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

While performing an assurance engagement on Kaveri Power Ltd's sustainability report, CA Imran finds that the company's carbon emission reduction claim rests on an internal methodology that management has not documented, and no suitable criteria were identified before the engagement. What is the most appropriate conclusion on the engagement?

Suitable criteria are a precondition to assurance. With an undocumented internal methodology, Imran should treat the engagement as potentially unacceptable and work with management to establish suitable criteria first. A representation letter cannot replace criteria, and defining them afterwards would undermine objectivity.

1. AProceed, since the practitioner can define criteria himself after completing the work
2. BProceed and rely on the management representation letter in place of criteria
3. CTreat the absence of suitable criteria as a matter that may make the engagement unacceptable, and discuss with management to establish suitable criteria before accepting or continuingCorrect
4. DConvert the engagement into a statutory audit under the Companies Act