New sustainability reporting standards are coming and the chair of the Auditing and Assurance Standards Board (AUASB) is warning that assurance providers will need to expand their skill set in order to keep up with a fluid environment.
AUASB chair Bill Edge said in a paper published in the latest edition of CPA Australia’s Australian Accounting Review that disclosures required assurance to have credibility, and assurance providers will need to upskill in the area of sustainability to be able to do tasks properly.
Australia’s accounting and auditing standard setters are contributing to a global consultation process on two proposed sustainability standards that deal with general sustainability disclosures and climate reporting.
Once these standards, which are set by the London-based International Sustainability Standards Board, have been approved, a local version gets issued in Australia.
These standards will have legal backing in a similar fashion to that of accounting standards in Australia and will be subject to surveillance and enforcement by regulators.
Edge said that audit and assurance practitioners are subject to a range of regulatory requirements to ensure they set out the behaviours expected of auditors.
“Currently, audits of financial reports are provided by practitioners who are members of the professional accounting bodies, with ‘Registered Company Auditor’ being the designation required by Corporations Law. Auditors are required to comply with a Code of Ethics, promulgated by the Accounting Professional and Ethical Standards Board,” Edge said.
“These principles establish the standard of behaviour expected of a member of the professional bodies. The fundamental principles are integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Independence standards are a key element of the Code.”
He said that other specialist practitioners could provide assurance on sustainability issues but they may not be subject to the same rules and ethical standards as members of professional accounting bodies such as CPA Australia, Chartered Accountants – Australia and New Zealand, and the Institute of Public Accountants.
“What appears to be a threat to the future of the professional accounting bodies because of competition from new providers can be an opportunity for them to grow their size and enhance the credentials of their members,” Edge said.
“They could support members as prescribed assurers, either by advocating relevant regulation or by promoting the reputation of members of the accounting profession.”
Edge said the higher education sector has a major role in developing courses that reflect emerging standards and practices as well as urgent research on the kinds of metrics and targets constituting best practice.