Assurance of carbon emissions reporting

Date updated: 2 February 2009

Position

CPA Australia supports the need for immediate action by auditing standard-setters to develop relevant standards for the assurance of carbon emissions reporting.

 A robust reporting and assurance framework is critical for the efficient functioning of the scheme to provide confidence to the market that reported data are accurate and reliable.

Background

The Australian Government’s Carbon Pollution Reduction Scheme (CPRS) green paper highlights the importance of assurance of carbon emissions reporting. To ensure the integrity and confidence of the scheme, the reliability and credibility of the information being reported is of paramount importance.

The government’s preferred position is that assurance under the CPRS would be carried out in accordance with standards produced by the Australian Auditing and Assurance Standards Board (AUASB).

In its submission on the green paper, CPA Australia recommended that:

• An assurance regime for CPRS must recognise the critical importance of independence, ethics and quality control frameworks, which are the key requirements of effective assurance and with which professional accountants must currently comply. Auditing and assurance standards recognise that expertise on subject matter, for example specific technical expertise relating to carbon emissions, can be acquired to complete assurance engagements. These views were reiterated in the joint accounting bodies’ submission to the Department of Climate Change (DCC) on its external audit consultation paper in November 2008
• Assurance be required on all emissions reports, for all entities, from the commencement of the scheme, rather than only for the largest emitting entities (the government’s preferred approach – subsequently reiterated in the DCC white paper).

In its Strategy and Work Program for 2009-2011, the International Auditing and Assurance Standards Board (IAASB) indicated that it is developing an assurance standard on reporting on carbon emissions information .

CPA Australia will monitor developments in this area and make submissions to the IAASB as exposure drafts, guidance statements and discussions papers are exposed for public comment.

Previously, in response to the Report of the prime ministerial task group on emissions trading in July 2007, CPA Australia recommended to the Auditing and Assurance Standards Board (AUASB) that it assess the existing audit and assurance framework regarding the capacity to accommodate assurance engagements pertaining to carbon emissions reporting.

It also recommended that the skills, guidance and tools practitioners require for this type of engagement be determined.

Action

CPA Australia will continue to represent the above policy position to policy makers and standard-setters. It will engage with these parties in the last quarter of 2008 and first half of 2009 to ensure that appropriate standards are available to guide assurance practitioners in their work on the assurance of carbon emissions reporting.

CPA Australia recognises that the auditing and assurance profession currently has in place a framework for the assurance of information other than historical financial information in the form of ASAE 3000 Assurance engagement other than audits or reviews of historical financial information and ASAE 3100 Compliance engagements.

Until specific standards are developed by the AUASB, these standards may be used by practitioners for assurance engagements on carbon emissions.

Rationale

The introduction of a CPRS in Australia presents significant challenges to both standard-setters and the accounting, auditing and assurance profession to ensure that a robust reporting and assurance framework is implemented.

CPA Australia recognises that the auditing and assurance profession has an important role to play in the assurance of carbon emissions reporting, given its history and reputation for providing high quality assurance services, founded on strict independence, ethical and quality control standards.