The AUASB has been directed to develop a pathway for phasing in mandatory assurance requirements from 2025 to 2030 over mandatory climate-related financial disclosures made by Corporations Act 2001 (the Act) entities. Following a Consultation Paper, earlier in 2024, it is now consulting on a proposed timeline for the introduction of audits and reviews of sustainability information reported under the Act’s requirements.

CA ANZ and CPA Australia have lodged a joint submission to the AUASB on the proposed timeline. We are supportive of the development of a practical timeline for phasing in mandatory assurance as this will maintain the quality of the assurance provided. However, we have identified issues on the timeline as proposed, as well as other aspects of the phasing that need to be addressed in order for it to be successful.

• There are concerns from both audit firms and preparers/those charged with governance that the timeframe required under the Act to achieve reasonable assurance over all mandatory climate-related disclosures by 2030 is ambitious and will make fulfilling the resourcing and capability needs of audit firms, preparers and sustainability experts to meet the requirements difficult.
• As raised in our response to the AUASB’s earlier Consultation Paper on implementing climate and sustainability assurance, we believe that revising the requirement for Group 3 entities to obtain assurance when they have no material risks or opportunities to report would alleviate many of the capacity concerns.
• While there is general support for the phasing in of assurance, there are differing views on the proposals set out in the ED. There is a general preference for delaying the introduction of reasonable assurance on Scope 1 and 2 emissions to year 3 to allow audit firms and preparers sufficient time to address any year 1 issues appropriately before moving to a higher level of assurance. In addition, there is a view that limited assurance over risks and opportunities should be delayed until year 2, unless the year 1 requirements are limited to the disclosures required in paragraph 9(a) of AASB S2 Climate-related Disclosures.
• Because of the nature of the disclosures, it will be necessary for preparers and those charged with governance to also upskill. They will require guidance and training on both the reporting and assurance requirements, and the nature of limited versus reasonable assurance. In addition, communication and outreach will be required to ensure that they understand the phasing approach so that they can plan their implementation of reporting appropriately.

Due to the issues and concerns identified, it will be necessary to monitor the implementation of the phasing and assess the progress and results and determine what issues may arise to inform any necessary changes to the requirements of the Act and the timetable. In the Policy Position Statement: Mandatory Climate-related Disclosures, Treasury states its intention to undertake a review of the requirements and progress in the requirements in 2028-2029. This does not allow for much time to amend mandatory assurance requirements prior to 2030 deadline, and it will be important that the AUASB and other stakeholders can provide quality feedback to the review. But it will also be vital to identify issues as they arise so that the AUASB and other stakeholders can advocate for earlier intervention and change if it is required. We note that New Zealand has delayed some climate-related disclosures to year 3 of reporting, so the challenges of implementing both the reporting and assurance should not be underestimated.