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Europe’s leading accountancy body has called for a specific
international standard on the assurance of non-financial reports. The
Federation of European Accountants (FEE) says present standards are
inadequate and that the gap needs to be plugged.
The FEE, which represents more than 500,000 accountants in 32 countries, wants the International Federation of Accountants (IFAC) to develop an international sustainability assurance standard. ‘The growth in sustainability reporting by the world’s most influential corporations has been such that, at this time, there is a clear public interest case for a specific standard,’ it says in a new discussion paper.
Through its standard-setting board – known as the International Auditing and Assurance Standards Board (IAASB) – the IFAC already has a benchmark standard for assuring non-financial information. However, FEE says that standard, known as ISAE 3000, remains ‘too general in nature’. In particular, FEE says it fails to cover stakeholder concerns.
The federation also criticizes AA1000 AS, the widely used assurance standard developed by the UK-based AccountAbility organization, which it believes fails to deal with a number of quality-control issues, such as risk assessment procedures, the use of experts, and certain requirements for report content. More than 150 companies used AA1000 AS last year to assure their sustainability reports.
‘AccountAbility is doing much to highlight the debate on assurance ... but it is not a standard-setting body,’ Lars-Olle Larsson, chairman of the FEE’s sustainability assurance sub-group, told EP. ‘When you take this so-called standard [AA1000 AS] and try to use it, you [come across] certain problems.’
AccountAbility concedes that its standard does not meet all the demands of the accountancy profession. However, it maintains that AA1000 AS was developed primarily to assure a company’s systems for stakeholder engagement in general, and not specifically for reporting. ‘Given that financial and non-financial issues are beginning to converge, it would make a lot of sense to work together,’ said Alan Knight, AccountAbility’s head of standards.
IAASB chair John Kallas told EP that ‘in principle’ the body was in favour of producing a generic standard for assurance of non-financial reports. A formal decision is unlikely before 2008.
The FEE, which represents more than 500,000 accountants in 32 countries, wants the International Federation of Accountants (IFAC) to develop an international sustainability assurance standard. ‘The growth in sustainability reporting by the world’s most influential corporations has been such that, at this time, there is a clear public interest case for a specific standard,’ it says in a new discussion paper.
Through its standard-setting board – known as the International Auditing and Assurance Standards Board (IAASB) – the IFAC already has a benchmark standard for assuring non-financial information. However, FEE says that standard, known as ISAE 3000, remains ‘too general in nature’. In particular, FEE says it fails to cover stakeholder concerns.
The federation also criticizes AA1000 AS, the widely used assurance standard developed by the UK-based AccountAbility organization, which it believes fails to deal with a number of quality-control issues, such as risk assessment procedures, the use of experts, and certain requirements for report content. More than 150 companies used AA1000 AS last year to assure their sustainability reports.
‘AccountAbility is doing much to highlight the debate on assurance ... but it is not a standard-setting body,’ Lars-Olle Larsson, chairman of the FEE’s sustainability assurance sub-group, told EP. ‘When you take this so-called standard [AA1000 AS] and try to use it, you [come across] certain problems.’
AccountAbility concedes that its standard does not meet all the demands of the accountancy profession. However, it maintains that AA1000 AS was developed primarily to assure a company’s systems for stakeholder engagement in general, and not specifically for reporting. ‘Given that financial and non-financial issues are beginning to converge, it would make a lot of sense to work together,’ said Alan Knight, AccountAbility’s head of standards.
IAASB chair John Kallas told EP that ‘in principle’ the body was in favour of producing a generic standard for assurance of non-financial reports. A formal decision is unlikely before 2008.
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