AICD submission to AUASB consultation on proposed amendments to ASSA 5010

The exposure draft covered two separate and distinct possible changes to the phasing in of assurance on sustainability reports under the Corporations Act.

With Australia being one of the first jurisdictions to introduce mandatory reasonable assurance over International Sustainability Standards Board (ISSB)-aligned disclosures, there is significant work in ensuring that directors, report preparers, and auditors are able to comply with these new obligations. This is critical as many climate disclosures are forward-looking, such that companies and directors are subject to heightened liability.

The AICD made the following points:

Directors’ declaration

• Consistent with our previous submissions on ASSA 5010 (Timeline) and ISSA 5000, the AICD agreed that the directors’ declaration should be subject to limited assurance in Years 2 and 3, before moving to reasonable assurance from Year 4 onwards, aligning with the expiry of the modified liability regime. This should give the assurance market the time to develop the relevant capabilities, and for standard-setters to provide guidance on the implementation of reasonable assurance over more challenging and nascent disclosures, such as scenario analysis and transition plan disclosures.

Phased assurance for voluntary reporting

• The AICD submitted that entities should be encouraged to become early adopters whilst the modified liability regime is in place. The proposal to subject an entity to the same phasing in of assurance requirements as Group 1, 2 and 3 entities may discourage early adoption of reports in accordance with the full sustainability reporting requirements of the Corporations Act 2001 (Cth) (Corporations Act)

Proposed phasing if start and stop voluntary reporting

• The AICD agreed that the proposed phasing for ‘start stop’ reporting is complex. In practice, we expect it would be rare for entities to voluntarily report earlier, stop then start again, given the sustainability reporting requirements of the Corporations Act (including AASB S2) are a significant undertaking from a cost and resourcing perspective