IAASB issues Staff Audit Practice Alert on Climate-Related Risks

Oct 06, 2020

 

The International Auditing and Assurance Standards Board (IAASB) has issued a Staff Audit Practice Alert, The Consideration of Climate-Related Risks in an Audit of Financial Statement.

Climate change is growing in relevance to investors and other stakeholders of the IAASB.  There is growing demand by investors for climate-related information for their economic decision-making. The effects of climate change are increasingly visible, global and local policy actions are evolving to take account of it, and it has the potential to impact most - if not all entities - directly or indirectly. 

The phrase 'climate change' does not feature in the International Standards on Auditing (ISA). This Staff Audit Practice Alert is to assist auditors in understanding what already exists in ISA and how it relates to auditors’ considerations of climate-related risks in an audit of financial statements. 

According to IAASB Technical Director Willie Botha "the auditor’s responsibilities under the ISAs encapsulate the consideration of events or conditions relevant to the susceptibility to misstatement of amounts and disclosures in an entity’s financial statements, which would include climate-change risk."

About the IAASB

The IAASB develops auditing and assurance standards and guidance for use by all professional accountants under a shared standard-setting process involving the Public Interest Oversight Board, which oversees the activities of the IAASB, and the IAASB Consultative Advisory Group, which provides public interest input into the development of the standards and guidance. The structures and processes that support the operations of the IAASB are facilitated by the International Federation of Accountants (IFAC).