, interoperable reporting frameworks such as the ISSB standards and the European Sustainability Reporting Standards (ESRS). It will apply to assurance engagements irrespective of the criteria or framework that an entity applies in preparing its sustainability information. ISSA 5000 is underpinned by ethics and quality management, and addresses both limited and reasonable assurance engagements. “What was also very important for us from the start is that this standard is available for use by all assurance practitioners, therefore both professional accountant and non-accountant assurance practitioners,” Willie Botha highlighted.
Developments in Europe have been taken into account while developing ISSA 5000. “We've also included the conditional requirement regarding double materiality so that we can accommodate those frameworks such as in Europe, where the framework requires the entity to apply both financial materiality and impact materiality in preparing the sustainability information. And if that is the case, the practitioner from the assurance engagement side is also required to take both perspectives into account in determining and considering materiality for purposes of planning and performing the engagement and evaluating the materiality of misstatements,” Willie Botha explained.
“ISSA 5000 is expected to be the global baseline for the limited sustainability assurance standard in the EU, topped-up with EU specifics to meet the requirements in the CSRD,” said Hilde Blomme. In the European context, the Corporate Sustainability Reporting Directive requirements for reporting and assurance have started this year in the EU. The CEAOB has therefore been invited by the European Commission to develop non-binding guidelines regarding limited assurance on sustainability reporting, with the aim to avoid fragmentation and to ensure that practices are as consistent as possible until the adoption of an assurance standard at the EU level.
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“The objectives of the Guidelines are to facilitate a common understanding of some of the key aspects of the limited assurance engagement requirements that are introduced by the CSRD. They do not override, nor replace, pronouncements that may be enforced at national level in EU Member States. They are not a standard per se and they should be read in conjunction with any national or other rules applicable,” Marjolein Doblado explained.
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Helene Agélii echoed this, adding: “This guidance, which the CEAOB has developed while ISSA 5000 was being developed, taking into consideration other steps being taken at the country-specific level within the EU, will further the understanding and application of IAASB-based sustainability assurance, so that practice over the next two years in the EU can best support an EU-wide assurance standard decision in 2026.”
A clear call for collaboration for the way forward
Speakers confirmed that high-quality assurance is essential to achieve a truly connected, global reporting ecosystem. Discussion also highlighted the dual challenge and opportunity of developing the necessary skills and capacity for delivering high-quality sustainability information.
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David Madon, in his concluding remarks, stressed that “building an interconnected framework for reporting and assurance will require patience and collaboration as all stakeholders—businesses professional accountants and auditors, and regulators—prepare for the evolving demands of sustainability information as a critical component of corporate reporting.”
“Collaboration is key to avoid fragmentation and enhance comparability and consistency,” he noted.
IAASB and CEAOB have been in regular dialogue while developing the standard and guidance to date, and the IAASB will issue more application guidance from January onwards.
See the slides of the event:
Useful links
Accountancy Europe
IFAC
- Sustainability Assurance
- What to Expect from Sustainability Assurance
- A Deep Dive into Sustainability Assurance Engagements
- Beyond the G20: The State of Play in Sustainability Disclosure & Assurance
IAASB
- Sustainability Assurance
- Understanding International Standard on Sustainability Assurance 5000
- IOSCO Issues Statement of Support on the IAASB’s International Standard on Sustainability Assurance (ISSA) 5000
CEAOB