Document ID: chunk:federal_register_of_legislation:F2025L00107:front:0:p178
Version: federal_register_of_legislation:F2025L00107
Segment Type: other
Provision Reference: 
Character Range: 553077–556494

broad range of possible outcomes, and it may be difficult to identify and evaluate misstatements, including whether the assumptions are:

         1.                 Reasonable, in the case of a forecast; or

         2.                 Realistic and in line with the purpose of the information, in the case of projections.

 4.       The practitioner may consider ways in which misstatements in forward-looking information may arise, for example:

         1.                 Data or other information used may not be relevant, complete or reliable;

         2.                 Assumptions may include information that is not relevant, may omit important considerations, may be internally inconsistent, or may be given inappropriate weighting;

         3.                 Assumptions may not be consistent with management's decisions or intent; or

         4.                 There may be unintentional or deliberate misapplication of the assumptions to the data or other information, or in calculations of quantifiable information.

In some cases, misstatements may arise as a result of a combination of these circumstances.

 1.       The practitioner may also consider whether there are indicators of possible management bias in the selection of assumptions, methods or data in the way in which the sustainability information is presented that may indicate a misstatement or have implications for the rest of the assurance engagement. For example, indicators of possible management bias may include when management has:

         1.                 Changed the assumptions or methods used, or has made a judgemental assessment that there has been a change in circumstances, without reasonable justification;

         2.                 Used assumptions that are inconsistent with assumptions used elsewhere in the entity's business, including for financial statement or operational purposes, or inconsistent with observable marketplace assumptions; or

         3.                 Selected significant assumptions that favour management's objectives, or that may indicate a pattern or trend.

Evaluating the Description of Applicable Criteria (Ref: Para. 162)

 1.       The preconditions for an assurance engagement in paragraph 78 require that the criteria that the practitioner expects to be applied in the preparation of the sustainability information will be available to the intended users. This may be done by references to a description of the applicable criteria, which is available to the intended users, or the inclusion of a description of the applicable criteria and the sources of those criteria in the sustainability information, to enable intended users to understand how:

         1.                 The content of the sustainability information, such as the topics and aspects of the topics, has been identified and selected;

         2.                 The intended users' information needs were identified; and

         3.                 The sustainability matter has been measured or evaluated.

 2.       Referencing or describing the applicable criteria and their sources is particularly important when:

         1.                 There are significant differences between criteria applied by entities in the same industry, region, or jurisdiction that the practitioner expects to have similar circumstances or be equivalent.

         2.                 The sustainability matter