Reasonable assurance. ICAI rolls out first ever audit standard on sustainability information

The Institute of Chartered Accountants of India’s (ICAI) has come out with an audit standard for sustainability information, the first such effort in the world, to help its members provide “reasonable or limited” assurance on such information by the reporting entities.

This move is significant as it comes at a time when market regulator SEBI is contemplating a “mandatory audit” of the Business Responsibility and Sustainability Reporting (BRSR) reports that the top 1,000 listed companies are already mandated to furnish as part of their annual reports for FY22-23.

Sustainability reporting has gathered pace in India in recent years with SEBI taking various measures since December 2019.

“Sustainability reporting standards board of ICAI has taken a proactive step and has issued the first-ever assurance standard on sustainability information which also incorporates BRSR, SDG etc.  It enables an auditor to give limited as well as reasonable assurance. I am sure that the standard (SSAE 3000) will go a long way in enhancing the quality of BRSR reports”, Debasish Mitra, President, ICAI told businessline.

Also read: ICAI bats for India Inc, pitches for 100% tax deduction for CSR expenses

SEBI had in December 2019 extended the Business Responsibility Reporting (BRR) requirement to the top 1,000 listed companies by market capitalisation, from the financial year 2019-20.

‘Path-breaking’

Aniket Talati, Vice President, ICAI, said that the sustainability reporting standards board of ICAI has been taking path-breaking steps and is leading initiatives like sustainability reporting maturity model, social audit standards, certificate course of BRSR, etc. 

Sanjeev Singhal, Chairman of the Sustainability Reporting Standards Board, ICAI said that assurance of sustainability information will instil confidence in sustainability information reported by the corporate sector and at the same time audit fraternity will have another opportunity to contribute towards nation-building through assurance of sustainability information. 

“It’s also pertinent to note that usually there are limited assurance that was provided on sustainability information. With the SSAE 3000, we are ushering into a new era of reasonable assurance which is a higher threshold of information”, Singhal said.

Social audit standards

The CA Institute has now issued 16 social audit standards (SAS) that will be applicable to social enterprises that will get listed on the social stock exchange.

These social audit standards cover themes such as hunger, poverty, malnutrition, inequality, healthcare, education, gender equality, environmental sustainability, etc.

Also read: CA Institute revises implementation guide on Auditing Standard on ‘audit documentation’

It may be recalled that the ICAI central council had in October last year approved the framework of social audit standards (SAS) and sixteen such standards covering 16 thematic areas in which social enterprises can operate for the purpose of listing on the social stock exchanges. 

The 16 social audit standards (SAS) will be mandatory for social auditors registered with the Institute of Social Auditors of India (ISAI). These could be chartered accountants or others who are eligible to be social auditors.

Each SAS aims to provide the social auditor with the necessary guidance about independent assurance engagement on the impact assessment, including the audit steps and procedures that should be applied while carrying out social audit. 

These standards set out the minimum requirements, including an illustrative list of key performance indicators to be followed while doing an impact assessment of the social enterprises.

SEBI had mandated ICAI to develop social audit standards, put up a structure to oversee social audits and how disciplinary action could be taken on erring social auditors. 

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