The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA)—on assurance of sustainability-related corporate reporting.
An increasing number of stakeholders are seeking assurance of sustainability-related information, whether on a voluntary basis or to meet regulatory requirements. The IAASB and the IESBA work is an important response to the accompanying market demand for robust standards applicable to all providers of sustainability assurance that can be used to foster independent, high-quality engagements, and consistent practices. The IAASB and the IESBA plan to work toward high-quality, global assurance and ethics (including independence) standards that are profession-agnostic and can support limited, and ultimately, reasonable assurance of sustainability-related information. The work will support the consistency, comparability, and reliability of sustainability-related information provided to the market, enhancing trust in the quality of that information. Based on the feedback received from the first roundtable held by IOSCO in February 2022, stakeholders observed that greater standardization in reporting is key to a robust assurance framework. Stakeholders also encouraged assurance and ethics standard-setters to build on the foundation of existing standards.
The IAASB and the IESBA began work to develop high-quality international assurance and ethics (including independence) standards for assurance over sustainability-related reporting. IOSCO encourages them to consider these key messages and highlights three priority areas for their Boards’ consideration: the importance of profession-agnostic standards, timely progress, and collaboration; focus on transparency; and tackling of challenging issues. In short, IOSCO encourages IAASB and IESBA to:
- build on the requirements and principles of existing standards that could apply irrespective of whether an assurance engagement is provided by an audit firm or a non-audit firm.
- collaborate with each other, and providers of other frameworks that are currently used in some assurance engagements on sustainability-related information.
- develop standards that support connectivity in assurance services between sustainability-related information and financial reporting, regardless of whether these services are provided by the same assurance provider.
- continue close engagements with the ISSB to foster compatibility between international financial reporting, sustainability reporting, and assurance standards.
- set clear requirements that promote transparency over which elements are subject to assurance, the standards applied, the conclusions reached and whether limited or reasonable assurance has been provided.
- consider how its standards can support such transparency, irrespective of the type of provider and whether the standards are applied on a mandatory or a voluntary basis.
- consider feedback received from investors regarding prioritization of assurance for certain targeted disclosure items.
- consider including guidance on using robust methodologies and rigorous risk assessment processes.
- work with others in the ecosystem to support capacity-building by providing support and guidance as appropriate.
IOSCO plans to hold a second global roundtable in the coming months to discuss the messages from its fact-finding activities and to gather feedback on the priority areas. Building on feedback from the roundtables and other engagements, IOSCO will issue a public report in early 2023, summarizing insights from its fact-finding work and charting a path for IOSCO’s ongoing engagement as the reporting landscape develops. Going forward, IOSCO will also continue its active engagement with the International Sustainability Standards Board (ISSB) on the development of its first reporting standards. The process for IOSCO’s potential endorsement of the ISSB standards will begin after the ISSB has issued its final standards.
Related Link: Statement (PDF)
Keywords: International, Banking, Securities, Reporting, Assurance Standards, Sustainable Finance, IAASB, IESBA, Disclosures, ESG, ISSB, IOSCO
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