Lecture 9 - Advanced Auditing

What does ESG stand for?

Environmental, Social, Governance.

Name examples of environmental issues.

Climate change, pollution, waste, water stress, biodiversity.

Name examples of social issues.

Labor conditions, diversity, health & safety, human rights.

Name examples of governance issues.

Ethics, board structure, transparency, tax behavior.

What is the purpose of the EU Action Plan on sustainable finance?

Redirect capital, increase transparency, integrate sustainability in risk management.

When does CSRD apply to large listed entities?

2024.

When does CSRD apply to all large EU entities?

2025.

What assurance level is required under CSRD?

Limited assurance, later reasonable assurance.

What are cross-cutting ESRS?

ESRS 1 (General requirements) and ESRS 2 (General disclosures).

How many topical categories exist?

Environmental (E1–E5), Social (S1–S4), Governance (G1).

What is impact materiality?

Inside-out: how the company impacts people & environment.

What is financial materiality?

Outside-in: how sustainability affects the company financially.

When is a topic material under CSRD?

When it is impact-material, financially material, or both.

Why must auditors be upskilled for CSRD?

ESG assurance needs new expertise in non-financial and forward-looking information.

Why will auditors focus more on the future?

CSRD requires assessing strategies, targets, transition plans.

Name the four phases of ESG assurance.

Initial engagement, planning & risk assessment, execution, completion.

What is unique about ESG assurance?

Testing textual statements and qualitative disclosures.

Example KPIs under CSRD?

CO₂ emissions, water use, circularity, energy use, injury frequency.

What challenges exist in ESG data?

Manual processes, fragmented sources, immature controls.

What is greenwashing?

Misleading sustainability claims.

How does CSRD reduce greenwashing?

Standardized rules, assurance, transparent KPIs, value-chain analysis.