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Assurance Standards Briefing
Assurance Standards Briefing
Published 04-19-05
Submitted by AccountAbility
The two international assurance standards - AA1000AS and ISAE3000 - are not in conflict and are not substitutes, but rather complementary in terms of providing a comprehensive and robust assurance process which should satisfy the needs of both management and stakeholders, and that subsequently, Sustainability assurance based on the combined use of AA1000AS and ISAE3000 is likely to deliver enhanced results. This includes the approach, methodology and conclusion, their communication, credibility, and so ultimately the outcome in relation to stakeholder trust and behaviour.
The emergence and dramatic growth in sustainability reporting over recent years is a response to increasing demands for corporate accountability. Many leading companies now report publicly not only their financial results but also on their social and environmental impacts and performance - information which is increasingly used by the financial markets when assessing underlying risks and likely future financial performance. The need to ensure the reliability and credibility of such reporting for both internal and external audiences has in turn accelerated the development of relevant assurance frameworks.
Globally, two standards have taken on particular importance in the area of sustainability assurance. The AA1000 Assurance Standard (AA1000AS), launched in March 2003 by AccountAbility; and the IAASB's International Standard on Assurance Engagements (ISAE) 3000, which all professional accounting networks must comply with from January 1st 2005.While these standards have advanced significant and welcome innovations in assurance, differing language, method, development pathways and institutional sources have led to confusion on the part of (assurance) practitioners, organisations seeking assurance and, most of all, the ultimate users, those stakeholders that such organisations seek to assure.
AccountAbility and KPMG Sustainability B.V. in The Netherlands, in collaborating in the preparation and publication of this report, are seeking to overcome this confusion by addressing the core question of whether these two global standards are consistent, complimentary or conflicting based on a detailed analysis, and in what ways they offer similar or different value in the assurance process and its impact on the behaviour of the intended users. Based on the research, Professor George Molenkamp of KPMG Sustainability believes "the combined use of ISAE3000 and AA1000AS would help ensure that sustainability assurance is aligned not only to the needs of our clients but also of their stakeholders".
This paper is both a contribution towards harmonisation in the field of sustainability assurance, and a call to strengthen productive collaboration between the parties to satisfy demands for professional and broadly credible assurance in the future. According to Simon Zadek (CEO AccountAbility), it demonstrates that "credible sustainability and non-financial assurance going forward will be grounded in the combined use of AA1000AS and ISAE3000. This complementarity points to the need for harmonisation in the future, effectively integrating the best of stakeholder-based materiality with the best of traditional auditing".
Sustainability performance reporting will continue to grow in importance, driven by demands for improved and more transparent corporate governance arrangements, and growing societal demands that the business community be held to account for its social and environmental impacts. "As sustainability reporting practices increase in quality and quantity, the relationship between reporting and assurance frameworks is raising both practical and strategic questions for report preparers. I commend AA and KPMG for showing how companies can draw on the benefits of AA1000AS and ISAE3000, and for shedding light on how an integrated approach can help practitioners looking to strengthen their reporting process with credible assurance", commented Ernst Ligteringen (Chief Executive, Global Reporting Initiative).
KPMG Sustainability and AccountAbility are currently collaborating on a second paper, which will examine the practical implications of using ISAE3000 and AA1000AS together to provide a value-adding and more robust assurance process. "Robust third party assurance is absolutely vital to credible, world class sustainability reporting. AA1000AS brings to the table the values of stakeholder-derived materiality and responsiveness, whilst ISAE3000 ensures that a business'-stated policies and objectives are reported against. If the two could move forward together, and take a highest common denominator approach, then a real critical mass could be realised. I look forward with interest to the results of the second phase of this project," said Paul Monaghan from Co-operative Financial Services.
Note to the editors
1. AccountAbility
As a leading international professional institute, our work includes developing innovative and effective accountability tools and standards (notably the AA1000 Series), carrying out cutting-edge strategic research exploring best practice for practitioners and policy-makers in organisational accountability, promoting accountability competencies across the professions, and promoting an enabling environment in markets and public bodies.
Core to AccountAbility are our members who are drawn from business, civil society organisation and the public sector worldwide. We embrace an innovative, multi-stakeholder governance model that allows our members to govern and support us as well as play a vital role in shaping our direction and work.
2. KPMG Sustainability, The Netherlands
KPMG Sustainability B.V., is part of KPMG in The Netherlands, with around 30 environmental, social and economic professionals. The group, one of the first in Europe in this field, has provided audit and advisory services in the field of sustainability or corporate social responsibility (CSR) for more than 20 years. Our clients include multinationals in Europe, Asia Pacific and Latin America, and we have project experience in more than 35 countries. KPMG Sustainability B.V. is part of KPMG's Global Sustainability Services (GSS) Network, with about 300 social, environmental and economic professionals around the globe.
We approach CSR from a corporate managerial perspective, advising companies on their strategy and the integration of CSR into their business functions. Our audit services include CSR reporting, where we are a leader in the national market.
KPMG in the Netherlands is a member of KPMG International, a Swiss Co-operative. With nearly 94,000 people worldwide, KPMG member firms provide audit, tax, and advisory services in 148 countries.
3. The report is freely available at www.accountability.org.uk/. Copyright 2005 AccountAbility.
4. Jennifer Iansen-Rogers is a Senior Manager at the Dutch sustainability practice of KPMG with special responsibility for sustainability assurance engagements. She has more than ten years experience in this field managing engagements for major multinational companies. Jennifer was a member of the working group for the new Dutch standard for assurance on CSR reports and of the GRI Boundaries Working Group. She has recently joined the Operating Board of AccountAbility and is Co-Chair of the Technical Committee.
5. Jeannette Oelschlaegel is the Standards Researcher at AccountAbility specialised in research related to standards and sustainability assurance. In this role Jeannette facilitates consultations on and further development of AccountAbility's standards.
AccountAbility
AccountAbility
AccountAbility is a global consulting and standards firm that works with businesses, investors, governments, and multi-lateral organizations to achieve opportunities, advance responsible business practices, and transform their long-term performance. We focus on delivering practical, effective, and enduring results that enable our clients to succeed.
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