The IIA Responds to ISSB's Exposure Drafts on Climate- and Sustainability-Related Disclosures

Recommends Making Internal Auditing a Key Component

LAKE MARY, Fla., Aug. 19, 2022 /PRNewswire/ -- In two letters to the International Sustainability Standards Board (ISSB) Chairman Emmanuel Faber, and Vice-chair Sue Lloyd, The Institute of Internal Auditors (IIA) - the internal audit profession's leader in standards, certification, education, research, and technical guidance worldwide - applauded the ISSB's initiative to expose for public comment two draft proposals concerning sustainability-related and climate-related disclosures.

A common theme in both letters was the need for uniformity, consistency, and cross-comparability of disclosures. "The IIA's 112 affiliates across the world have been supporting and advocating for international and universally understood standards, frameworks, and reporting mechanisms for organizations to avoid fragmented and inconsistent approaches to climate change risks and climate-related reporting," wrote IIA President and Chief Executive Officer, Anthony J. Pugliese, CIA, CPA, CGMA, CITP.

The IIA also emphasized the vital role that internal audit can play in supporting organizations to identify, manage, and mitigate sustainability- and climate-related risks.

The IIA broadly supported the ISSB's direction but also argued, "While we recognize the deep scrutiny surrounding the decision to create two sets of disclosure standards, we would support the eventual simplification to one set of disclosures to avoid duplication and encourage implementation. Two sets of standards may be confusing to the market."

The IIA believes that both drafts provide much-needed momentum toward global standards that will give investors and stakeholders valuable and reliable information about an organization's performance related to climate- and sustainability-related goals.

As the global voice and primary advocate for the internal audit profession, The IIA recommended clearly defining the role of internal auditors in the assurance process for climate- and sustainability-related disclosures and emphasized the importance, where appropriate, of internal audit's cooperation with external and statutory auditors to avoid duplication of work and ensure quality performance.

In letters one and two, the Institute also shared relevant IIA studies, white papers, and reports on internal audit's leadership role in such disclosures. They include:

• Harnessing internal audit against climate change risk: A guide for audit committees and directors: A guide for leadership.
  
  
• Organizations' preparedness for climate change: an internal audit perspective: The role of internal audit in relation to climate-related risks.
  
  
• Risk in Focus 2022: The report found climate change and environmental sustainability is a top five risk, up more than 40% from last year's survey.
  
  
• Practical guidance on climate change and environmental sustainability: A joint effort of European IIA affiliates.

See The IIA's Response to Regulators and Oversight Bodies page for the complete letters, addendums, and responses.

SOURCE The Institute of Internal Auditors