The Fast Future With IFAC is a conversational podcast series that features innovative SMP practitioners sharing how they’re adapting to the rapidly changing global economy.
Episode four features a conversation with Paul Redmond, an Irish professional accountant. His firm, RDA Accountants Limited, has four offices across Ireland. He has a wide range of experiences and expertise, including the digitalization of accounting practices.
IFAC principal Kristy Illuzzi spoke with Paul about a range of pressing topics for SMPs, including:
Going digital with his firm
Building trust and enabling sustainability
Steppng into advisory services
Building strong relationships with clients
Click below or visit IFAC's iTunes podcast channel to listen to this episode. Be sure to subscribe to catch our next conversation with an innovative practitioner, coming soon.
IFAC welcomes the opportunity to comment on the International Sustainability Standards Board’s (ISSB) Exposure Draft addressing climate-related disclosures (the “Exposure Draft”). As the global voice of the accountancy profession, IFAC represents over 180 Professional Accountancy Organizations in 135 jurisdictions, thereby representing over three million professional accountants. As such, our perspective to this consultation—like that of the ISSB—is global in scope, while also taking into consideration important jurisdictional activities (i.e., such as that in the United States
Professional Accountancy Organization (PAO) Development
Attractiveness of the Profession
Education
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Mashael Al-Shalan, Assistant Director of Entrepreneurship and Professional Support, SOCPA; Dana Jensen, Regional Manager, IFAC; and Laura Leka, Principal, IFAC
58% of global companies obtained ESG assurance in 2020
Assurance engagements were mostly limited in scope
61% of ESG assurance services were performed by professional accounting firms, with substantial variation in practice within different jurisdictions
The number of global companies obtaining independent assurance on their environmental, social and governance (ESG) information increased from 51% to 58% in 2020, compared to the previous year, according to new data from the International Federation of Accountants (IFAC), American Institute of CPAs (AICPA) and Chartered Institute of Management Accountants (CIMA), the latter two of which represent the unified voice of the Association of International Certified Professional Accountants.
The 2020 information released today is an update to the accounting bodies’ inaugural study last year that examined global trends in both sustainability-related reporting and its assurance. This latest update offers the first benchmark of progress relative to the original data. A follow-up study that incorporates 2021 information is expected to be released at a later date.
When it comes to ESG assurance, 82% of engagements were limited in scope in 2020, essentially the same as in 2019 (83%). Some 61% of assurance engagements were performed by audit firms on a global basis, a slight decline from the previous year (63%). Jurisdictions with some of the highest rates of assurance performed by professional accountants include Australia, France, Italy, Germany and Spain. In other countries, including South Korea, the United Kingdom and the United States, most assurance engagements are conducted by service providers outside of the accountancy profession. Professional accountants have high professional standards, including independence, and are subject to regulatory oversight, which is critical in this space.
On the reporting side, the study found 92% of global companies provided some ESG data to investors, either through integrated, annual or standalone reports. The use of, or reference to, Sustainability Accounting Standards Board (SASB) standards more than doubled in 2020. This is important because new disclosure proposals from the International Sustainability Standards Board (ISSB) include and build upon SASB standards. (SASB’s parent organization, The Value Reporting Foundation, will consolidate into the IFRS Foundation on Aug. 1, 2022, to support the work of the ISSB.)
“It’s encouraging to see continued high levels of reporting on sustainability information and an overall increase in assurance globally,” said IFAC CEO Kevin Dancey. “But our research tells us that 80% of companies are using multiple frameworks or standards, which results in data that is not consistent, comparable or decision-useful for investors, stakeholders or society at large. Sustainability reporting and assurance will only reach its full potential when it is based on a harmonized global system led by the International Sustainability Standards Board’s comprehensive baseline of disclosure.”
The 2020 study data also shows 89% of companies presented at least some information in each of four categories: greenhouse gasses, other environmental factors, social and governance. Yet only 43% provided assurance for all four categories. The most common area for independent assurance was greenhouse gases (95%).
Seventy percent of global companies that engaged a professional accounting firm to perform the ESG assurance engagement chose the firm that audits their financial statements.
“High-quality reporting requires high-quality assurance,” said Susan S. Coffey, CPA, CGMA, AICPA & CIMA’s CEO of public accounting. “Auditors already have a holistic view of a company’s risk profile, structure and processes, so it makes sense for that firm to also engage in ESG assurance. Professionally qualified and licensed accountants have the requisite expertise, objectivity, integrity and commitment to professional standards that are essential for instilling trust in ESG reporting.”
