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

Valmont Foods plc publishes a sustainability report alongside its financial statements. Its lenders and institutional investors have asked for greater confidence in the reported greenhouse gas emissions. Which of the following best explains why demand for assurance over such ESG information has grown?

Demand has grown because investors, lenders and other stakeholders rely on ESG information for decisions, and independent assurance increases the credibility of that information. Assurance never guarantees accuracy, does not replace management's controls and does not remove regulatory disclosure duties.

  1. AUsers want to rely on non-financial information for decisions, and independent assurance increases the credibility of that informationCorrect
  2. BAssurance over ESG information removes the need for management to maintain internal controls over the data
  3. CAssurance guarantees that the reported emissions figures are completely free from error
  4. DAssurance allows the entity to avoid the regulatory disclosure requirements that apply to it

Explanation

Stakeholders such as investors and lenders increasingly use ESG data in decisions, and independent assurance enhances the confidence they can place in it. Assurance does not remove management's responsibility for controls, does not give a guarantee (only reasonable or limited assurance), and does not replace regulatory requirements.

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