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

Brightwater & Co is the auditor of Calder Ltd. Calder asks Brightwater to also design the data-collection system and the carbon-emission calculation methodology that will feed its sustainability report, and then to provide assurance over that report. Which is the most appropriate response under the IESBA Code?

The firm should evaluate the self-review threat from designing the system and methodology and then assuring its output, and decline if safeguards cannot reduce the threat to an acceptable level. Independence rules apply to sustainability assurance, and disclosure or partner rotation does not cure it.

  1. AAccept, because sustainability information is non-financial and falls outside the independence rules
  2. BAccept, provided the fee for the design work is disclosed in the assurance report
  3. CAccept, provided a different partner signs the assurance report
  4. DEvaluate whether designing the system and methodology creates a self-review threat, and decline if safeguards cannot reduce it to an acceptable levelCorrect

Explanation

The IESBA Code applies independence requirements to assurance engagements on sustainability information. Designing the system and methodology then assuring the output creates a self-review threat, and management responsibility issues also arise. The firm must apply the conceptual framework and decline if threats cannot be reduced to an acceptable level. Using a different partner or disclosing fees does not remove the threat.

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