While the UK sustainable reporting assurance market is currently working well, a leading global accountancy body says there is no room for complacency.
ACCA applauds the City regulator the Financial Reporting Council (FRC) for the timely study into the functioning of the sustainable reporting assurance market. But ACCA urges the regulator to continue to address the threats highlighted in the report – many of which ACCA had already identified.
Key findings in Assurance of Sustainability Reporting Market study include concerns over the quality of the assurance provided, a drift towards domination of the market by the Big Four audit firms, market immaturity driven by the UK’s uncertain regulatory position and the lack of an established regulatory framework.
Mike Suffield, Director Policy & Insights, ACCA and a former director at the Financial Reporting Council, said: ‘It is good to see the FRC quickly producing this market study – pace was one of the characteristics we urged. We agree with the concerns that the FRC has raised, and we would welcome the opportunity to work with the government, the regulator and others to ensure we put in place quickly the right policy in this important emerging area.’
The report recommended three key actions establishing a clear policy framework, creating a unified regulatory regime and improving the calibre of information on sustainability assurance quality.
Maggie McGhee, Executive Director, Strategy and Governance, ACCA, said: ‘A clear policy framework is critical as is regulation: it is critical to ensure that all providers are on a level playing field. While Professional Accountancy Organisations (PAOs) are able to regulate their own members there needs to be an equivalent mechanism for broader participants. This burden should not fall on PAOs.’
ACCA is also clear that any regime would need to be proportionate and recognise that sustainability reporting and assurance is still in its infancy. Considering the calibre of information on the quality of sustainability assurance Jessica Bingham, Regional Policy and Insights Lead, ACCA said: ‘While welcoming the report and its recommendations, ACCA urges greater emphasis on the role of small and medium sized enterprises (SMEs) and small and medium sized practices (SMPs). With approximately 5.5 million SMEs in the UK, a clear narrative needs to be set out as to how they will interact with the sustainability assurance market and what role SMPs will play in this market to ensure consistency and competitiveness.’
