International Auditing and Assurance Standards Board Releases Sustainability Assurance Guidance

The International Auditing and Assurance Standards Board (IAASB) has issued what is expected to be the benchmark for assessing sustainability reporting globally. The  IAASB’s proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements, aims to provide principles-based guidance for assurance of sustainability reporting, regardless of the framework or standards used for sustainability reporting. The proposed standard was released along with an explanatory statement for broad consultation and comment. The standard will provide guidance on various aspects of sustainability reporting.

For example, sustainability reporting frameworks typically require a company to disclose information about sustainability matters when such information is material to their operations. The ISSA standard provides guidance as to what materially means. This, it notes, ordinarily involves judgments about matters that are material to intended users as a group, while misstatements, including omissions, are considered material if they, individually or in the aggregate, can reasonably be expected to influence decisions of intended users. The IAASB issued some further guidance in October on the application of materiality in this context.

The IAASB says it drafted the standard to work with sustainability information prepared under any suitable reporting framework. These frameworks include the many reporting frameworks in place such as those issued by the European Union, the International Sustainability Standards Board, the Global Reporting Initiative, the International Organization for Standardization, and others.

In a related development, this month the International Ethics Standards Board for Accountants (IESBA) approved proposed new International Ethics Standards for Sustainability Assurance and proposed revisions to its International Code of Ethics for Professional Accountants in respect to sustainability reporting. It expects to finalise that standard before the end of 2024.