The Association of Chartered Certified Accountants, the International Federation of Accountants and the International Organization of Supreme Audit Institutions (or INTOSAI) Development Initiative are teaming up on guidance on sustainability reporting and assurance for the public sector.
The ACCA, IFAC and IDI presented a summary of an upcoming introduction to sustainability and assurance in the public sector during an investment conference Monday in Abu Dhabi. The document points out how governments need to prepare for sustainability reporting and assurance and how public sector finance and audit professionals should take the lead.
“It is crucial for the public sector to demonstrate leadership and drive action to progress sustainability agendas globally,” said the report. “Governments and other public sector bodies need to be able to measure and report on how they are addressing sustainability challenges. They should be transparent and demonstrate accountability for the long-term impacts of their decisions. As a result, sustainability reporting and assurance in the public sector is gaining momentum, and as it does, the concept of sustainable development should be at the heart of the public sector’s approach. An emphasis on sustainable development focuses reporting on those activities that have the most significant impact. Sustainability-related disclosure in the public sector should be of high quality and usable for decision-making. Importantly, it should be subject to effective audit and assurance arrangements to help build public trust.”
The groups noted that momentum is building for sustainability reporting and assurance in the public sector. A standard-setting board affiliated with IFAC, the International Public Sector Accounting Standards Board has decided to move forward with the development of public sector specific sustainability reporting standards beginning with a climate-related disclosures standard (see story).
Based on the ongoing work and recent global roundtables with public sector reporting and auditing experts, the report calls for a focus on the principle of sustainable development: “meeting the needs of the present without compromising the ability of future generations to meet their own need.” The report discusses what sustainability reporting and assurance mean for the public sector, why they are important, and key principles for governments, “supreme audit institutions,” which are public bodies responsible for the audit of government revenue and expenditure, as well as other public sector bodies to consider.
“A sustainable future for all is a primary concern across government activity,” said Maggie McGhee, executive director for strategy and governance at ACCA, in a statement. “At the same time governments play a critical role in establishing good governance: the institutional, policy and regulatory frameworks in which society operates. So governments and other public sector bodies need to be able to measure and report on how their policies and expenditure are addressing sustainability challenges.”
As sustainability reporting progresses, independent outside assurance will be needed to build trust in the information disclosed. The report draws on information from two global roundtables that were held in August and September, with professionals involved in both reporting and audit in the public sector. Participants in the roundtables saw supreme audit institutions taking the lead, building on their experience auditing progress towards sustainable development.
“Policymakers and other stakeholders, including the public, need information to understand the sector’s impact on sustainable development,” said Laura Leka, principal and public sector lead at IFAC, in a statement. “It’s important that sustainability reporting provides disclosures that are high-quality, decision-useful, and prepared in accordance with internationally recognized reporting and disclosure standards.”
Courtesy of IFAC
SAIs undertake three main types of audit: financial audits, compliance audits and performance audits. Categorizing SAIs’ work in this way clarifies the objective of the audit, according to the report, and identifying the purpose of an audit of sustainability information will determine how the audit is conducted.
“SAIs have a central role to play in providing independent and objective oversight on sustainability information generated by the public sector,” said Archana Shirsat, deputy director general at IDI, in a statement. “Determining appropriate forms of assurance or confidence, engaging with stakeholders and developing auditor competencies to audit sustainability information is important to build public trust.”
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