Advanced Audit and Assurance (International) · Developments in sustainability assurance

Ethics, Quality and Skills for Sustainability Assurance

Updated 11 October 2026 · Fact-checked

Sustainability assurance must meet the same ethical and quality bar as an audit. You need independence, competence, and a firm quality management system under ISQM 1. IESBA's sustainability standards extend the Code to assurance practitioners who are not auditors. In the exam, link each point to the scenario's facts.

Understand Ethics, Quality and Skills for Sustainability Assurance

Sustainability assurance means giving a conclusion on information such as greenhouse gas emissions, climate risk disclosures or social metrics. Users trust the conclusion only if the practitioner is independent and capable. That is why ethics and quality sit at the centre of this topic.

The IESBA Code of Ethics applies to professional accountants. IESBA has also issued sustainability-related ethics standards. These extend the Code's independence and ethics provisions to sustainability assurance, including for practitioners who are not professional accountants. They also address the use of experts and the way the ethics rules apply to non-financial information. Know the idea and its purpose. Do not quote paragraph numbers.

Independence works as it does for audit. You identify threats (self-interest, self-review, advocacy, familiarity, intimidation), evaluate them and apply safeguards, or decline. A typical sustainability threat is a firm that helped design the client's emissions data systems and then assures the output. That is a self-review threat. Another is a fee linked to a favourable conclusion, which is a self-interest threat.

Competence is a major issue. Sustainability subject matter is new and technical. Engagement teams need skills in the reporting framework, the measurement methods, data and IT systems, and often scientific topics. Where the team lacks a skill, the firm uses a practitioner's expert. You must evaluate that expert's competence, capabilities and objectivity, and stay responsible for the conclusion.

ISQM 1 requires the firm to design a quality management system that covers the firm's assurance work. For sustainability, this affects resources (trained people, technology, experts), engagement acceptance, ethical requirements, performance and monitoring. Engagement partners must have enough time and capability, and engagement quality reviews are used where required. Professional scepticism matters throughout, as management's data often comes from non-financial systems with weaker controls. Climate-related risks also affect the financial statement audit, for example through impairment, useful lives, provisions and going concern.

Key rules to remember

Threat response sequence: Identify threats → Evaluate significance → Address (eliminate, safeguard) → Decline or withdraw if not possible; Use this for every independence scenario, including sustainability assurance.
Five threat categories: Self-interest, self-review, advocacy, familiarity, intimidation; Name the category, then tie it to a fact in the scenario.
Competence test for an expert: Competence + Capabilities + Objectivity (then evaluate work performed); The practitioner remains responsible for the conclusion and does not pass it to the expert.
ISQM 1 components to link to: Governance and leadership, ethical requirements, acceptance and continuance, resources, engagement performance, information and communication, monitoring and remediation; Pick the components that fit the scenario rather than listing all of them.

How to solve Ethics, Quality and Skills for Sustainability Assurance questions

Use this method for any question on ethics, quality or skills in sustainability assurance.

1Read the requirement and note the verb (identify, explain, recommend, evaluate) and the number of marks.
2Pick out the scenario facts: who the client is, what is being assured, past services, fees, team skills and any use of experts.
3Identify the issue type: independence, competence, quality management or climate risk in the audit.
4For ethics, name the threat, explain why it arises here, and state a safeguard or the need to decline.
5For competence and quality, link to ISQM 1 resources, acceptance and engagement performance, and to expert evaluation.
6Apply scepticism: say what you would challenge, such as data sources, estimates or management's claims.
7Finish with a clear recommendation and, if asked, how you would communicate it to those charged with governance.

Quickest way: Threat, fact, response

When to use it: Use this when time is short and the question asks you to identify and respond to ethical or quality issues.

List each issue in one line, with the scenario fact beside it.
Label each as a threat type or an ISQM 1 component.
Write one response per issue: safeguard, expert, review, or decline.
Add one scepticism or professional skills point, such as challenging the data or advising the board clearly.

Common mistakes in Ethics, Quality and Skills for Sustainability Assurance

Treating sustainability assurance as outside the ethics framework.
It is not a financial statement audit, so students assume lighter rules apply.
Fix: State that independence and ethical principles apply to all assurance, and IESBA's sustainability standards extend this to non-accountant practitioners.
Listing threats without applying them to the scenario.
Students recall the five-threat list and write it out generically.
Fix: Choose only the relevant threat and quote the fact that creates it, then give a specific safeguard.
Saying the firm can rely on an expert and be free of responsibility.
Confusion between using an expert's work and delegating the conclusion.
Fix: Say you evaluate the expert's competence, capabilities and objectivity and the work's adequacy, and you keep responsibility.
Ignoring ISQM 1 and focusing only on the engagement team.
Quality is seen as an engagement matter, not a firm-level system.
Fix: Link to firm-level resources, acceptance decisions and monitoring, and to engagement quality review where relevant.
Forgetting climate risk effects on the financial statement audit.
Students treat sustainability and the audit as separate topics.
Fix: Mention effects on risk assessment, impairment, estimates, provisions, going concern and other information.
Giving a generic answer with no professional skills.
Technical content is prioritised over analysis and communication.
Fix: Show scepticism, commercial awareness and a clear, reasoned recommendation.

