Chartered Accountants Australia and New Zealand (CA ANZ) is actively advocating to ASIC, Treasury, and the Government on the following two issues to ensure the new climate-related disclosure (CRD) assurance regime is fair and workable for smaller audit practices. By pushing for clarity and fairness, CA ANZ aims to help smaller audit practices thrive in the new sustainability reporting landscape.

Dual auditor approach

The first issue is that for a company, registered scheme or retail CCIV the auditor of the sustainability report is not required, under the Corporations Act, to be the same as the auditor of the financial report. 

Originally, government policy intended that climate-related disclosures would be assured by the financial auditor, who could use sustainability experts as needed. However, when the law was amended, this was not clear, and ASIC’s latest FAQs indicate different auditors are allowed. 

There is a common misconception that allowing two separate auditors – one for financial reports and one for sustainability reports – will benefit smaller audit practices. In reality, this approach creates complexity, competitive tensions, and regulatory ambiguity that are much more likely to disadvantage smaller audit practices.

CA ANZ is advocating for an integrated approach – one auditor for both financial and sustainability assurance – to avoid duplication, inefficiency, and audit quality risks. If dual auditors are considered, there must be a clear framework to manage independence, coordination, liability and regulatory oversight, so smaller firms are not unfairly burdened.

Assurance of Group 3 entities’ nil statements

The second issue is the requirement for Group 3 entities (mostly private companies and not-for-profits) to have an audit when they have no material climate-related risks. Treasury’s analysis indicates that 95% of these entities are expected make a nil statement but estimated there would be no associated costs. Data we have obtained indicates the cost of auditing these statements will be  in the range of $20,000 to $50,000 per entity, adding up to hundreds of millions of dollars a year when considered over the population of Group 3 entities.

CA ANZ is advocating for a more sensible approach: limit the audit requirement for nil statements to public interest entities (PIEs) or disclosing entities only. This would spare smaller entities from unnecessary costs and compliance burdens, ensuring the regime is proportionate and practical.