“CSRD readiness” with assurance support


published on 27 July 2023 | Reading time approx. 3 minutes


The ESG compliance of companies is becoming a key success driver and will help determine the future viability of business models. Societal expectations and politics are driving the regulatory process forward with great strides and thus the entry into force of the CSRD is also approaching. For the companies concerned, time is already running out to lay the foundations for trustworthy and verifiable sustainability repor­ting. This makes it all the more important to take the topic of sustainability reporting seriously and to start preparing for the CSRD immediately. It is advisable to involve the auditor right from the start as part of an assurance engagement accompanying the prepara­tion of the report in order to avoid unnecessary loops on the way to the sustainability report and possibly only being confronted with process weaknesses and missing documentation with limited certainty during the subsequent audit.

Assurance support for sustainability reporting 

The future sustainability report in accordance with CSRD will be subject to a mandatory audit and published as part of the management report. The mandatory audit of the report is intended to increase confidence in sustainability information for users and stakeholders and to place the importance of sustainability reporting on a par with financial reporting. However, the fact that the sustainability report is subsequently audited does not mean that only the existence of the report is checked; on the contrary, sustainability reports are subject to an audit of the content with at least limited assurance. For this to work, sustainability reports must be prepared with the same care as financial reports. Management is responsible for selecting and applying appropriate sustainability reporting methods and making accounting estimates that are reasonable in the circumstances. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of a sustainability report that is free from material misstatement, whether due to fraud or error. This includes defining auditable processes for sustainability reporting, establishing clear lines of responsibility, implementing effective controls, and establishing proper documentation.
For many users, the new regulatory framework means setting up a new form of reporting that involves large parts of the company, encompasses a wide variety of data sources and requires interpretations of the latest legal standards. Auditors can provide feedback on project approaches, interpretations, processes, data points, controls and documentation at an early stage and throughout the internal project. In doing so, we can incorporate experience from a large number of projects as well as the constantly evolving interpretations by the profession and the user community. When introducing the new reporting, the preparers can thus react early to the feedback from the auditors and adapt their concepts, processes and documentation in a timely manner so that they can withstand the subsequent mandatory audit in the first reporting year. Due to the complexity of the new reporting and usually limited resources on the part of the preparers, timely feedback from the auditor plays an important role. For example, failure to properly implement dual materiality can have a significant impact on data points and their conceptual and process implementation. If these errors are identified late in the process, it can be difficult for preparers, particularly in international groups, to collect missing data points completely and correctly within the time remaining for initial reporting. Significant errors can then potentially result in qualified or adverse audit opinions.

Procedure and contribution of the assurance support 

The assurance support already starts in the preparation phase of the implementation project. Here, the project plans and the scoping of the creators are audited for compliance with the requirements of the CSRD and ESRS. This is usually followed by the crucial step of the materiality analysis. In this phase in particular, it is advisable to obtain auditor feedback on the concept, implementation and results, as the materiality analysis defines many parameters for the further steps in the CSRD reporting process. After the materiality analysis, the necessary technical concepts for data collection must be created and their procedural implementation must be tackled by the preparer. Followed by the initial data collection in the context of test runs and the building of the reporting structure in line with the ESRS. In all these phases, the project-accompanying assurance engagement can add value for the preparer and help to improve the quality of the sustainability reporting even before the initial publication. The assurance support can also create synergies for the first mandatory audit of sustaina­bility reporting, since the auditor has closely accompanied the introduction of the new processes, process weaknesses could be remedied before the actual audit by the preparer, and thus the effort in the context of the first audit can be reduced.

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Assurance support for initial sustainability reporting in accordance with CSRD/ESRS helps companies to move in the right direction at an early stage. It reduces weaknesses in the technical and procedural implementation of the new regulations and thus contributes to resilient and trustworthy sustainability reports. Auditor feedback enables processes to be adapted to the legal requirements in good time. The assessment of auditability provides an indication of which steps still need to be taken with regard to meeting the requirements of the CSRD. As auditors, we accompany our clients on the new path of sustainability reporting, provide security and ultimately contribute to stakeholder confidence in future transparent and comprehensible sustainability reporting. The aim is for our clients to make the best possible use of the remaining time in order to meet the future regulatory requirements in a targeted manner so that, from an auditing perspective, high-quality sustainability reports are complied that provide the necessary transparency for sustainable development.

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Christian Maier


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Anna Wilhelm

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