Greenhouse gas and sustainability assurance

Accounting Ahead | Original study resource | accountingahead.com.au

Greenhouse gas and sustainability

assurance

MODULE 5 | 5.3.2 | STUDENT COMPANION

Emissions are reported in three scopes. The figures go wrong in predictable ways, and practitioners

respond with site visits, agreement to source data, checks on factors, recalculation and analytics.

Sustainability reports are wider and harder to assure, and most assurance today is limited. ISSA 5000 (in

Australia, ASSA 5000) covers any sustainability topic at either level, for any practitioner who meets

equivalent ethical and quality requirements.

Three scopes of emissions

Crestwater Ports Group (imagined): a listed company running three cargo ports

Scope 1: direct

From sources Crestwater owns or controls

At Crestwater

Diesel burned in its cranes, straddle

carriers and trucks

Refrigerant gases leaking from its cold

storage

Scope 2: energy it buys

Indirect emissions from purchased electricity,

heat or steam

At Crestwater

Power for its terminals and lighting

Scope 3: the value chain

All other indirect emissions, upstream and

downstream

At Crestwater

Trucks that collect containers from its

gates

Reported in tonnes of carbon dioxide equivalent (CO2-e), usually measured with the Greenhouse Gas Protocol. Large emitters also report

under Australia's national greenhouse and energy reporting scheme (NGER), which has its own legislated methods

Methods. The Greenhouse Gas Protocol is the most widely used method for measuring emissions. In Australia,

large emitters must also report under Australia's national greenhouse and energy reporting scheme, whose

methods are set in law. Scope 3 is often the largest of the three and usually the least certain, because it relies on

other organisations' data.

Where emissions figures go wrong

Organisational

boundary

Leaving out a port the

company controls, or

including one it doesn't

Missing sources

Such as backup generators

nobody remembered

Activity data

Litres of fuel or kilowatt hours

that are wrong, or estimated

without support

Emission factors

Out of date, or the wrong

ones for the location

Calculation errors

Mistakes in turning activity

into emissions

Double counting

The same emissions counted

twice

Inherent uncertainty

Scientific and estimation

uncertainty, worst in scope 3:

suppliers' data and

spending-based estimates

Immature controls

Controls over emissions data

are often far less developed

than those over financial data

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | STUDENT COMPANION

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Accounting Ahead | Original study resource | accountingahead.com.au

How the practitioner tests Crestwater's figures

The greenhouse gas standard set out the response, and ISSA 5000 carries the same logic forward.

Risk Procedures

Boundary and missing

sources

Understand the operations and list every emission source; visit sites to see the

equipment and the metering

Activity data Agree fuel quantities to supplier invoices and fuel management records, electricity to

bills and meter data, and refrigerant top-ups to maintenance logs

Emission factors Check that they are the current national factors published by the government

Calculations Recalculate the emissions

Anything else that doesn't fit Analytics such as emissions per container handled, comparing ports and years,

followed up until every difference is explained

A port that looks too good. Suppose one port's emissions per container are a third lower than the others', with

no newer equipment to explain it. The likely suspects are missing activity data, such as fuel bought on a

separate account, or a misapplied emission factor. The practitioner investigates until the difference is explained.

Sustainability reports

Sustainability reports cover a company's environmental, social and governance impacts and risks. The Global

Reporting Initiative standards focus on an organisation's impacts on the economy, the environment and

people; the International Sustainability Standards Board focuses on information that matters to investors, and

Australia's mandatory climate disclosures follow its approach. Assurance is harder than for an emissions

statement: the information mixes numbers with narrative, involves judgements about what is material, and

includes forward-looking statements such as targets and transition plans.

Case note: what the surveys show, and ISSA 5000

Surveys of about 1,400 of the world's largest companies by the International Federation of Accountants have

found that almost all now report sustainability information, that about three quarters obtain some assurance on it,

and that most of that assurance is limited assurance, with greenhouse gas emissions the most widely assured

information. In November 2024 the IAASB issued ISSA 5000, designed for sustainability assurance on any topic,

at limited or reasonable assurance, and usable by any assurance practitioner, accountant or not, who meets

equivalent ethical and quality requirements. For periods beginning on or after 15 December 2026 it replaces the

greenhouse gas standard. In Australia, the AUASB issued ASSA 5000 in early 2025, alongside ASSA 5010, the

phased timeline for assuring the new mandatory climate disclosures.

Source: IFAC with AICPA & CIMA, The State of Play: Sustainability Disclosure and Assurance (2019-2024), June 2026; IAASB, ISSA

5000 (November 2024); AUASB, ASSA 5000 and ASSA 5010 (January 2025).

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | STUDENT COMPANION

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Accounting Ahead | Original study resource | accountingahead.com.au

The path to dedicated sustainability standards

For years

The umbrella standard,

ISAE 3000, often used with

ISAE 3410 for greenhouse

gas statements

November 2024

The IAASB issues ISSA

5000: any sustainability

topic, limited or reasonable

assurance, any practitioner

who meets equivalent

ethical and quality

requirements

Early 2025

The AUASB issues ASSA

5000, with ASSA 5010: the

phased timeline for assuring

Australia's mandatory

climate disclosures

From 15 December 2026

ISSA 5000 applies to

periods beginning on or

after this date, replacing

ISAE 3410

The new standards apply to any topic and any qualified practitioner, accountant or not, provided it meets ethical and quality requirements

at least as demanding

Australia's phasing (ASSA 5010). Groups 1, 2 and 3 start with years beginning 1 January 2025, 1 July 2026

and 1 July 2027. Year 1: limited assurance on governance, strategy (risks and opportunities) and scope 1 and 2

emissions. Years 2 and 3: limited assurance on all climate disclosures. Year 4 on: reasonable assurance, which

every group has reached for years beginning on or after 1 July 2030.

