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.
