Greenhouse-gas assurance is not the same as checking a sustainability report for arithmetic accuracy. Under ICAI's SAE 3410, the practitioner is engaged to obtain limited or reasonable assurance on an entity's greenhouse gas statement and to conclude whether it is prepared, in all material respects, in accordance with the applicable criteria. The engagement therefore combines assurance methodology with an understanding of emissions boundaries, source data, estimation methods and reporting controls.
ICAI's effective-date announcement states that SAE 3410 applies on a voluntary basis for assurance reports covering periods ending on 31 March 2023 and on a mandatory basis for assurance reports covering periods ending on or after 31 March 2024. That does not mean every entity is automatically required by SAE 3410 to obtain GHG assurance. It means that where the standard applies to a practitioner's assurance engagement on a GHG statement, the practitioner must follow its requirements. The complete requirements are available in ICAI's official SAE 3410 text, with a reader-friendly entry point on the ICAI publication page.
What is a GHG statement under SAE 3410?
SAE 3410 describes a GHG statement as information that sets out and quantifies an entity's greenhouse-gas emissions for a period, sometimes called an emissions inventory, together with relevant comparative information and explanatory notes where applicable. It can also include removals or emissions deductions.
The standard distinguishes direct and indirect emissions. Scope 1 emissions arise from sources owned or controlled by the entity. Scope 2 emissions are indirect emissions associated with energy transferred to and consumed by the entity. Scope 3 covers other indirect emissions. The assurance engagement must be anchored to the applicable criteria used by the entity to quantify and report emissions.
Limited assurance vs reasonable assurance
SAE 3410 permits both limited and reasonable assurance engagements, but the two are not interchangeable. In a reasonable assurance engagement, the practitioner seeks sufficient appropriate evidence to express a positive-form conclusion that the GHG statement is prepared, in all material respects, in accordance with the applicable criteria. In a limited assurance engagement, the level of assurance is lower and the conclusion is expressed in negative form: whether anything has come to the practitioner's attention that causes the practitioner to believe the statement is not prepared, in all material respects, in accordance with the criteria.
The difference affects the work effort. SAE 3410 states that procedures in limited assurance vary in nature and timing from, and are less extensive than, those for reasonable assurance. Both can involve inspection, observation, confirmation, recalculation, reperformance, analytical procedures and inquiry; the mix depends on the engagement and assessed risks.
Step 1: confirm the engagement is capable of assurance
Before acceptance, the engagement partner needs suitable assurance competence and sufficient competence in emissions quantification and reporting, while the engagement team collectively needs the capabilities required for the work. The practitioner also evaluates whether the GHG statement and engagement scope are useful to intended users.
The applicable criteria are fundamental. SAE 3410 requires the criteria to address, at a minimum, how the organisational boundary is determined, which greenhouse gases are accounted for, acceptable quantification methods including base-year adjustments where relevant, and disclosures that allow users to understand significant judgments. Management must acknowledge responsibility for preparing the GHG statement under those criteria and for the internal control it considers necessary to prevent material misstatement.
Step 2: set materiality for emissions information
Materiality is not reserved for financial statements. SAE 3410 requires the practitioner to determine materiality for the GHG statement when establishing the overall engagement strategy and to determine performance materiality for risk assessment and further procedures. If information discovered during the engagement would have changed the initial materiality amount, it must be revised.
In practice, the engagement file should explain not only the numerical benchmark but also why particular types of emissions or disclosures may be important by nature. A small but sensitive omission may matter differently from a routine measurement variance.
Step 3: understand the emissions data chain and identify risks
The practitioner needs to understand the entity, its environment, relevant reporting criteria, organisational boundary, emission sources, quantification methods and reporting policies. SAE 3410 specifically requires attention to completeness of emission sources, uncertainty in quantities, changes in operations, possible double counting, and significant estimates.
