Climate change is increasingly front of mind for investors and other stakeholders of the International Auditing and Assurance Standards Board (IAASB) as its effects are increasingly visible. Given climate change’s potential to impact most, if not all entities, directly or indirectly, the IAASB issued a Staff Audit Practice Alert, The Consideration of Climate-Related Risks in an Audit of Financial Statement.
This Staff Audit Practice Alert assists auditors in understanding what already exists in the International Standards on Auditing (ISA) today and how it relates to auditors’ considerations of climate-related risks in an audit of financial statements.
“Climate-related events or conditions are impacting entities worldwide as global and local policy actions continue to evolve and given the growing demand by investors for climate-related information for their economic decision making,” said IAASB Technical Director Willie Botha. “This Staff Audit Practice Alert shows that while the phrase ‘climate change’ does not feature in the ISAs, 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.”
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