Legal & Regulatory News

IAASB publishes additional guidance on the application of materiality by a reporting entity and by an assurance practitioner

On 25 October 2023, the International Auditing and Assurance Standards Board (IAASB) published answers to frequently asked questions (FAQs) on the application of materiality by a reporting entity and by an assurance practitioner. This guidance was developed in response to feedback that additional clarity was required on the application of materiality in this context.

Materiality is a central for ensuring the integrity of sustainable finance products and the Sustainability-Linked Loan Principles require that KPIs are material to the borrower’s core sustainability and business strategy.  

The FAQs include:

• How does the concept of materiality apply to sustainability reporting and related assurance engagements?
• How does the entity apply materiality when determining the sustainability matters to be included in the sustainability report?
• What is double materiality?
• How does the entity apply materiality when preparing and presenting the sustainability information?
• Is the entity’s “materiality process” different from the practitioner’s application of materiality?
• How does the practitioner apply materiality in a sustainability assurance engagement?
• How does the practitioner consider the entity’s materiality process during a sustainability assurance engagement?

The FAQs are designed to assist users of the proposed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. This standard is intended to provide recommendations for limited and reasonable sustainability assurance engagements and can be applied by any participant performing sustainability assurance engagements.

Click here to read the FAQs.

Click here to read the press release.