The International Auditing and Assurance Standards Board (IAASB) has released the finalized version of its International Standard on Sustainability Assurance (ISSA) 5000, a standard for companies engaged in sustainability assurance. This new standard is designed to serve as a detailed, stand-alone framework suitable for any sustainability assurance engagement worldwide.
The ISSA 5000 may help private equity/credit companies, asset managers, and impact investors with a portfolio of companies that align with sustainability and ESG disclosure standards and regulations, as it establishes a global framework to ensure the reliability and credibility of sustainability disclosures.
Let’s explore the ISSA 5000 standard released by IAASB in detail.
About the ISSA 5000
The ISSA 5000 is a new detailed standard that consists of a set of rules designed to assure sustainability reporting. It responds to growing public demand for consistent, high-quality assurance practices in sustainability disclosures across many topics and frameworks. The standard covers both limited and reasonable assurance and addresses key issues identified in sustainability assurance engagements.
By building on existing IAASB standards, including ISAE 3000, ISAE 3410, and Extended External Reporting (EER) guidance, ISSA 5000 offers a well-rounded framework to enhance the credibility of sustainability information. Additionally, the new standard has received support from IOSCO, a leading international policy forum and EU regulators who have been calling for assurance standards.
Key aspects of the ISSA 5000
- The ISSA 5000 will act as an internationally recognized standard that is applicable to a wide range of sustainability information across multiple global frameworks, including ISSB’s IFRS S1 and S2 and the GRI standards. It can be utilized by both accountants and non-accountants performing assurance engagements.
- The standard clarifies the different levels of assurance required for varying types of sustainability information by accommodating both limited and reasonable assurance engagements. Thus, practitioners can tailor their strategy according to the particular context and demands of each engagement.
- The ISSA 5000 promotes a risk-based approach to assurance, highlighting the necessity for practitioners to evaluate the risks of material misstatements in sustainability information.
- The new ISSA 5000 standard enhances transparency in assurance engagements by requiring clear reporting on the scope, methodology, and limitations of assurance work performed so that stakeholders can base conclusions drawn from the sustainability reports on that information.
Next steps
The IAASB is planning to provide extensive support for implementing ISSA 5000 through guidance materials and training resources, which will be released in January 2025 for practitioners adapting to the new standard.
While you’re here…
Financial institutions, private equity and credit firms, asset managers, and impact investors should carefully consider the new IAASB standard for assurance of sustainability disclosures, which to date has been largely inconsistent across markets.
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