INTHEBLACK December 2021 - Magazine - Page 9
UPSKILL NOW
Discover CPA Australia’s
Micro-credentials
transitional climate risks, while the Reserve Bank of Australia
has warned that the cost of capital will go up for Australian
companies if they do not address climate change.
Industry bodies are also recognising the importance
of addressing this issue, with CPA Australia issuing a
climate change policy statement and committing to
a call to action as a member of Accounting for
Sustainability’s Accounting Bodies Network.
The Australian Institute of Company Directors
has launched the Australian Chapter of the Climate
Governance Initiative and has issued a Climate Risk
Governance Guide, spelling out directors’ duties and
expectations with respect to climate risk and the
litigation risks they face if they ignore these risks.
ASSURANCE AND REPORTING QUALITY
The EY Global Climate Risk Disclosure Barometer shows
that there is now extensive reporting under TCFD globally,
but quality is lagging. There is a need for assurance to
enhance the quality of climate-related reporting.
The International Federation of Accountants’
benchmarking report, The State of Play in Sustainability
Assurance, has found that 91 per cent of the 1400
companies examined globally – the largest companies
in 22 jurisdictions – are reporting on sustainability.
However, only 51 per cent of these companies have
obtained assurance over their sustainability disclosures,
the majority provided by audit-affiliated firms using the
auditing and assurance standards issued by the
International Auditing and Assurance Standards Board
or national equivalent.
THE CAPACITY
AND CAPABILITY OF
FIRMS TO CONDUCT
AUDITS OF FINANCIAL
STATEMENTS WILL
NEED TO BE MATCHED
BY CAPACITY AND
CAPABILITY TO
PROVIDE ESG
ASSURANCE IN
THE NEAR FUTURE.
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TO ACCESS
CPA Australia’s
policy pages
The lag between reporting and assurance is
understandable, as robust reporting needs to be
in place before effective assurance is possible.
There is a significant amount of work in establishing
systems, processes and controls in order for an entity
to be ready for assurance on ESG reports.
Nevertheless, external assurance will be increasingly
needed to provide credibility and trust in ESG reports, as
well as confidence that reporting is not “greenwashing”,
but instead an accurate reflection of the reality of the
entity’s activities.
As entities are gearing up for more fulsome ESG
reporting, practitioners need to be building their
capabilities to provide assurance on those reports.
ACCOUNTING AND ESG ASSURANCE
The accounting profession needs to be prepared to
meet growing demand for increased sustainability
reporting and assurance. The capacity and capability of
firms to conduct audits of financial statements will need
to be matched by the capacity and capability to provide
ESG assurance in the near future.
While the accounting profession is in a strong
position to provide that ESG assurance and, indeed,
the larger firms are already doing so, it is not a given
that the profession can claim or retain this space
without upskilling.
In order to exercise professional judgement and
professional scepticism, assurance practitioners cannot
rely on experts alone, but must themselves have an
adequate depth of understanding of the subject matter.
intheblack.com December 2021 9