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• discuss the assurance provided for non-financial information…

- - - - Disclosure of carbon emission levels by companies is required to support actions aimed at reducing these emissions, including:
        • monitoring regulatory compliance
        • facilitating emission tracking systems
        • assisting investor decision-making.
      - Greenhouse gas (GHG) statements take different forms, including disclosures that are:
        • required by regulation
        • related to emissions trading schemes
        • voluntary.
      - Benefits
        
        Assurance services on carbon emission disclosures in Australia increase the credibility of these disclosures and enhance the relevant trading schemes (Huggins & Green et al. 2011).
        
        Further, as carbon emissions trading schemes and taxes become more common around the world,
        well‑established reporting and assurance frameworks help organisations to meet their obligations.
      - assurance approach
        
        varies depending on the reporting entity’s level of precision in its monitoring and disclosure of GHG emissions.
        
        coal
        
        one approach is to report coal consumption by using a generic factor that reflects the carbon content of coal used within the relevant jurisdiction; this could then be applied to approximate the amount of GHGs emitted by consuming that amount of coal.
        
        assurer’s role is ‘to test the measured level of coal consumption and consider the appropriateness of the factor and the accuracy of its application’.
        
        A more direct and sophisticated approach is to place measuring instruments on the chimneys and furnaces of any outlets through which GHG escape.
        
        assurer’s role would be to test whether all outlets are monitored and the instrumentation is working appropriately, and to examine the accuracy of the calculations
        
        ISAE 3410 Assurance Engagements on Greenhouse Gas Statements covers the assurer’s responsibilities for identifying, assessing and responding to risks of material misstatement on GHG statements.
        
        experts
        
        standard also recognises that most engagements will be undertaken by a multi-disciplinary team (including, for example, engineers or environmental scientists) and thus addresses the need to integrate such experts at various stages of the engagement.
        
        application
        
        can be applied to a broad range of circumstances, including those organisations that are directly emitting GHGs into the atmosphere, as well as those organisations that are indirectly adding to GHG emissions (e.g. by consuming electricity).
        
        The standard covers both reasonable assurance and limited assurance engagements
    - - CPA Australia has developed A Guide for Assurance on SME Sustainability Reports.
        
        Importantly, the document sets out the business pressure and opportunities that are inducing SMEs to consider sustainability reporting, and the consequent importance of CPAs being capable of discussing these issues with clients and providing opportunities for clients.
        
        CPA Australia (2012) lists four opportunities for SMEs related to sustainability reports:
        • Large organisations often require their supply chains to demonstrate sustainability (e.g. through tender processes or the need for sustainability reports, sometimes with assurance). By demonstrating sustainability in practices and products, SMEs can differentiate themselves from competitors.
        • They provide a credible way to present sustainability performance to stakeholders.
        • A greater range of finances are available to organisations that can demonstrate sustainability.
        • Sustainability reporting can unlock internal advantages such as staff support, risk management and process improvements.
    - - standards
        
        Australian Water Accounting Standard 1
        
        It prescribes how to prepare and present a General Purpose Water Accounting Report.
        
        BOM released
        
        Australian Water Accounting Standard 2
        
        AUASB) and the BOM have jointly issued the Standard on Assurance Engagements ASAE 3610 and AWAS 2 Assurance Engagements on General Purpose Water Accounting Reports
        
        This assurance standard establishes requirements for assurance engagements in the emerging area of water accounting.
        
        It guides assurance practitioners on accepting, conducting and reporting on engagements so they can provide reasonable or limited assurance on a general purpose water accounting report (WASB 2014).
        
        It is critical that users of the water accounting reports have confidence in the credibility of these reports—hence the need for an assurance engagement. The idea is that water accounting reports should contain independent attestation that they have been prepared in accordance with approved water accounting standards (i.e. those developed by WASB).
      - water accounting
        
        Water accounting is ‘a systematic process of identifying, measuring, monitoring and communicating information about water-related transactions, transformations and events to allow informed judgements and decisions about the allocation of scarce resources’ (Chalmers & Godfrey 2007).
        
        Water accounting enables entities to collect, record, measure and disclose information about water in order for users of this information to make informed decisions on the economic, social and environmental effects of water transactions, transformations and events.
        
        in many countries, water usage is a major issue and increasingly this issue will be incorporated as part of strategic planning.
      - Water Accounting Standards Board (WASB)
        
        The Water Accounting Standards Board (WASB) is an independent advisory board to the
        Bureau of Meteorology (BOM) and works with the water industry to develop consistent standards for water accounting (Standard 1 (WASB 2012)) and assurance (Standard 2 (WASB 2014)).
    - - society is starting to expect non-financial performance measurement for certain types of organisations.
        
        e.g. charity
      - Australian Accounting Standards Board
      - Organisations are increasingly using performance measurement systems to help realise their strategic objectives and goals, and to report their performance on a broader range of performance indicators, such as non-financial performance.
        
        proposed a framework, in the form of a draft Standard, for reporting service performance information.
        
        objective
        
        to establish principles and requirements for an entity to report service performance information that helps users assess whether a not-for-profit entity has met its service performance objectives
      - Two types of potential assurance services in relation to performance measurement systems are:
        • assessing the reliability of information being reported from the organisation’s performance measurement systems
        • assessing the relevance of the performance measures (i.e. how well they inform users about performance).
        
