Chartered Accountants Australia and New Zealand (CA ANZ) and Association of Chartered Certified Accountants (ACCA) have issued a report to guide assurance practitioners on applying professional judgement to estimates and forward-looking information in sustainability engagements.
Estimates, targets, transition roadmaps and projections are now a core part of sustainability disclosures and are increasingly influential for investors and other stakeholders.
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However, this type of information is by nature uncertain. It rests on assumptions, expert judgement and future developments that may be outside an organisation’s control.
The two accounting bodies noted that as sustainability reporting matures, the requirement for reliable and decision-relevant assurance over these disclosures is also rising.
Their publication is aligned with ISSA 5000 General Requirements for Sustainability Assurance Engagements, which sets out an international framework for assurance over sustainability data, including estimates and future-oriented information.
They emphasised that using ISSA 5000 effectively calls for “careful” professional judgement, especially where evidence relates to future events and cannot be confirmed at the reporting date.
The report, A case study: Demystifying the assurance of estimates and forward-looking information in accordance with ISSA 5000, is presented as a practical case study to support practitioners in applying that judgement.
It looks at how assurance providers can address the inherent uncertainty in estimates and forward-looking disclosures when conducting engagements under ISSA 5000.
ACCA Audit and Assurance, Policy & Insights head Antonis Diolas said: “This report reinforces a critical distinction: assurance over such information relates to its preparation and disclosure, not to whether future outcomes will ultimately be achieved.”
The case study sets out how practitioners can respond to identified risks, select procedures suited to either limited or reasonable assurance, and assess the sufficiency and appropriateness of evidence in the face of uncertainty.
It also outlines how matters uncovered in relation to estimates and forward-looking data can influence the final assurance conclusion.
CA ANZ reporting and assurance leader Amir Ghandar said: “By bringing the requirements on estimates and forward-looking information together and grounding them in a practical case study, this report provides much needed guidance for assurance practitioners.”
