CPAB climate thematic review
CPAB is interested in how climate-related matters are addressed by auditors, given climate-related risks can have a material impact on a reporting issuer's financial results.
Our goal is to understand the current state of how climate matters are captured within audit activity today to inform our future inspections and other activities, including contributing to the development of sustainability reporting and assurance standards by international standard setters.
With this in mind, in 2022 CPAB conducted our inaugural climate thematic review focused on understanding how auditors evaluate the impact of climate-related risks in their financial statement audits.
What we found
- Canada’s four largest audit firms each had specific guidance and training materials to support auditors in considering and addressing climate-related risks in their financial statement audits.
- The quality of resources provided to the audit practice varied across all firms. There was a range of guidance and training seen at the other annually inspected firms, with many firms at the early stage of developing their approach in this emerging area.
- In most files we inspected in 2022, there was no change to the audit approach to respond to the climate-related audit risks.
- In instances where climate-related factors were considered by auditors as part of their risk assessment, the extent and quality of work performed varied significantly.
Firms should also increase their monitoring of this area to ensure that audit teams, particularly those auditing reporting issuers in industries more likely to be impacted by climate-related risks, are using their existing guidance and resources.