The Competitive Market for Assurance Engagements on Greenhouse Gas Statements: Is There a Role for Assurers from the Accounting Profession?

Abstract

SUMMARY:In response to current and increasing demand for assurance on greenhouse gas statements, the International Auditing and Assurance Standards Board (IAASB) released an exposure draft of a new assurance standard, ISAE 3410 ''Assurance on a Greenhouse Gas Statement'' (IFAC 2011), to provide comprehensive guidance on these types of greenhouse gas (GHG) assurance engagements. Internationally, approximately 50 percent of GHG statements are independently assured. The related assurance market is competitive, with the accounting profession and those outside the profession currently holding approximately equal shares. This paper highlights the characteristics of GHG assurance engagements that warrant multi-disciplinary teamwork, the unique and interdependent skill-sets that different practitioners bring to these engagements, and the market forces that create a demand for diverse providers.

Corporate choice of providers of voluntary carbon assurance

“…Previous studies document that accounting firms are well regulated; are perceived to be significantly more credible in terms of trustworthiness, financial expertise, ethics, and quality control; and are overall bound by professional standards on accounting and assurance (Pflugrath et al, 2011). However, nonaccounting firms have greater subject expertise related to climate change, and provide assurance statements that are more informative and complete with clear recommendations and comments on processes and system improvements (Deegan, Cooper, & Shelly, 2006;Hasan, Roebuck, & Simnett, 2003;Huggins, Green, & Simnett, 2011;Simnett et al, 2009). However, nonaccounting firms have greater subject expertise related to climate change, and provide assurance statements that are more informative and complete with clear recommendations and comments on processes and system improvements (Deegan, Cooper, & Shelly, 2006;Hasan, Roebuck, & Simnett, 2003;Huggins, Green, & Simnett, 2011;Simnett et al, 2009).…”

Mandatory corporate social responsibility assurance practices

“…The International Framework for Assurance Engagements (IFAE) defines an assurance engagement as "an engagement in which a practitioner expresses an opinion designed to enhance the degree of confidence of the intended users other than the responsible party about 518 AAAJ 28,4 the outcome of the evaluation or measurement of a subject matter against criteria" (South African Institute of Chartered Accountants, 2012: Framework-3). Reporting companies increasingly rely on independent assurance to improve the credibility and transparency of their CSR disclosures, driving the rapid development of CSR assurance practices (Al-Hamadeen, 2007;Huggins et al, 2011;Institute of Chartered Accountants in England and Wales (ICAEW), 2008;Kolk and Perego, 2010).…”

Assurance of Integrated Reports: The State of the Art

“…Thus, it may be necessary to involve a team made up by practitioners in different fields for such an engagement. However, having certified auditors as members of an assurance team brings several advantages stemming from their experience in risk assessment, occurrence and accuracy assertions, structuring of the assurance/audit report, as well as their acquired abilities such as teamwork (in multidisciplinary teams), relevant education and continuing professional development, or the compliance with the Code of Ethics, policies and procedures issued by a professional association such as the IAASB (Huggins, Green and Simnett, 2011). Yet, the multidisciplinary teams may be difficult to manage.…”