AICPA, CalCPA jointly call for clarity regarding California climate rule

The AICPA and the California Society of CPAs (CalCPA) recommended to the board responsible for implementing California’s climate risk disclosure rules that it consider clarifications to ensure CPAs can effectively support a practical and efficient climate disclosure framework.

The joint comment letter came in response to an Information Solicitation from the California Air Resources Board (CARB) issued in December, after amendments to two new climate disclosure laws gave CARB additional time to develop an implementation plan. Reporting for companies subject to the legislation could begin in 2026.

The joint comment letter read, in part: “Transparency and accountability in sustainability reporting and assurance are crucial for building stakeholder trust and meeting market and public expectations. To strengthen confidence in reported information, we encourage legislators and regulators to incorporate recognized sustainability reporting and assurance standards, which already outline different levels of assurance, and establish uniform requirements for assurance practitioners.”

According to a news release, the comment letter recommends that CARB consider:

• Providing clear guidance implementation and compliance in the first year. “CARB should update its rulemaking timeline, clarify how it will address statutory deadlines if rulemaking is delayed, and provide implementation guidance on reporting and clarity on assurance requirements for the first reporting cycle,” the letter said.
• Broadening acceptable reporting standards. The letter calls for allowing climate-related disclosures introduced by the IFRS Foundation to be accepted as recognized reporting standards under the California rules, both for simplicity and to ensure consistency and comparability among entities.
• Aligning assurance standards with recognized terminology. “The use of nonstandard terms can create confusion for practitioners, preparers, and report users, making it harder to apply standards correctly,” the comment letter said. “AICPA assurance standards guide CPAs in assurance engagements, which are subject to ongoing monitoring and quality control.”
• Setting rigorous minimum qualifications for assurance practitioners. Qualifications regarding independence, competency, ethics, oversight, and quality management should be at least as rigorous as those followed by CPAs when assuring financial and nonfinancial information.

The AICPA and CalCPA formed a climate-disclosure working group after California’s legislation was enacted to review implementation and compliance issues. Some of the group’s findings are contained in Sustainability Reporting and Assurance: Key Considerations for Legislators and Regulators, a joint paper from the AICPA and the Center for Audit Quality.

For more on the broader topic, visit the AICPA’s resource page.

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.