Net zero targets. Nobody can assure a future outcome, such as reaching net zero by 2050. A practitioner can

give assurance on whether the target is presented in line with the criteria, whether the baseline emissions are

reliable, whether reported progress is accurate, and whether the transition plan described exists and is

consistent with the company's other information. Claims such as 'carbon neutral' need clear criteria too, including

how offsets were counted: a confident claim without criteria is how greenwashing begins.

Practice questions

MODULE 5 | 5.3.2 | TRY THESE BEFORE THE WORKED ANSWERS

Question 1 - Sort Cindermill's emission sources

Cindermill Cement Ltd (imagined) makes cement at one plant. Sort each source into scope 1, 2 or 3.

Emission source Scope Emission source Scope

(a) Natural gas burned in the cement kilns (f) Steam bought from a neighbouring factory

to dry raw materials

(b) Carbon dioxide released from limestone

as it is heated in the kilns

(g) Emissions from producing the slag and

gypsum Cindermill buys

(c) Diesel used by Cindermill's own quarry

trucks and loaders

(h) A contract trucking company delivering

cement to customers

(d) Diesel burned in a standby generator at

the plant

(i) Employees commuting to the plant

(e) Electricity bought from the grid to run the

grinding mills

(j) Plant waste sent to a council landfill

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | STUDENT COMPANION

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Accounting Ahead | Original study resource | accountingahead.com.au

Question 2 - Test Cindermill's scope 1 fuel emissions

Cindermill's kilns burn mainly natural gas, with some waste-derived fuel made from shredded tyres, and its own

quarry fleet runs on diesel. It reports under Australia's national greenhouse and energy reporting scheme and

wants limited assurance on its scope 1 emissions. Design the procedures you would perform on its fuel

emissions.

Question 3 - A net zero transition plan

Cindermill's board has announced a target of net zero emissions by 2050, an interim target to cut scope 1 and 2

emissions by 30% by 2032 against a 2025 baseline, and a transition plan relying on alternative fuels, carbon

capture at one kiln and offsets for whatever remains. What could a practitioner give assurance on, and what

couldn't it?

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | STUDENT COMPANION

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Accounting Ahead | Original study resource | accountingahead.com.au

Worked answers

MODULE 5 | 5.3.2 | WORKED ANSWERS - ATTEMPT THE QUESTIONS FIRST

Question 1 - Cindermill's sources

Source Scope Why

(a) Gas in the kilns 1 Fuel burned in equipment Cindermill owns

(b) Limestone heated in the kilns 1 Process emissions released directly from its own kilns

(c) Quarry trucks and loaders 1 Its own vehicles burning fuel

(d) Standby generator 1 Owned equipment; easy to miss, so check it's included

(e) Grid electricity 2 Purchased electricity

(f) Purchased steam 2 Purchased heat or steam

(g) Slag and gypsum 3 Upstream: made by suppliers

(h) Contract trucking 3 The trucks belong to another company: value chain

(i) Employee commuting 3 Value chain, not its own sources

(j) Waste to landfill 3 Emissions arise at the council's landfill

Question 2 - Procedures on fuel emissions (sample answer)

Area Procedures

Understanding and

boundary

Understand both kilns, the quarry fleet and every other fuel-burning source; compare the

source list with the asset register; visit the plant to see the burners, fuel storage and meters

Activity data Agree gas quantities to supplier invoices and the gas meter; agree tyre-fuel deliveries to

weighbridge dockets and invoices; agree diesel to fuel card and bulk delivery records,

adjusted for the change in tank levels; check meter calibration

Emission factors Check each factor and energy content against the current method under the national

scheme, including the right factor for the tyre-derived fuel and any part treated as biomass

Calculation Recalculate fuel used multiplied by energy content and factor; agree the total to the scope 1

statement

Analytics Fuel used per tonne of clinker by kiln and month, and against last year; diesel per tonne

quarried; fuel quantities against fuel costs in the accounts

Completion Cut-off around year end; written representations; if anything looks wrong, do more until it can

be explained

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | WORKED ANSWERS

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Accounting Ahead | Original study resource | accountingahead.com.au

Question 3 - Cindermill's transition plan

Could give assurance on Couldn't give assurance on

Whether the targets are presented in line with the criteria:

scopes covered, the 2025 base year, the boundary, and

how offsets will be counted

That net zero will be reached by 2050, or the 30% cut by

2032

Whether the 2025 baseline emissions are reliable That carbon capture will work, or that enough alternative

fuel will be available

Whether reported progress against the interim target is

accurate

Future offset prices or availability

Whether the plan described exists (board approvals,

budgets, contracts, studies) and is consistent with the

financial statements and other information

Whether the plan is the best strategy

ADVANCED AUDIT AND ASSURANCE | M5 | 5.3.2 | WORKED ANSWERS

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