ACCA AAA · Chapter 30
Sustainability information
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Reporting implications and engagement acceptance
Sustainability work reporting, risks, suitable engagement
Scope and examples
- GHG emissions, energy, water, waste and workforce
- Governance, diversity and value-chain practices
- Can affect prospects, financial statements and reports
Disclosure frameworks
- IFRS S1: risks/opportunities affecting prospects
- IFRS S2: climate-related risks/opportunities
- Governance, strategy, risk management, metrics/targets
Greenwashing
- False, incomplete or misleading sustainability claims
- Management incentives may bias reported performance
Potential financial statement effects
- Useful lives, impairment and expected credit losses
- Provisions, fair values, inventory NRV, going concern
- Check consistency with sustainability disclosures
Planning and strategy
- Assess RoMM, reporting rules and reporting boundary
- Understand data systems, controls and value-chain inputs
- Assess estimates, forward-looking data and incentives
- Plan expertise, locations, timing and resources
Procedures
- Read minutes and evaluate required disclosures
- Recalculate measures; compare assumptions and forecasts
- Investigate inconsistencies and data completeness
Annual report
- Read sustainability other information for material conflict
ISSA 5000
- Reasonable or limited assurance under suitable criteria
- Whole report, disclosures, topics, measures or targets
- Define activities, entities and value chain in boundary
Acceptance questions
- Criteria suitable and available to intended users?
- Clear scope, boundary, intended users and rational purpose?
- Management accepts preparation and control duties?
- Independence, integrity, competence and resources?
- Can third-party evidence be obtained?
Key limitation
- Expected disclaimer normally prevents acceptance
- Unless engagement required by law or regulation
Reliability issues
- Diverse expertise; unclear or entity-developed criteria
- Missing value-chain data; immature or manual systems
- Uncertain forecasts and unsupported qualitative claims
- Unreliable meters, factors, models or third-party data
- Changing measures can distort comparisons
Materiality and scepticism
- Quantitative and qualitative measures use varied units
- Single financial benchmark may be unsuitable
- Challenge incentives, favourable claims and contradictions
- Investigate missing comparatives or withheld evidence
Planning, evidence and assurance reporting
Assurance conclusion evidence, criteria, scope and level
Reasonable assurance
- High, not absolute; more extensive risk/evidence work
- Positive opinion on preparation under criteria
Limited assurance
- Lower assurance and less extensive procedures
- Negative form: nothing has come to attention
Selection
- No subject matter automatically restricted to limited
- Mature controls and records may support reasonable
- First-year value-chain data may favour limited
Understand
- Criteria, boundary, methods and significant assumptions
- Systems, locations, laws, technology and experts
GHG emissions
- Agree activity data to invoices and meter readings
- Verify emissions factors with suitable external source
- Recalculate and seek omitted sites/emissions
- Assess Scope 1/2/3 classification
Value-chain information
- Inspect supplier contracts and reporting instructions
- Test submissions to records or certifications
- Seek direct evidence; investigate missing suppliers
Qualitative claims
- Corroborate with minutes, actions, contracts and policies
- Compare complaints, regulator letters and public claims
- Challenge “zero waste” and omitted adverse matters
Ask whether
- Data are relevant, reliable, complete and accurate
- Boundary is covered and criteria consistently applied
- Assumptions and third-party data are corroborated
- Contradictions and unusual movements are resolved
- Experts’ work is adequate; misstatements corrected
Do not infer reliability
- Several reports may share one incomplete data source
- If evidence insufficient, perform further procedures
- Or assess implications for assurance conclusion
Recycling illustration
- Changed measures may hide a declining rate
- Recalculate rates and reconcile to underlying records
Identify clearly
- Information assured, boundary, level and criteria
- Management/TCWG and practitioner responsibilities
- Ethics, independence and quality management
Conclusion and support
- Reasonable opinion or limited conclusion and basis
- Summarise work, especially for limited assurance
- Explain significant inherent limitations where relevant
Scope and modification
- Distinguish information outside assurance scope
- Material misstatement or evidence gap may modify
- Include title, addressee, signature, address and date
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