Given the link between greenhouse gas (GHG) emissions and climate change, many entities are quantifying their GHG emissions for internal management purposes, and many are also preparing a GHG statement:
- As part of a regulatory disclosure regime;[#]
- As part of an emissions trading scheme;[†] or
- To inform investors and others on a voluntary basis. Voluntary disclosures may be, for example, published as a stand-alone document; included as part of a broader sustainability report or in an entity’s annual report; or made to support inclusion in a “carbon register.”
In Australia this includes the National Greenhouse and Energy Reporting Scheme (NGERS), which establishes emission, energy consumption and energy production reporting.
In Australia this includes the Clean Energy Scheme, which establishes a carbon pricing mechanism
Scope of this Standard on Assurance Engagements
This Standard on Assurance Engagements (ASAE) deals with assurance engagements to report on an entity’s GHG statement.
The assurance practitioner’s conclusion in an assurance engagement may cover information in addition to a GHG statement, for example, when the assurance practitioner is engaged to report on a sustainability report of which a GHG statement is only one part. In such cases: (Ref: Para. A1–A2)
- This ASAE applies to assurance procedures performed with respect to the GHG statement other than when the GHG statement is a relatively minor part of the overall information subject to assurance; and
- ASAE 3000 (or another ASAE dealing with a specific underlying subject matter) applies to assurance procedures performed with respect to the remainder of the information covered by the assurance practitioner’s conclusion.
This ASAE does not deal with, or provide specific guidance for, assurance engagements to report on the following:
- Statements of emissions other than GHG emissions, for example, nitrogen oxides (NOx) and sulphur dioxide (SO2). This ASAE may nonetheless provide guidance for such engagements;
- Other GHG-related information, such as product lifecycle “footprints,” hypothetical “baseline” information, and key performance indicators based on emissions data; or (Ref: Para. A3)
- Instruments, processes or mechanisms, such as offset projects, used by other entities as emissions deductions. However, where an entity’s GHG statement includes emissions deductions that are subject to assurance, the requirements of this ASAE apply in relation to those emissions deductions as appropriate (see paragraph 76(f)).
NOx (i.e., NO and NO2, which differ from the GHG nitrous oxide, N2O) and SO2 are associated with “acid rain” rather than climate change.
Attestation and Direct Engagements
The Framework for Assurance Engagements (the Assurance Framework) notes that an assurance engagement may be either an attestation engagement or a direct engagement. This ASAE deals only with attestation engagements.
Procedures for Reasonable Assurance and Limited Assurance Engagements
ASAE 3000 notes that an assurance engagement may be either a reasonable assurance engagement or a limited assurance engagement. This ASAE deals with both reasonable and limited assurance engagements.
In both reasonable assurance and limited assurance engagements on a GHG statement, the assurance practitioner chooses a combination of assurance procedures, which can include: inspection; observation; confirmation; recalculation; re-performance; analytical procedures; and enquiry. Determining the assurance procedures to be performed on a particular engagement is a matter of professional judgement. Because GHG statements cover a wide range of circumstances, the nature, timing and extent of procedures are likely to vary considerably from engagement to engagement.
Unless otherwise stated, each requirement of this ASAE applies to both reasonable and limited assurance engagements. Because the level of assurance obtained in a limited assurance engagement is lower than in a reasonable assurance engagement, the procedures the assurance practitioner will perform in a limited assurance engagement will vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Requirements that apply to only one or the other type of engagement have been presented in a columnar format with the letter “L” (limited assurance) or “R” (reasonable assurance) after the paragraph number. Although some procedures are required only for reasonable assurance engagements, they may nonetheless be appropriate in some limited assurance engagements (see also paragraph A90, which outlines the primary differences between the assurance practitioner’s further procedures for a reasonable assurance engagement and a limited assurance engagement on a GHG statement). (Ref: Para. A4, A90)
Relationship with ASAE 3000, Other Pronouncements, and Other Requirements
The assurance practitioner is required to comply with ASAE 3000 and this ASAE when performing an assurance engagement to report on an entity’s GHG statement. This ASAE supplements, but does not replace, ASAE 3000, and expands on how ASAE 3000 is to be applied in an assurance engagement to report on an entity’s GHG statement. (Ref: Para. A17)
[Footnote deleted by the AUASB.]
[Footnote deleted by the AUASB.]
Compliance with ASAE 3000 requires, amongst other things, that the assurance practitioner comply with relevant ethical requirements related to assurance engagements,[*] or other professional requirements, or requirements imposed by law or regulation, that are at least as demanding. It also requires the lead assurance practitioner[#] to be a member of a firm that applies ASQM 1,[†] or other professional requirements, or requirements in law or regulation, that are at least as demanding as ASQM 1. (Ref: Para. A5–A6)
ASAE 3000, paragraphs 3(a), Aus 20.1 and 34. ASA 102 Compliance with Ethical Requirements when Performing Audits, Reviews and Other Assurance Engagements, paragraph 5.
The term “lead assurance practitioner” is referred to in ASQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements as the “engagement partner”.
Where the engagement is subject to law or regulation or the provisions of an emissions trading scheme, this ASAE does not override that law, regulation or provision. In the event that law or regulation or the provisions of an emissions trading scheme differ from this ASAE, an engagement conducted in accordance with law or regulation or the provisions of a particular scheme will not automatically comply with this ASAE. The assurance practitioner is entitled to represent compliance with this ASAE in addition to compliance with law or regulation or the provisions of the emissions trading scheme only when all applicable requirements of this ASAE have been met. (Ref: Para. A7)