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

Kestrel Foods plc publishes a sustainability report alongside its financial statements. Investors have asked for independent verification of the greenhouse gas emissions data. Which of the following best explains why demand for assurance over such ESG information has increased?

Demand has grown because investors and other stakeholders use ESG information in decisions and want greater confidence in its reliability. Independent assurance provides that confidence. It does not shift management's responsibility, and the financial statement audit does not automatically extend to separate sustainability reports.

  1. AUsers want greater confidence in the reliability of non-financial information that influences their decisionsCorrect
  2. BStatutory audit of the financial statements automatically covers all sustainability data
  3. CAssurance converts the sustainability report into audited information with an unmodified opinion on the financial statements
  4. DAssurance removes management's responsibility for preparing the sustainability report

Explanation

Assurance exists to increase the confidence of intended users in information. Investors rely on ESG data in decisions, so independent assurance adds credibility. A financial statement audit does not automatically cover separate sustainability reporting, and management stays responsible for preparing it.

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