Assurance Approach

Introduction

The auditor's task is to assess and report on the reliability, completeness and balance of a business' sustainability report, and the extent to which the business is responsive to stakeholders' concerns and interests. Described below is the basis of the auditor's work assessing CFS' Sustainability Report 2003.

Accounting and assurance standards

In order to produce the best results the business should prepare its report according to a recognised accountability reporting standard. Two sets of guidelines are currently available: The Institute of Social and Ethical AccountAbility's AA1000 Framework Standard for Social and Ethical Accounting, Auditing and Reporting (November 1999)i and the Global Reporting Initiative's 2002 GRI Guidelines for Sustainability Reporting ii.

The Principal Assurance Providers for this assignment have both been involved in working groups and contributing to both of these standards. CFS has used the AA1000 Framework and is partially compliant with the GRI Guidelines.

AccountAbility's AA1000 Assurance Standard has been used in the current assurance work.iii The following principles apply

The assurance process

The process used with CFS follows a number of sequential steps:

1. Engagement This involves a preliminary discussion with CFS staff working on the Report to agree the scope of the assurance work (to support judgements about the full Report and supporting management systems), a timetable and budget. These are confirmed in writing. The assuror needs to be satisfied at the outset that they will have access to all necessary information and people, and that enough time has been allowed to carry out the engagement effectively. The engagement for the 2003 CFS Sustainability Report involved 65 days work.
   


2. Planning Planning involves two stages:
   
   Ongoing issues and risks The assuror makes an independent review of findings from earlier assurance engagements with the company, taking account of previous Assurance Statements, working papers and reports to directors (see 4 below). They may also carry out independent research into issues for the business sector (banking and insurance).
   
   The assuror carries out an assessment of those aspects of performance and reporting where there may be a risk of information being omitted, misrepresented or inadequately supported by evidence and effective management systems. In practice this involves going through the indicators and targets, assessing their importance (or materiality) and deciding which data sets will need detailed investigation and which will just require sample checks, (because the assuror is confident from previous assurance cycles that the relevant systems are robust and reliable).
   
   The assuror pays particular attention in planning assurance work to CFS' responses to issues and concerns stakeholders have raised through previous reports, current engagements or directly with the assuror.
   
   Planning the assurance work On the basis of the described risk assessment, the assuror will discuss with CFS staff arrangements and times for interviewing managers, staff and other stakeholders, and for accessing CFS records and information systems relevant to investigations.
   


3. The Assurance Work This involves the following activities:
   
   Interviewing managers and staff in order to gain an understanding of how specific policies, management information systems and controls have been designed and their views on their effectiveness. Discussions will focus on systems that have changed since the previous audit cycle or systems that have been identified as weak or at risk.
   
   
   • Testing systems and their data output on a sample basis where appropriate.
     
   • A review of accounting processes and the findings of internal audit procedures requested by the assuror.
     
   • Interviewing managers and staff about the nature, content and outcomes of stakeholder engagement processes and stakeholder surveys that have taken place.
     
   • Checking the output from stakeholder surveys for compliance with the intended sample frame, bias, accuracy of processing, and misinterpretation or understatement in the reported results and commentary.
     
   • Consulting stakeholder representatives (e.g., the CFS staff trades union representatives) where necessary to corroborate stakeholder survey findings or their interpretation by the CFS or its consultants.
     
   • Testing all data in the Report for source and accuracy, on a full or sample basis depending on the previously detailed risk analysis.
     
   • Checking that all commentary in the Report and all graphical presentations are consistent with the underlying data and do not misrepresent performance.
     
   • Carrying out independent reviews of CFS data relating to the 'campaign' issues and consulting independent experts and external parties involved in the campaigns as appropriate.
     
   • Documenting investigations and findings.
     
   • Assessing the materiality of information to be included in the Report to the interests of CFS' stakeholders (Partners) and the time period covered by the Report.
     
   • Assessing the extent to which the CFS has responded to stakeholder concerns and whether actions during the year covered by the Report are likely to impact on stakeholder interests later on.
     
   • Checking final drafts of the Report for responsiveness, clear communication and a balanced presentation of performance information that is material to stakeholders' interests.
   
   During this assurance work, the assurance provider will advise CFS' managers of any discrepancies and inaccuracies in the data, weaknesses in the systems, or misrepresentations in the commentaries. Some issues raised during the assurance process will result in corrections being made in the final version of the CFS Report. Discussions about changes to the Report between the CFS and assuror are robust and may only be resolved after further investigations of the evidence. This helps to ensure that information in the report is based on auditable evidence rather than any personal or 'corporate' view, or the assurance provider's personal interests or biases.
   


4. Assurance Statement. The published 'opinion', and any additional comments included in the web-based version of the report, are based on the final published version of the Report. CFS agreed at the start of the engagement to publish the Assurance Statement and comments in full. If there are issues arising from the assurance work that have not affected the reliability, completeness and balance of the current Report, but which may do so in future, the assuror may advise the directors in a separate letter.
   


5. Competence. It is essential that the assurance provider is competent to undertake an assurance assignment. This involves knowledge of the principles of assurance provision and experience in using current standards for auditing techniques. It also involves sufficient understanding of the business sector and the issues relating to its economic, social and ecological impacts and performance measurements.
   
   Finally, if assurance providers are to give a useful and valued service to stakeholders, as well as to the client, they must have substantial and credible experience in single and multi-stakeholder engagement processes and have a publicly acknowledged commitment to stakeholder accountability.

i Follow this link for details of AA1000
(This link will open in a new window)

ii Follow this link to the GRI Guidelines
(This link will open in a new window)

iii For a technical analysis of AA1000 in practice see: Adams, C and Evans, R (2004). "Accountability, Completeness, Credibility and the Audit Expectations Gap." Journal of Corporate Citizenship (14).