Companies Will Have to Disclose Pollution Caused by External Suppliers
Multinational and other companies will be required to disclose their indirect greenhouse gas (GHG) emissions, according to the International Sustainability Standards Board (ISSB)’s October 20 decisions. The disclosures, which fall under Scope 3 indirect emissions caused by companies’ suppliers, would make up the bulk of a business’s emissions. Proposed Scope 3 disclosures have gotten the most pushback from accountants over concerns that it would be hard to get the necessary data, some of which might not be available or would be difficult to estimate. At a future meeting, the ISSB will develop relief provisions to help companies to apply the requirements. This could include giving companies more time to provide Scope 3 disclosures and working with jurisdictions on “safe harbor” provisions. Safe harbor provisions would provide companies protection from or reduced liability on information disclosed to investors and other capital market participants, the board said. “It is important to include Scope 3,” ISSB Vice Chair Jingdong Hua said. “But recognizing the specificity in each jurisdiction, I certainly would urge staff in the final standard to allow for jurisdictional flexibility, both in the safe harbor and in relief,” he said. “My sense is there will be a day where we will all converge to a standard without the need for a safe harbor and relief and that is where the Scope 3 will be fully measured. But the speed with which to get there can be very different from jurisdictions from different continents, also recognizing that we can’t impose that—that the regulators in each jurisdiction have to make that decision.”
Barbara Vanich Appointed Chief Auditor
The PCAOB has decided to promote Barbara Vanich as its chief auditor. Vanich has been serving in an acting capacity since November 2020, when then-Chief Auditor Megan Zietsman was elevated to serve on the board as a voting member. As the head of the Office of the Chief Auditor (OCA), Vanich will play an instrumental role in the board’s standard-setting and research activities. Vanich’s promotion also comes as PCAOB Chair Erica Williams in May set one of the most ambitious standards-setting agendas in the board’s history. Moreover, the PCAOB’s proposed long-term strategic plan includes modernization of audit standards. “High-quality standards are the foundation for quality audits, and modernizing our standards is strategically vital for the PCAOB,” Chair Williams said in an Oct. 21, 2022, statement. “As we continue pursuing the most ambitious standard-setting agenda in PCAOB history, we will continue to count on Barb’s outstanding leadership, experience, and dedication to our investor-protection mission.”
Progress Made on Project to Revise Standards for Group Audits
The AICPA’s Auditing Standards Board (ASB) had a packed agenda during its Oct. 25–26 meeting. The standards-setting panel delved into projects including group audits, sustainability, and fraud. Most of the projects are not in an advanced stage, with working groups monitoring developments in the business environment as well as activities of other standards-setters, especially the International Auditing and Assurance Standards Board (IAASB). The ASB’s goal is to converge its standards with those of IAASB to whatever extent possible. There will be differences in the AICPA’s standards because of the different environment in the United States.