Keynote address by IAASB Chair Tom Seidenstein
IAASB Chair Tom Seidenstein delivered the following keynote address during the Accountancy Europe/IFAC webinar, “Shaping the Future of Sustainability Assurance Engagements.” Learn more about the event and access materials from presenters on the IFAC website here.
Good afternoon. I am so pleased to be here today for this timely webinar. I want to express my appreciation to Accountancy Europe and IFAC for hosting this event and for their continued support for global standards, set by an independent standard-setting body committed to a robust due process. And I also want to thank you, the over 1,200 registered participants, who have given up your time to join today.
Today’s webinar is titled, “Shaping the Future of Sustainability Assurance Engagements.” Indeed, my remarks will shortly turn to ISSA 5000, the standard that the International Audit and Assurance Standard Board (the IAASB) approved in September. In fact, I bring good news—this morning, the Public Interest Oversight Board (PIOB), certified the standard for final publication. It is now officially ready to use in Europe and elsewhere.
While ISSA 5000 certification is a big deal for the IAASB, we know that we are part of something bigger. We are at the advent of a new era of external reporting. Users will expect a broader range of information—financial and non-financial information—to assess corporate performance.
Today, policymakers, regulators, standard-setters, and a broad range of market participants together are creating the foundations of a new reporting ecosystem. Well-calibrated actions should help build a system that engenders trust, confidence, and well-functioning economies. In doing so, we can encourage a new generation of professionals to choose careers in reporting. We together can do our part to build more resilient, sustainable, and efficient economies.
We can take a few lessons from the world of financial reporting in terms of constructing this new sustainability reporting ecosystem. The most important is that a trusted reporting should be built on a foundation of:
- High-quality reporting standards,
- Complemented by robust assurance standards,
- Supported by ethical and independent requirements, and
- Overseen by empowered regulatory authorities.
In my mind, the public interest requires those components to:
- Enable global comparability,
- Encourage the development of a cadre of professionals capable of producing and assuring high quality reporting, and
- Be unapologetic in its commitment to quality, rigor, and ethics.
These are points that EU policymakers know well. These components are embedded in the Corporate Sustainability Reporting Directive (CSRD). When the IAASB initiated the work on ISSA 5000 two short years ago, we committed ourselves to supporting the EU’s leadership.
Make no mistake, the IAASB has created a global baseline that can work in every jurisdiction, in Europe and elsewhere. At the same time, we were particularly conscious of European timelines and requirements under CSRD. It was obvious to the IAASB that we can’t have a globally accepted standard without the European Union, considering its leadership position.
EU deadlines and IOSCO recommendations therefore served as a helpful prompt to complete our work in September of this year, three months faster than originally scheduled. We wanted to give practitioners as much time to prepare.
Timeliness, however, did not come at the expense of our due process and extensive engagement. We involved thousands of stakeholders in six continents through events like this one, our eight roundtables, bilateral meetings, and our exposure draft and comment process. Throughout the consultation and drafting periods, we worked closely with the European Commission, European securities regulators, the Committee of European Auditing Oversight Boards, and EU stakeholders in all sectors. Accountancy Europe deserves special thanks for helping to convene so many helpful discussions.
Willie Botha, the IAASB’s Technical Director, will describe the standard in more detail shortly. I did want to highlight a few elements that either were vital to European requirements or reflects themes we heard in Europe throughout the comment process.
- ISSA 5000 addressed both limited and reasonable assurance engagements. Before finalizing the requirements, we ensured differences in work effort for limited and reasonable assurance were clearer.
- We created an assurance framework that works with both traditional materiality and double materiality concepts and have included enhanced explanatory material to support practitioners.
- We highlighted the work required related to an entity’s materiality process.
In developing ISSA 5000, we were mindful of the practical challenges of implementation. For this reason, we adopted a no “greenfielding” strategy—we built off existing practices already embedded in our well-established and widely used assurance standards, ISAE 3000 and ISAE 3410. We also paid particular attention to scalability and proportionality throughout. This was because we know that there will be a diversity of practitioners for a wide range of engagements, and because we committed to ensuring that the standard is useable and does not create any unnecessary burdens.
Finally, we at the IAASB are committed to support implementation through the issuance of timely guidance. We will release a package of guidance, support videos, and wide range of outreach activities beginning in January 2025. Our focus will be issuing guidance that is concise, focused and pragmatic. We will also certainly depend on partnerships with bodies such as IFAC and Accountancy Europe to amplify these efforts.
So what is next? The hard work did not end with the standard’s approval. At the IAASB, we will support the adoption and implementation with significant energy and resources. As I just mentioned, we will provide a wide range of implementation support. We are also conscious that we need to give the market time to absorb ISSA 5000. We need a period of stability. Therefore, the emphasis will not be on the setting of new standards in the 5000-space. However, we as a Board stand ready to respond to market feedback if adjustments or guidance are necessary. We will be working closely with our advisory council, national standard-setters, and regulators to get this feedback.
We now call upon policymakers and practitioners to adopt ISSA 5000. We are pleased that the European Commission has asked the CEAOB to advise the Commission on how to incorporate ISSA 5000 into CSRD-related requirements. This commitment to a global baseline has and will serve as a catalyst for other jurisdictions to use ISSA 5000 as well.
Earlier, I said that ISSA 5000 addressed many of the elements in CSRD. At the same time, as a global standard, ISSA 5000 does not incorporate the specific requirements unique to Europe, such as the green and digital taxonomies. As the term global baseline implies, we anticipate jurisdictions to add on requirements to meet their regulatory mandates. Our expectation, as the European Commission’s letter to the CEAOB notes, is that “carve outs” should be avoided when they impact the performance of the engagement. We know that the reasonable assurance requirements in ISSA 5000 will not be part of the first-wave requirements for the European Union. That was anticipated in Europe and elsewhere. That is why we distinguished the limited and reasonable assurance requirements clearly.
Let me close by emphasizing the importance of collaboration and cooperation in the journey to develop ISSA 5000. The standard is a testament to the dedicated support and partnership we’ve received, including from organizations like Accountancy Europe, IFAC, and many that have contributed their expertise, insights, and feedback.
As we move forward, the IAASB will continue to engage with stakeholders across sectors, listen to market feedback, and provide the support needed for successful implementation.
Thank you once again for your trust, your collaboration, and your commitment to a future where transparency and integrity in reporting serve the public interest. We look forward to continuing this journey together, building a robust foundation for sustainable economies.