Financial year 2024 will be the first reporting year for the initial group of in-scope companies under the Corporate Sustainability Reporting Directive (“CSRD”). Financial year 2024 will be the first reporting year for the initial group of in-scope companies under the Corporate Sustainability Reporting Directive (“CSRD”). CSRD will require companies to report extensive sustainability information in a dedicated section of their annual reports. Reporting will require a limited assurance audit at the outset, but it is expected that the EU will, in time, require a full reasonable assurance audit. Reporting under CSRD must be performed in accordance with the European Sustainability Reporting Standards which include standards concerning climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy, own workforce, workers in the value chain, affected communities, consumers and end-users and business conduct.
This month, the Irish Auditing and Accounting Supervisory Authority ("IAASA") (the competent authority in Ireland for the oversight of statutory auditors), issued a letter to the CEOs of the professional membership organisations for auditors ("Recognised Accountancy Bodies") concerning IAASA's expectations for the initial approval of existing statutory auditors as Sustainability Assurance Service Providers ("SASPs") under CSRD.
Noting that national transposition is not yet complete, neither IAASA nor the Recognised Accountancy Bodies have the requisite powers to carry out any functions in regard to sustainability reporting and assurance. However, IAASA is of the view that given the timelines involved, it is important for all stakeholders to be actively preparing for the implementation of the legislation. IAASA notes that it is likely that a number of statutory auditors will require approval to carry out assurance engagements of sustainability reporting during 2024, given that assurance work is likely to start before the financial year end. Statutory auditors who are approved before 1 January 2026 can also seek approval as a SASP by acquiring the requisite knowledge of sustainability reporting and assurance of sustainability reporting through education; those qualifying after that time will be subject to examinations and practical training requirements. IAASA expects that not all existing statutory auditors are to be automatically accepted as SASPs, recognising the specialist nature of sustainability auditing under the new regime.