Reasonable assurance?
Gives users high level of confidence about company. There is extensive work and is positively worded
Limited assurance?
Moderate level of assurance providing lower level of confidence to users. It’s less work and the conclusion is negatively worded
Key elements of an audit engagement
Party involvement
Subject matter
Suitable criteria
Evidence
Written report
Who audits governed by in the UK?
Companies ACT 2006
International Standards on Auditing (ISAs)
What does ISA UK state?
- To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.
- To express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting.
Which companies are exempt from audits?
From April 2025
Fewer than 50 employees, less than 15 million revenue, less than 7.5 total assets
Before April 2025
Fewer than 50 employees, less than 10.2 millions revenue, less than 5.2 total assets
Benefits of carrying out assurance ?
Added credibility
Fraud deterrent
Draws attention to issues
Reduces risk of management bias
Limitation of assurance ?
Sampling (we don’t receive all the transactions
inherent limitations of systems that produce the financial information
Evidence is generally persuasive not conclusive
Collusion to defraud
Financial information includes subjective and judgemental matters
Use of management representations evidence may be unavoidable
Examples of sustainability impacts
Emissions and waste
Natural resource usage
Human rights
Land use and biodiversity
Examples of sustainability dependencies
Climate risks
Resource availability
Regulatory risks
Worker health
four key objectives of ISSB?
To develop standards for a global baseline of sustainability disclosure
To meet the information needs of investors
To enable companies to provide comprehensive sustainability info to GCM (global capital markets)
To facilitate interoperability with disclosures that are jurisdiction specific and aimed at broader stake holder groups
2 ISSB Standards
1) general requirements for disclosures of sustainability-related financial information
2) climate-related disclosures (metrics used assess climate risks and opportunities)
What does the strategic report include?
It’s a review of the companies business, including risks and key performance indicators.
Why was the Task Force on Climate-related financial disclosure established?
To improve reporting on climate related risks and opportunities
Benefits of assurance
Enhanced credibility (leading to investor confidence)
Stakeholder management
Regulatory compliance
Long term sustainability
Risk management