        Assessing the reliability of performance measures
        
        When an organisation’s performance measurement system reports actual results, an assurance practitioner can provide assurance on the reliability of information in that performance report
        
        Comparisons can then be made about the quality of information received from that department against internal goals and the results of other organisations that are comparable in size and operate in similar industries.
        
        Two issues the organisation may require assurance
        
        criteria for performance measurement assurance
        
        relevance of performance measures used
        
        Criteria for performance measurement assurance
        
        often necessary to either develop appropriate measures as criteria, or assess whether the performance measures being used are suitable criteria for measuring the right things from the organisation’s perspective.
        
        Performance indicators should be: RQVFBCT
        • relevant—relate to the user’s needs and to clearly defined objectives that communicate what is to be measured
        • quantifiable—illustrate the extent to which objectives have been achieved in absolute and proportional measures (i.e. subjective and judgmental statements should be avoided)
        • verifiable—should result in similar conclusions when an independent assessment is conducted
        • free from bias—report information impartially, using information that is gathered and analysed in a way that is free from built-in bias
        • balanced—provide a complete picture of what is being done, covering all significant areas
        • cost-effective—balance the benefits of the information against the costs of preparing them
        • time-based and timely—cover a defined time period to determine whether the performer has achieved the target and produced on a timely basis so that corrective action can
        be taken.
        
        Assessing the relevance of performance measures
        Are they measuring the right things?)
        
        approach
        
        examine the organisation’s strategic objectives and assess whether the performance measures used are consistent with those objectives.
        
        assurance practitioner can also provide value to the organisation by providing independent insights about whether the strategic objectives are reasonable, achievable, clearly defined and understood by the organisation’s employees
        
        They can also assess whether the organisation has appropriate financial and non-financial measures.
        
        users
        
        Management
        
        to assist in performance evaluation,
        for example, or to help identify activities that need improvement.
        
        investors and creditors
        
        provides credible information on the entity’s systems for measuring performance, and information on how well management is performing in a variety of areas.
- - - - ISAE 3000 Assurance Engagements Other than Audits or Reviews of Historical Financial Information is an umbrella standard for ‘other’ assurance engagements.
        
        Other assurance engagements under ISAE 3000 may be either ‘reasonable’ or ‘limited’
        
        In regard to the underlying subject matter and other engagement circumstances, ISAE 3000, para. 46, outlines that:
        
        • for a reasonable assurance engagement, the practitioner shall obtain an understanding of the underlying subject matter and other engagement circumstances. This should be sufficient to identify and assess the risks of material misstatement in the subject matter information.
        It should also provide a basis for designing and performing procedures to respond to the assessed risks and to obtain reasonable assurance to support the practitioner’s conclusion.
        
        • for a limited assurance engagement, the practitioner shall obtain an understanding of the underlying subject matter and other engagement circumstances sufficient to enable the practitioner to identify areas where a material misstatement of the subject matter information is likely to arise. It should therefore provide a basis for designing and performing procedures to obtain limited assurance to support the practitioner’s conclusion.
        
        In regard to obtaining sufficient appropriate evidence for an assurance engagement, ISAE 3000, para. 48, outlines that:
        
        For a reasonable assurance engagement, the practitioner shall:
        – identify and assess the risks of material misstatement in the subject matter information; and
        – design and perform procedures to respond to the assessed risks and to obtain reasonable assurance to support the practitioner’s conclusion.
        
        For a limited assurance engagement, the practitioner shall:
        – identify areas where a material misstatement of the subject matter information is likely to arise; and
        – design and perform procedures to address the areas identified in these areas to obtain limited assurance to support the practitioner’s conclusion.
        
        conditions for accepting or continuing them
        
        These conditions include the general requirements that the practitioner (signing partner) believes that the engagement team satisfies relevant ethical requirements, including independence.
        
        The practitioner should also be satisfied that the engagement team, collectively, has the appropriate competence and capabilities.
        
        Further, the practitioner should be satisfied that the preconditions of an assurance engagement, as discussed in ISAE 3000, para. 24, are present. These preconditions include: PERCS
        • an appropriate underlying subject matter
        • suitable criteria that will be available to the intended users
        • evidence to support the practitioner’s conclusion
        • a written report that presents the practitioner’s conclusion
        • a rational purpose for undertaking the engagement, including (in the case of a limited assurance engagement) that the practitioner expects to be able to obtain a meaningful level of assurance.
        
