AICPA comments on assurance standards for California climate law

The AICPA, in a joint comment letter with the California Society of CPAs (CalCPA), expressed support for the recent California Air Resources Board (CARB) public workshop discussion that included AICPA standards among the acceptable assurance standards for California climate disclosure legislation. The letter also called for additional minimum requirements for all assurance providers.

CARB, the agency charged with implementing S.B. 253 — which requires companies with more than $1 billion in annual revenue that do business in the state to report greenhouse gas (GHG) emissions beginning later this year — sought comments following a workshop in March. At the workshop, CARB proposed acceptable assurance standards for Scope 1 and 2 GHG emissions starting in 2027, including AICPA standards; International Auditing and Assurance Standards Board (IAASB) standards ISAE 3000 and ISAE 3410 (until December 2026) and ISSA 5000 (effective December 2026); and International Organization for Standardization (ISO) as well as AccountAbility standards.

“We support CARB’s inclusion of IAASB standards in proposed regulation,” the AICPA and CalCPA stated in the letter, noting the AICPA’s efforts to converge where appropriate with IAASB standards as well as the International Ethics Standards Board for Accountants’ code of ethics. “When performing engagements under these standards, practitioners must: (a) design, implement and operate a risk-based system of quality management in accordance with International Standard on Quality Management (ISQM 1), and (b) apply requirements that are at least as demanding as the relevant ethical requirements of the [IESBA] International Code of Ethics.”

The letter further stated: “Other proposed assurance standards, such as [ISO] standards and the AccountAbility series of standards, may or may not require assurance providers to follow quality management and ethical standards. … To help ensure the quality of the assurance engagement, we recommend that CARB establish minimum requirements for assurance practitioners regarding independence, competency, ethics, oversight, and systems of quality control.”

The AICPA and CalCPA then highlighted the oversight frameworks present for professional accountants and called upon CARB to “consider what oversight and monitoring mechanisms are necessary for assurance engagements performed by non-CPA providers as it develops its regulations.”

The letter recommended that CARB incorporate all GHG Protocol accounting methods and their underlying details as well as reporting requirements within its regulations for measuring and reporting GHG emissions. The AICPA and CalCPA also strongly encouraged CARB to clarify the scope of assurance to cover all quantitative and qualitative disclosures required to report in conformance with GHG Protocol. In maximizing interoperability, the letter also asked CARB to permit a reporting entity to submit a “greenhouse gas emissions report prepared in accordance with European Sustainability Reporting Standards (ESRS), the IFRS Sustainability Disclosure Standards as issued by the International Sustainability Standards Board (ISSB), or substantially similar nationally adopted requirements based on such standards.”

Related resource

AICPA summary of California climate disclosure laws S.B. 253 and S.B. 261

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