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CA Final · Advanced Auditing, Assurance and Professional Ethics · Sustainable Development Goals (SDG) & Environment, Social and Governance (ESG) Assurance

Kaveri Textiles Ltd asks CA Rao to provide reasonable assurance on its greenhouse gas emissions disclosure. During planning, Rao finds that the company computes emissions using an in-house method with no stated criteria. What is the most appropriate conclusion regarding the engagement?

The practitioner should ensure suitable criteria are identified and made available to users before accepting. Suitable, available criteria are a precondition for an assurance engagement. An undefined in-house method fails this, so the engagement cannot be accepted as assurance until the criteria issue is resolved.

  1. AAccept the engagement, since the practitioner can define the criteria after completing fieldwork
  2. BAccept the engagement but issue a disclaimer, since in-house methods are never acceptable
  3. CEnsure that suitable criteria are identified and available to users before accepting, as the absence of suitable criteria means the preconditions for an assurance engagement are not metCorrect
  4. DConvert the engagement to a review of historical financial information under SRE 2400

Explanation

Suitable criteria that are available to intended users are a precondition for an assurance engagement. Without them the practitioner should not accept it as an assurance engagement. Defining criteria after fieldwork is wrong because it defeats the precondition. An in-house method may be acceptable if it is suitable and disclosed.

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