Risk-identification procedures include inquiry, analytical procedures, observation and inspection. The standard also highlights risk factors such as intentional misstatement, omission of potentially significant emissions, regulatory or economic change, complexity in defining organisational boundaries, unusual emissions, subjectivity in quantification, inclusion of Scope 3 emissions and the quality of data supporting significant estimates.
Worked example: fuel consumption to Scope 1 emissions
Assume a manufacturer reports Scope 1 emissions from diesel used in generators at multiple plants. A weak assurance approach would simply agree the final emissions total to a spreadsheet. A stronger approach follows the data chain: identify which plants fall within the organisational boundary, reconcile fuel purchase or consumption records to the source population, inspect whether unusual or emergency generator use is captured, evaluate the emission factor and conversion logic under the applicable criteria, recalculate selected amounts, and investigate unexpected plant-level trends.
If one large plant was acquired during the year, the practitioner should also consider whether the boundary and reporting period treatment are consistent with the criteria and whether any base-year adjustment or related disclosure is required. The point is to test the process that creates the GHG number, not merely the final total.
Step 4: design procedures that respond to the assessed risk
SAE 3410 requires overall responses and further procedures that are responsive to assessed risks, with the nature, timing and extent reflecting whether the engagement provides limited or reasonable assurance. Depending on the risk, work may include tests of controls, tests of details, analytical procedures, site visits at significant facilities, recalculation of emissions, evaluation of estimates, and work involving experts or other practitioners.
For a reasonable assurance engagement, the standard requires a deeper understanding of relevant internal control and procedures beyond inquiry to evaluate control design and determine implementation. The practitioner also decides whether on-site procedures are necessary at significant facilities rather than assuming central-office records are sufficient.
Step 5: close the engagement with evidence, representations and reporting
Management explanations are not enough on their own. The practitioner evaluates identified misstatements, obtains written representations from appropriate people, considers subsequent events, comparative information and other information, and documents significant judgments and conclusions. Written representations are dated as near as practicable to, but not after, the assurance report date.
The assurance report identifies the GHG statement, applicable criteria, responsibilities of management and practitioner, level of assurance and conclusion. Limited-assurance reporting ordinarily describes procedures in more detail so users can understand the lower level of assurance. The report should not blur a limited assurance engagement into a reasonable assurance opinion.
Practical SAE 3410 file checklist
- Define the GHG statement, reporting period, intended users, applicable criteria and organisational boundary.
- Confirm engagement-team competence in both assurance and emissions quantification, including specialist needs.
- Document materiality and performance materiality and revise them if new information requires it.
- Map Scope 1, Scope 2 and relevant Scope 3 sources to the underlying activity data and reporting process.
- Identify risks from omissions, boundary errors, emission factors, estimates, manual adjustments, unusual emissions and double counting.
- Design procedures appropriate to the chosen assurance level and assessed risks.
- Consider whether significant facilities require on-site procedures and whether experts or other practitioners are needed.
- Evaluate misstatements, disclosures, written representations, subsequent events and comparative information before forming the conclusion.
- Make the assurance level and basis of conclusion unmistakable in the final report.
Common mistakes
- Assuming SAE 3410 itself requires every company to obtain GHG assurance.
- Treating a GHG statement as a spreadsheet total without testing its organisational boundary and source-data completeness.
- Using an emission factor without checking whether it is permitted and appropriate under the applicable criteria.
- Applying financial-statement materiality mechanically without considering the nature of emissions and disclosures.
- Calling a limited assurance engagement a reasonable assurance engagement because extensive procedures happened to be performed in one area.
- Ignoring acquired, disposed or outsourced operations that may change the organisational boundary or comparatives.
Practical takeaway
A strong SAE 3410 engagement follows the emissions number from boundary to source data to quantification to disclosure. Start with suitable criteria and a clearly defined scope, set materiality, identify where the GHG statement could be materially misstated, design procedures that match the assurance level, and make the final conclusion transparent. For CAs entering sustainability assurance, the key shift is to apply familiar assurance discipline to a data system whose risks include scientific estimation, operational boundaries and non-financial source information.
