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In 2012, the International Auditing and Assurance Standards Board (IAASB) had issued the International Standard on Assurance Engagements (ISAE) 3410, Assurance Engagements on Greenhouse Gas Statementsto provide reasonable or limited assurance on Greenhouse Gas Statements. However, the Indian reporting framework did not have any specific auditing standard on assurance engagements on Greenhouse Gas Statements, corresponding to ISAE 3410. Taking note of this, in February 2021, the Sustainability Reporting Standards Board (SRSB) of the ICAI issued the Standard on Assurance Engagements (SAE) 3410, Assurance Engagements on Greenhouse Gas Statements.

ICAI, vide a notification dated 2 May 2022 has announced the effective date of application of SAE 3410 as follows:

  • Voluntary basis for assurance reports covering periods ending on 31 March 2023
  • Mandatory basis for assurance reports covering periods ending on or after 31 March 2024.

To access the text of ICAI notification, please click here

Action points for auditors

In recent years, climate change concerns and sustainable development have taken center stage in global and national priorities. Given the link between Greenhouse Gas (GHG) emissions and climate change, many entities are quantifying their GHG emissions as part of regulatory requirements and due to increase in demand for such information by investors. Since regulators and investors rely on such information, there is a corresponding demand for assurance on the information provided. SAE 3410 requires practitioners to select procedures appropriate to the circumstances of the engagement based on an assessment of risks of material misstatement.

The practitioners would need to assess whether a limited or reasonable assurance could be required on the GHG statement. Effective understanding and communication between the practitioner and the client would enable appropriate planning and risk assessment, which will facilitate a smooth execution of the assurance engagement.

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