AICD submission to AUASB consultation on proposed amendments to ASSA 5000

Given the technical focus of many of the AUASB consultation questions, our submission focussed on areas of greatest impact on directors.

The AICD made the following key points:

Underlying framework – Fair presentation framework and compliance framework (Questions 2 and 3) 

• We agreed that for Year 2 onwards that the review/audit should be based on a fair presentation framework rather than a compliance framework which should be used for Year 1, where only specified disclosures are subject to assurance.
• As we noted in our mandatory climate reporting guidance, directors should consider what additional disclosures may be required to in order to present a true and fair view.

Inherent limitations paragraphs (Question 8) 

• Consistent with our position that Australian climate disclosures should be consistent, comparable and aligned to international standards, we supported the inclusion of the examples of inherent limitation paragraphs noting the challenges of disclosing forward-looking information compared to financial reports.
• We also recommended the AUASB consider including a reference to the ‘short, medium and/or long-term’ nature of the forward-looking information to further contextualise the uncertainty in measuring or evaluating sustainability matters over certain timeframes, consistent with the strong emphasis in AASB S2.

Distinguishing the auditor’s reports on the financial and sustainability reports (Question 10) 

• Given the connectivity of information, assumptions and disclosures between financial and sustainability reports, we supported greater visual elements to distinguish between the two reports for greater clarity should preparers wish to publish both in a single combined report.
• We agreed with the AUASB that greater prominence could be made through report headings or text boxes at the start of each report.