The Association of Chartered Certified Accountants (ACCA) has issued a warning regarding emerging risks within the UK’s sustainable reporting assurance market, urging vigilance despite the market’s current efficacy.
The association has acknowledged the Financial Reporting Council (FRC) for its study on the UK’s sustainable reporting assurance market, while cautioning against complacency.
The FRC’s study, titled “Assurance of Sustainability Reporting Market,” raises concerns about the quality of assurance services provided.
It notes a trend towards market concentration by the Big Four audit firms and points to the UK’s uncertain regulatory position as a factor contributing to market immaturity.
Additionally, the absence of an established regulatory framework is seen as an issue.
ACCA Policy and Insights director and FRC former director Mike Suffield said: “It is good to see the FRC quickly producing this market study – pace was one of the characteristics we urged. We agree with the concerns that the FRC has raised, and we would welcome the opportunity to work with the government, the regulator and others to ensure we put in place quickly the right policy in this important emerging area.”
The study recommends three actions: establishing a clear policy framework, creating a unified regulatory regime, and enhancing the quality of information regarding sustainability assurance.
ACCA emphasises that any new regulatory regime must be proportionate, acknowledging the nascent stage of sustainability reporting and assurance.
ACCA Regional Policy and Insights lead Jessica Bingham said: “While welcoming the report and its recommendations, ACCA urges greater emphasis on the role of small and medium sized enterprises (SMEs) and small and medium sized practices (SMPs).
“With approximately 5.5 million SMEs in the UK, a clear narrative needs to be set out as to how they will interact with the sustainability assurance market and what role SMPs will play in this market to ensure consistency and competitiveness.”
This warning from ACCA comes on the heels of their latest release in a series on sustainability reporting, titled “Sustainability Reporting: Risk and Materiality.”
The new instalment provides businesses with guidance on identifying material information for sustainability reporting and outlines a three-step process to assist in this endeavour.
