Verification standards urged for green reports

European accountants call for multi-disciplinary teams to assess credibility of corporate reports

Corporate environmental reports risk appearing over-rosy and sometimes economical with the truth unless objective standards are developed for expert verification, the European accountants' federation FEE has claimed.

In a report aimed at contributing to the "fast developing global debate" about a future international verification standard, FEE insists that independent verification or assurance is only possible if a report's content is relevant, material and comprehensive and based on objectively verifiable and quantifiable data. FEE issued its own set of draft guidelines for the content of environmental reports in January, and is now trying to stimulate input to similar work on assurance being prepared under the auspices of the International Auditing Practices Committee (ENDS Daily 4 February).

Noting that assurance on environmental reporting is often provided by non-accountants and that such reports frequently have a much wider audience than financial reports, FEE says clarity of language and content are vital. The development of satisfactory guidance "will help to avoid or reduce any gaps in understanding between the parties involved," says Johan Piet, who chairs FEE's environmental working party. In particular, an assurance should explain the scope of the work carried out, and its relevance to the report's issuer and user.

FEE says multi-disciplinary teams should carry out audits, and spells out what should be included in the subject matter and scope of an engagement. It also notes the need for tolerance of the ongoing difficulties in the area of environmental reporting, such as the presence of both quantitative and qualitative data and the fact that most environmental data are still not provided with the same degree of accuracy as financial data.

It draws some of its inspiration from a set of assurance standards for environmental reports issued by the German professional auditors' association IDW, which is says "addresses all the main issues" although there will be a need for different emphasis in other countries. FEE hopes to receive wide-ranging comments on before the deadline of the end of February.

Follow Up:
FEE, tel: +32 2 285 4085. References: "FEE Discussion Paper: Providing Assurance on Environmental Reports".

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