Minutes Posted for Sustainability Information Assurance Subcommittee Meeting 2
Overview
At the second meeting of the Corporate Accounting Council’s Sustainability Information Assurance Subcommittee, members discussed the nature and development methods of standards for Japan’s sustainability information assurance system, key matters concerning assurance engagements, and coordination with international standards. The Financial Services Agency indicated a direction to develop standards, based on practical guidance from the Japanese Institute of Certified Public Accountants and other materials, that entities other than audit firms could also comply with. Members expressed views on the level and scope of assurance, those responsible for governance, engagement quality reviews, and the transfer and joint performance of assurance engagements.
Key points
- The meeting discussed the nature and development methods of standards, key matters concerning assurance engagements, and coordination with international standards.
- A direction was indicated to have the Financial Services Agency develop the standards based on practical guidance from the Japanese Institute of Certified Public Accountants and other materials.
- The indicated approach was to use limited assurance when the system is introduced, without transitioning to reasonable assurance.
- Committee members expressed views on the name of the standards, assurance scope, confidentiality obligations, and those responsible for governance.
Overview
The subcommittee presented an outline concept for an opinion paper on the sustainability information assurance system. The proposed outline would comprise the background to its introduction, the nature and development methods of the standards, key matters concerning assurance engagements, and coordination with international standards.
Impact
Third-party assurance was characterized as improving the reliability of sustainability information, supporting the decision-making of investors and other information users, enhancing confidence in the capital market, and serving the public interest.
A philosophy was indicated of balancing assurance quality with the burden on companies and gradually maturing practice and the system.
Details
A proposal was presented to make the adjustments necessary for standards equivalent to international standards, designating JSSA5000 as the assurance standard, JSQM1 as the quality management standard, and JESSA as the ethics and independence standard. The direction is for the Financial Services Agency to develop standards, based on the views of relevant parties, that entities other than audit firms could also comply with.
Assurance engagements place importance on professional ethics, independence, an objective and impartial attitude, professional skepticism, and quality management. Procedures suited to the characteristics of qualitative information, estimation information, forward-looking information, and information obtained from third parties were deemed necessary.
Coordination with international standards raised issues concerning those responsible for governance, partial assurance, engagement quality reviews, and the transfer and joint performance of assurance engagements. A proposal was presented to use audit supervisors and others and the board of directors as the basic framework, and to clarify the applicable standards and assurance scope through Cabinet Office ordinances.