Accounting for greenhouse gases

A global assurance framework for carbon emission disclosures must be included in any plan to reduce Australia's carbon emissions, according to a report co-authored by a UNSW expert.

The report, produced in association with Australian School of Business' (ASB) Professor Roger Simnett, was launched in Canberra by the Institute of Chartered Accountants in the lead-up to the release of the Garnaut Report on climate change.

"Australia's proposed emission trading scheme (ETS) will be less effective without an auditing system that ensures industry emission disclosures are accurate and reliable. Society is looking for a method that promotes trust and confidence in the disclosures," says Professor Simnett.

Professor Simnett, who is co-chair of an international task force to set guidelines for assurance engagements on carbon emission disclosures, insists that generally accepted international reporting criteria are necessary to ensure the information reported in one jurisdiction is consistent with that reported in other jurisdictions. This will contribute to the development of emissions trading between jurisdictions.

"Industry carbon emission disclosures will not necessarily be reliable. There will be errors caused by lack of familiarity with the required disclosures, differences in the ways emissions can be measured and recorded, and lack of internal systems to support the reporting," he says.

"Independent assurance needs to be built into the ETS from the beginning to provide confidence in the accuracy of disclosures."

Andrew Stringer, head of Audit for the Institute of Chartered Accountants in Australia says: "Emissions reporting will require some specialised skills and equally the auditing of emissions data is likely to require some additional skills. But Australia's auditing framework is scalable and readily adaptable to all types of data and enterprises. Auditors are well equipped to apply that framework in dealing with these assignments and to add credibility to emissions data reported."

Professor Simnett and Dr Wendy Green from Accounting at the ASB were recently awarded an ARC Linkage grant for their project on improving the credibility of greenhouse gas emission disclosures.

For more information, or a copy of the report, please contact: Marie Kelly | 0408 256 381 | mariek@unsw.edu.au