        The practitioner shall plan the engagement so that it will be performed in an effective manner (ISAE 3000, para. 40). This includes determining the nature, timing and extent of planned procedures that are required to be carried out in order to achieve the objective of the practitioner.
        
        Experts
        
        When the work of a practitioner’s expert is to be used, the practitioner shall also: CUNA
        (a) evaluate whether the practitioner’s expert has the necessary competence, capabilities and objectivity for the practitioner’s purposes. In the case of a practitioner’s external expert, the evaluation of objectivity shall include inquiry regarding interests and relationships that may create a threat to that expert’s objectivity;
        (b) obtain a sufficient understanding of the field of expertise of the practitioner’s expert;
        (c) agree with the practitioner’s expert on the nature, scope and objectives of that expert’s work; and
        (d) evaluate the adequacy of the practitioner’s expert’s work for the practitioner’s purposes (ISAE 3000, para. 52).
        
        The assurance report shall be in writing and shall contain a clear expression of the practitioner’s conclusion about the subject matter information (ISAE 3000, para. 67).
        
        The practitioner must prepare engagement documentation that provides a record of the basis for the assurance report that is sufficient and appropriate to enable an experienced practitioner (with no previous connection of the engagement) to understand: NRS
        (a) the nature, timing and extent of the procedures performed;
        (b) the results of the procedures performed, and the evidence obtained; and
        (c) significant matters arising during the engagement, the conclusions reached thereon, and significant professional judgments made in reaching those conclusions (ISAE 3000, para. 79).
    - - Sustainability Report passcard!!
      - also referred to as an ‘environmental report’, ‘CSR report’ or ‘corporate responsibility report’).
      - IAASB has not developed a specific assurance standard for these engagements. In fact, this type of reporting is becoming a ‘mainstream’ practice in the largest corporations globally.
      - GRI standards
        
        The GRI Standards, released on
        19 October 2016, have superseded the GRI G4 Guidelines. Use of the GRI Standards will be required for all sustainability reports and other related materials published on or after 1 July 2018
        
        The most common reporting framework for sustainability reports is the GRI Standards
        
        GRI also recognises that assurance of sustainability reports is at an early stage in its evolution. It therefore encourages the development and use of principles and guidelines for assurance practices. Moreover, the GRI recommends that external assurance should: BOGIES
        • be conducted by groups or individuals external to the reporting organisation, who are demonstrably competent in the subject matter and assurance practices
        • utilise groups or individuals who are not limited by their relationship with the organisation to publish an independent conclusion on the report
        • be implemented in a manner that is systematic, documented, evidence-based, and characterised by defined procedures
        • assess whether the report provides a reasonable and balanced presentation of performance
        • assess the extent to which the report preparer has applied the GRI Reporting Framework
        • result in an opinion or set of conclusions that is publicly available in written form, including a statement from the assurance practitioner on their relationship to the report preparer.
        
        The GRI does not make recommendations on what type of assurance practitioner to use. It is expected that the reporting organisation will select the assurance practitioner on the basis of these six key qualities.
      - A sustainability report provides information about the organisation’s economic, environmental and social impacts—as well as its values and governance model—and ‘demonstrates the link between its strategy and its commitment to a sustainable global economy’
        
        Accountability
        
        Australia, varying degrees of reporting of sustainability information is mandatory. With increased disclosure, there are increased expectations of assurance on this information in order to increase its credibility.
      - Benefits
        
        Why assurance on sustainability information is important
        Assurance adds credibility to the sustainability information reported. This increases the reliability of disclosures for a broad range of stakeholders, including:
        • investors, analysts (particularly social responsibility analysts) and rating agencies
        • employees—to provide confidence in systems and establish progress against targets
        • business partners in the supply chain—to strengthen their confidence in their partners
        • communities—to establish credibility with neighbours and local organisations.
        
        To benefit from the process of sustainability reporting, organisations take steps to enhance the credibility of their reports, including having their reports externally assured. This is believed to contribute to building stakeholder trust and to continually improve the quality of reporting systems and processes.
      - Strategic
        
        As the above issues are more frequently incorporated as a central part of strategy and included in performance evaluations and reward systems
        
        Accountants Role
        
        Investors are increasingly likely to want firms to demonstrate that CSR and sustainability issues are included as an important part of the strategic planning process, and to want assurance on related disclosures.
        
        Boards faced with these issues are increasingly likely to require assurance on measures and disclosures important to their decision-making role
        
        accountants will take an increasingly important role in both the development of sustainability measurement and reporting systems, and the related assurance activities.