Worked examples

Example 1

Your firm audits Zenith Ltd and has been asked to provide limited assurance on its greenhouse gas emissions report. Last year your consulting team designed the emissions data collection system. The fee for the assurance is higher if the report is issued without modification. Identify the ethical threats and recommend a response. (8 marks)

Show the solution

Design of the data system creates a self-review threat, because the firm would assure information produced by a system it built.
The fee that depends on an unmodified report creates a self-interest threat, as the firm gains financially from a favourable conclusion.
Evaluate significance: both threats are significant because the work affects the subject matter directly, and the fee affects objectivity.
Response for the fee: remove the contingency so the fee is fixed on work needed. A fee tied to the outcome is not an acceptable safeguard.
Response for self-review: use a team separate from the consulting team and an independent review, and assess whether this reduces the threat to an acceptable level. If it cannot, decline the engagement.
Discuss with those charged with governance and document the decision.

Answer: There is a self-review threat from designing the system and a self-interest threat from the outcome-linked fee. Remove the contingent fee, assess whether separate teams and a review reduce the self-review threat to an acceptable level, and decline if not.

Example 2

A mid-sized firm is accepting a sustainability assurance engagement on a client's climate-related disclosures. No team member has climate scenario analysis experience. Explain how ISQM 1 and the practitioner's expert requirements apply, and what scepticism is needed. (8 marks)

Show the solution

ISQM 1 resources: the firm needs people with appropriate competence and time. It must assess whether it can perform the engagement before accepting it (acceptance and continuance).
Options: train staff, recruit, or engage a practitioner's expert. If none is practical, decline.
If an expert is used, evaluate competence, capabilities and objectivity, agree the scope of their work, and evaluate whether their work is adequate for the evidence needed.
The engagement partner keeps responsibility for the conclusion and must be sufficiently involved in the work and direction of the team.
Consider an engagement quality review if the firm's policies or the engagement risk require it, and ensure consultation on difficult matters.
Scepticism: challenge assumptions in the scenarios, the data sources, and whether management's claims are consistent with other information such as financial statements.
Document judgements, and communicate limitations to those charged with governance.

Answer: The firm must confirm it has the competence and resources before accepting. It can use a practitioner's expert after evaluating competence, capabilities and objectivity, but the partner remains responsible. It should apply scepticism to assumptions and data and use review and consultation where needed.

Exam tips

In ethics scenarios, always tie the threat to a specific fact. Generic lists earn little.
Where the scenario mentions fees, past services or a family link, expect an independence issue and name the exact threat type.
Mention ISQM 1 components that fit: resources, acceptance and continuance, and monitoring are most often relevant.
Use professional skills marks: give a clear recommendation, sceptical challenge and commercial awareness, and keep communication concise.
If asked about climate risk in a financial statement audit, link to risk assessment, estimates, impairment and going concern.

Practice questions from Developments in sustainability assurance

Ethics, Quality and Skills for Sustainability Assurance in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ProfessionalSustainability Audit and ESG Assurance

Ethics, Quality and Skills for Sustainability Assurance: frequently asked questions

What are the IESBA sustainability ethics standards?

They are IESBA standards that extend the Code's ethics and independence provisions to sustainability assurance. They also cover practitioners who are not professional accountants. For the exam, know their purpose and how the principles apply, rather than paragraph details.

Why is competence a special issue in sustainability assurance?

The subject matter is technical and new, and often needs scientific or data skills that audit teams may lack. The firm must have or obtain those skills. Where it uses an expert, it must evaluate the expert and stay responsible for the conclusion.

How does ISQM 1 affect sustainability assurance?

The firm's quality management system must cover sustainability assurance work. This includes having the right resources, deciding whether to accept engagements, meeting ethical requirements, and monitoring quality. It affects how teams are staffed and reviewed.

How do climate-related risks affect a financial statement audit?

They can affect risk assessment and areas such as impairment, asset lives, provisions, fair values and going concern. You also consider whether other information, such as sustainability disclosures, is consistent with the financial statements.