A road map for ESG disclosures and assurance

By Ken Tysiac

As the demand for environmental, social, and governance (ESG) information increases, related opportunities for CPAs involved in financial reporting and auditing continue to grow.

Investors are showing more interest in ESG information, and some are calling on public companies to incorporate into SEC submissions ESG disclosures on topics such as climate change and diversity and inclusion metrics.

Interest in the reliability of this information is expected to lead to higher demand for attestation engagements performed on this information by auditors. In a publication released Wednesday, ESG Reporting and Attestation: A Roadmap for Audit Practitioners, the Association of International Certified Professional Accountants and the Center for Audit Quality (CAQ) provide ESG-related tools for auditors. The publication is available on the AICPA website and the CAQ site.

The report can be used to help auditors inform their clients’ approach to ESG disclosures, to help clients determine whether to seek an attestation report on ESG information, and to help determine how to report ESG information in an SEC submission.

“ESG is a rapidly evolving area of reporting, and while there is no one-size-fits-all approach, independent auditors have an important role as this reporting continues to take shape,” Dennis McGowan, CPA, senior director of the CAQ’s Professional Practice, said in a news release. “The auditing profession is steeped in bringing accountability, standards-based analysis, and objectivity to the review of company reporting information — and these skills are transferable to these other areas of company-reported information like ESG data.”

The road map explains that investors often expect ESG information to be presented in accordance with existing ESG reporting frameworks and standards such as those provided by the Sustainability Accounting Standards Board or the Task Force on Climate-Related Financial Disclosures.

The report also provides details on how management can determine the level of assurance it desires on ESG information and describes the objectives of examination engagements and review engagements that auditors may provide related to ESG information.

“The road map explores how and why ESG disclosures are being included in SEC submissions and provides practitioners with insight into the risk and legal considerations associated with performing assurance engagements over such information,” Desiré Carroll, CPA, senior manager–Public Accounting for the Association, said in a news release.

For more on sustainability reporting and assurance, please visit the AICPA webpage on that topic.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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