Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p141
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 442982–446517

understanding necessary in a reasonable assurance engagement.

 2.       The practitioner's understanding of the entity and its environment may include an understanding of the following:

         1.                 The nature of the entity and its sustainability-related business risks, including:

                 1.                  The nature of the operations included in the reporting boundary, including:

                         1.                    Whether the activities or operations within the reporting boundary are internal or external to the entity;

                         2.                    The contribution of each activity or operation to the sustainability information, including entities or operations within the value chain, if material to the sustainability information; and

                         3.                    The uncertainties associated with the quantities reported in the sustainability information.

                 2.                Changes from the prior period in the nature of the entity, its business risks, or the reporting boundary, including whether there have been any mergers, acquisitions, disposals, or outsourcing of functions.

                 3.              The frequency and nature of interruptions to operations.

         2.                 The maturity of the processes and controls over sustainability information and the extent to which they integrate the use of IT.

Understanding the Reporting Boundary (Ref: Para 110(b))

 1.       Understanding the reporting boundary may require the analysis of complex organisational structures (e.g., multiple operating units in different jurisdictions), contractual relationships and activities within the entity's value chain. The way operations are organised may also have implications for the reporting boundary. For example, a facility may be owned by one party, operated by another, and process materials solely for a third party, but the sustainability activities of all three entities may be within the reporting boundary. Understanding activities within the reporting boundary help the practitioner:

           * Understand whether the disclosures are affected by complexity, judgement, change, uncertainty, or susceptibility to misstatement due to management bias or fraud.

           * Identify disclosures for which it may be necessary to use the work of others to obtain sufficient appropriate evidence.

           * Identify the members of the engagement team and other parties with whom the engagement leader discusses the susceptibility of disclosures to material misstatements whether due to fraud or error.

           * Consider or determine an appropriate materiality for the applicable disclosures.

           * Determine the nature, timing and extent of further procedures.

           * Identify disclosures where it may be difficult to obtain sufficient appropriate evidence and, as a result, the implications for the assurance report.

Understanding the Entity's Goals, Targets, or Strategic Objectives (Ref: Para. 110(c))

 1.       Understanding goals, targets, or strategic objectives related to sustainability matters and measures used to assess the entity's performance may help the practitioner identify incentives and pressures that increase the susceptibility of the sustainability information to management bias or fraud.

Understanding the Legal and Regulatory Framework (Ref: Para. 111)

 1.       The effect on the sustainability information of laws and regulations will vary. Those