About the Study
IFAC and AICPA & CIMA partnered with Audit Analytics to understand the state of play involving environmental, social, and governance (ESG) reporting and assurance practices on a global basis. The inaugural version of the study was published last year. This latest update reviewed data from 1,400 global companies from the G20 nations plus Hong Kong S.A.R., China and Singapore. The full methodology is referenced within the study.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
About the Association of International Certified Professional Accountants, and AICPA & CIMA
The Association of International Certified Professional Accountants (the Association), representing AICPA & CIMA, advances the global accounting and finance profession through its work on behalf of 689,000 AICPA and CIMA members, students and engaged professionals in 196 countries and territories. Together, we are the worldwide leader on public and management accounting issues through advocacy, support for the CPA license and specialized credentials, professional education and thought leadership. We build trust by empowering our members and engaged professionals with the knowledge and opportunities to be leaders in broadening prosperity for a more inclusive, sustainable and resilient future.
The American Institute of CPAs (AICPA), the world’s largest member association representing the CPA profession, sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It also develops and grades the Uniform CPA Examination and builds the pipeline of future talent for the public accounting profession.
The Chartered Institute of Management Accountants (CIMA) is the world’s leading and largest professional body of management accountants. CIMA works closely with employers and sponsors leading-edge research, constantly updating its professional qualification and professional experience requirements to ensure it remains the employer’s choice when recruiting financially trained business leaders.
The State of Play in Reporting and Assurance of Sustainability Information: Update 2019-2020 Data & Analysis is designed to update understanding (based on 2020 reporting) of market practice for the assurance of environmental, social, and governance (ESG or sustainability) information, globally.
The International Auditing and Assurance Standards Board (IAASB) has issued a non-authoritative publication to address some of the common questions related to reporting going concern matters in the auditor’s report. Specifically, the publication focuses on the use of and interrelationship of the Material Uncertainty Related to Going Concern and Key Audit Matters sections, and the Emphasis of Matter paragraphs, in an auditor’s report prepared in accordance with the International Standards on Auditing (ISAs).
This publication does not amend or override the International Standards on Auditing, the texts of which alone are authoritative. Reading the publication is not a substitute for reading the ISAs.
The International Auditing and Assurance Standards Board (IAASB) has submitted a response to the International Sustainability Standards Board (ISSB) on its exposure drafts on sustainability- and climate-related disclosures. In its response, the IAASB noted the importance of reliable, high-quality, globally consistent sustainability reporting that investors and regulators are able to trust.
“The reliability and quality of sustainability reporting and supporting investors’ and regulators’ trust in the sustainability information hinge on the effectiveness of the external reporting supply chain,” noted IAASB Chair Tom Seidenstein. “As in financial reporting, external assurance has a key role in contributing to reporting reliability and investor confidence. This is why the IAASB’s feedback focuses on the ability of practitioners to obtain assurance on an entity’s sustainability reporting prepared in accordance with the ISSB draft standards, and why we’re committed to collaborating with and supporting the ISSB.”
The IAASB highlighted the value of long-term cooperation between the IAASB and ISSB, as well as the International Ethics Standards Board for Accountants, to strengthen the connectivity between sustainability reporting external sustainability assurance, and ethical standards—especially as standards become increasingly refined and enhanced. External assurance should play a crucial role in enabling organizations to demonstrate that the sustainability information reported is reliable and credible.
The IAASB has begun its journey to sustainability reporting assurance standards: at the June 2022 IAASB meeting, the IAASB committed to its next steps in developing a bespoke assurance standard for sustainability reporting. This journey to enhanced sustainability assurance standards was noted recently by the Financial Stability Board’s decision to include the IAASB’s work in its Climate Roadmap.
About the IAASB The International Auditing and Assurance Standards Board develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC). For copyright, trademark, and permissions information, please go to permissions or contact permissions@ifac.org.
IAASB Efforts to Develop Sustainability Assurance Standards Will Complement ISSB Efforts
Responding to ISSB exposure drafts on sustainability- and climate-related disclosures
The IAASB submitted this comment letter to the International Sustainability Standards Board on its exposure drafts on sustainability- and climate-related disclosures. In its response, the IAASB noted the importance of reliable, high-quality, globally consistent sustainability reporting that investors and regulators are able to trust.
ISA 315 (Revised 2019) is effective for audits of financial statements for periods beginning on or after December 15, 2021. This publication does not amend or override ISA 315 (Revised 2019), the text of which alone is authoritative. Reading this publication is not a substitute for reading the standard.
