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ACCA Strategic Professional · Advanced Audit and Assurance (International) · The assurance of sustainability

Marlow & Co is planning a limited assurance engagement on Zephyr plc's reported Scope 1 and Scope 2 greenhouse gas emissions. Management uses an internally developed methodology for converting energy consumption into emissions, and no recognised standard has been applied. Which action is most appropriate at the planning stage?

The practitioner should assess whether the criteria are suitable before accepting the engagement, considering relevance, completeness, reliability, neutrality and understandability. Suitable criteria are a precondition for assurance, so an internally developed methodology cannot be assumed acceptable merely because it is disclosed, and the assessment cannot be left until reporting.

  1. AAssess whether the criteria are suitable, including relevance, completeness, reliability, neutrality and understandability, before accepting the engagementCorrect
  2. BAccept the engagement, because management's chosen criteria are always suitable if disclosed
  3. CUse the auditor's own preferred criteria without telling management
  4. DDefer the assessment of criteria until the assurance report is drafted

Explanation

Suitable criteria are a precondition for an assurance engagement. An internal methodology must be evaluated against characteristics such as relevance, completeness, reliability, neutrality and understandability. Disclosure alone does not make criteria suitable, and the assessment cannot wait until reporting.

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