Submission on the Draft International Assurance Standard

The key points of our submission included:

1. We welcome clarification and/or guidance on key issues including: materiality, steps to be taken by directors and boards to satisfy preconditions of assurance, and the nature and scope of communication expected between the sustainability assurance provider and directors (principally through the Audit Committee), and as between the sustainability assurance provider and the financial statement auditor (in the event that Treasury does not impose a requirement that the financial statement auditor must lead the climate assurance engagement, as is currently proposed).
2. In light of the directors’ role in recommending/ appointing assurance practitioners and in reviewing and maintaining audit quality, more consideration needs to be given as to which quality management, ethics and independence standards apply to non-accounting sustainability assurance practitioners.
3. Given the qualitative and assumption/judgement/contingency-laden nature of the majority of sustainability disclosures, consideration should be given to the suitability of the proposed “appropriateness of sustainability matters” test set out in paragraph 70 of the Draft ISSA 5000.
4. The Draft ISSA 5000 and Explanatory Memorandum appears to equate all greenwashing with fraud, which does not reflect the majority of greenwashing cases which may involve unintentional misleading disclosures. Consideration needs to be given as to how incidents of non-fraud greenwashing will be addressed, including how and when such cases should be raised with directors and/or management.