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ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors

Dunmore plc publishes a sustainability report that is reviewed by an independent firm, which states whether the reported environmental and social data are reliable. Which statement about this arrangement is most accurate?

The arrangement is external assurance that increases the credibility of the sustainability report for stakeholders. It gives confidence that the data are reliable, but it is not the statutory audit, does not shift responsibility from the directors, and does not guarantee that actual environmental performance is good.

  1. AIt is a statutory financial audit that must follow the same rules as the audit of the financial statements
  2. BIt is external assurance that increases the credibility of the report for stakeholdersCorrect
  3. CIt removes the need for the directors to be responsible for the report's content
  4. DIt guarantees that the company's environmental performance is good

Explanation

Independent assurance on sustainability reports adds credibility by giving stakeholders confidence in the reliability of the data. It is generally voluntary and distinct from the statutory audit, directors remain responsible for the content, and assurance concerns the reliability of the reporting, not the quality of the performance itself.

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