SUSTAINABILITY ASSURANCE: WHAT TO EXPECTTHE SWITCH TO MANDATORY REQUIREMENTS: Policymakers and regulators are moving with pace to introduce mandatory
sustainability reporting and assurance. Even for companies already reporting on a voluntary basis, the evolution tomandatory sustainability reporting will take time as companies develop governance structures and rigorous processes,
systems, and controls related to their sustainability reporting—all to be tested through internal assessment and external
assurance. Unbiased estimates, assumptions, and scenario analysis, as well as reliable value chain data, will be important.
Preparers must develop new, robust materiality assessments in accordance with reporting requirements.
To make informed decisions related to important global issues like climate change, stakeholders need reliable data and narrative information about companies’ GHG emissions and othersustainability-related matters. When a company engages an assurance practitioner to obtain assurance over these disclosures, users’ trust and confidence about the information is enhanced.
WHAT TO EXPECT: Many jurisdictions are electing to implement a phased approach to both reporting and assurance requirements—reflecting the readiness of preparers to apply
new sustainability reporting standards, as well as implement information systems and reporting processes. Users of sustainability disclosures should expect, depending on jurisdictionspecific requirements or market practices, that assurance engagements may initially cover only some sustainability topics (e.g., climate change) and will seek to deliver a different levelof assurance (i.e., limited assurance) than financial statements audits (i.e., reasonable assurance). Further, engagements may result in modified assurance conclusions. (See definitionsbelow and examples on the IFAC website).
Meanwhile, assurance practitioners are developing the methodologies to test, analyze, and evaluate new sustainability-related datasets, processes and controls in accordance witha new global International Standard on Sustainability Assurance (ISSA) and global ethics standards.

LEVEL OF ASSURANCE
Research on The State of Play in Sustainability Disclosure and Assurance finds
most engagements currently do not result in reasonable assurance conclusions.

TYPES OF MODIFIED ASSURANCE CONCLUSIONS
Modified opinions (conclusions) are not common in financial statements audits, but they may occur
during initial years of new reporting and assurance requirements.*

REASONABLE: In a reasonable assurance engagement, the level of assurance
obtained is like that in a financial statements audit. The practitioner gathers
sufficient, appropriate evidence—based on procedures designed to obtainreasonable assurance (i.e., a high, but not absolute, level of assurance)—that thesustainability information is free from material misstatement.
LIMITED: A practitioner gathers sufficient, appropriate evidence—based onprocedures that are limited compared to a reasonable assurance engagement—toconclude whether anything has come to the practitioner’s attention thatcauses them to believe the sustainability information may be materially misstated.

QUALIFIEDCONCLUSION

Effects, or possible effects, of a misstatement or scope limitation
are material but not pervasive.

DISCLAIMER OF
CONCLUSION

A material and pervasive scope limitation exists that precludes
the practitioner from obtaining sufficient, appropriate evidence to form
a conclusion.

ADVERSECONCLUSION

The sustainability information is misstated and the misstatement ismaterial and pervasive.

* e.g., under the Sarbanes-Oxley Act, adverse auditor attestations related to internal controls over financial reporting in theU.S. were initially double that of current levels.

CALL TO ACTION:• Mandatory, independent assurance that can be performed alongside financial audits.

The accountancy profession, market regulators, preparers, investors
and all users of sustainability disclosures need to engage with eachother and develop a shared understanding of—and commitment todelivering— high-quality sustainability assurance that includes:• Engagements conducted in accordance with global IAASB and IESBA standards, including
independence, ethics, quality management.
• Reporting and assurance requirements—supported by best practices inside of companies—that ultimately deliver reasonable assurance over sustainability information.