Exposure Draft

Standard on Assurance Engagements(SAE) 3410
Assurance Engagements on Greenhouse Gas Statements

(Last date for comments: November 6, 2020)

Issued by
Sustainability Reporting Standards Board
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
New Delhi

ED SAE 3410 is being issued in the context of ―Guidance Note on Reports or Certificates for Special Purposes, issued by the ICAI, which provides guidance on engagements which require a professional accountant in public practice to issue reports other than those which are issued in audits or reviews of historical financial information.

Your comments on this Exposure Draft should reach us by November 6, 2020. Comments are most helpful if they indicate the specific paragraph(s) to which they relate, contain a clear rationale and, where applicable, provide a suggestion for alternative wording. The comments should be mailed at srsb@icai.in.


1. Given the link between greenhouse gas (GHG) emissions and climate change, many entities are quantifying their GHG emissions for internal management purposes, and many are also preparing a GHG statement:

(a) As part of a regulatory disclosure regime;

(b) As part of an emissions trading scheme; or

(c) To inform investors and others on a voluntary basis. Voluntary disclosures may be, for example, published as a stand-alone document; included as part of a broader sustainability report or in an entity’s annual report; or made to support inclusion in a “carbon register.”

Scope of this SAE

2. This Standard on Assurance Engagements (SAE) deals with assurance engagements to report on an entity’s GHG statement.

3. The practitioner’s conclusion in an assurance engagement may cover information in addition to a GHG statement, for example, when the practitioner is engaged to report on a sustainability report of which a GHG statement is only one part. In such cases: (Ref: Para. A1-A2)

(a) This SAE applies to assurance procedures performed with respect to the GHG statement other than when the GHG statement is a relatively minor part of the overall information subject to assurance; and

(b) The Guidance Note on Reports or Certificates for Special Purposes (hereinafter referred as “the Guidance Note”) (or another SAE dealing with a specific underlying subject matter) applies to assurance procedures performed with respect to the remainder of the information covered by the practitioner’s conclusion.

4. This SAE does not deal with, or provide specific guidance for, assurance engagements to report on the following:

(a) Statements of emissions other than GHG emissions, for example, nitrogen oxides (NOx) and sulphur dioxide (SO2). This SAE may nonetheless provide guidance for such engagements;1

(b) Other GHG-related information, such as product lifecycle “footprints,” hypothetical “baseline” information, and key performance indicators based on emissions data; or (Ref: Para. A3)

(c) Instruments, processes or mechanisms, such as offset projects, used by other entities as missions deductions. However, where anentity’s GHG statement includese missions deductions that are subject to assurance, the requirements of this SAE apply in relation to those emissions deductions as appropriate (see paragraph 76(f)).

Assertion-based and Direct Reporting Engagements

5. The Guidance Note notes that an assurance engagement may be either an assertion-based engagement or a direct reporting engagement. This SAE deals only with assertion-based engagements.2

Procedures for Reasonable Assurance and Limited Assurance Engagements

6. The Guidance Note notes that an assurance engagement may be either a reasonable assurance engagement or a limited assurance engagement.3 This SAE deals with both reasonable and limited assurance engagements.

7. In both reasonable assurance and limited assurance engagements on a GHG statement, the practitioner choosesa combination of assurance procedures, which can include: inspection; observation; confirmation; recalculation; reperformance; analytical procedures; andinquiry.

Determining the assurance procedures to be performed on a particular engagement is a matter of professional judgment. Because GHG statements cover a wide range of circumstances, the nature, timing and extent of procedures are likely to vary considerably from engagement to engagement.

8. Unless otherwise stated, each requirement of this SAE applies to both reasonable and limited assurance engagements. Because the level of assurance obtainedina limited assurance engagement is lower than in a reasonable assurance engagement, the procedures the practitioner will perform in a limited assurance engagement will vary in nature and timing from, and are less in extent than, for a reasonable assurance engagement. 4Requirements that apply to only one or the other type of engagement have been presented in a columnar format with the letter “L” (limited assurance) or “R” (reasonable assurance) after the paragraph number. Although some procedures are required only for reasonable assurance engagements, they may nonetheless be appropriate in some limited assurance engagements (see also paragraph A90, which outlines the primary differences between the practitioner’s further procedures for a reasonable assurance engagement and a limited assurance engagement on a GHG statement). (Ref: Para. A4, A90)

Relationship with the Guidance Note, Other Professional Pronouncements, and Other Requirements

9. The practitioner is required to comply with the Guidance Note and this SAE when performing an assurance engagement to report on an entity’s GHG statement. This SAE supplements, but does not replace, the Guidance Note, and expands on how the Guidance Note is to be applied in an assurance engagement to report on an entity’s GHG statement. (Ref: Para. A17)

10. Compliance withthe Guidance Note requires, among other things, compliance with the provisions of the Code of Ethics issued by the Institute of Chartered Accountants of India related to assurance engagements5. It also requires the engagement partner to be a member of a firm that applies SQC 16.(Ref: Para. A5-A6)

11. Where the engagement is subject to local law or regulation or the provisions of an emissions trading scheme, this SAE does not override that law, regulation or provision. In the event that local law or regulation or the provisions of an emissions trading scheme differ from this SAE, an engagement conducted in accordance with local law or regulation or the provisions of a particular scheme will not automatically comply with this SAE. The practitionerisentitled to represent compliance with this SAE in addition to compliance with local law or regulation or the provisions of the emissions trading scheme only when all applicable requirements of this SAE have been met. (Ref: Para. A7)

Effective Date

12. This SAE is effective for assurance reports covering periods ending on or after………………


13. The objectives of the practitioner are:

(a) To obtain either reasonable assurance or limited assurance, as appropriate, about whether the GHG statement is free from material misstatement, whether due to fraud or error, thereby enabling the practitioner to express a reasonable assurance or limited assurance conclusion;

(b) To report, in accordance with the practitioner’s findings, about whether:

(i) In the case of a reasonable assurance engagement, the GHG statement is prepared, in all material respects, in accordance with the applicable criteria; or

(ii) In the case of a limited assurance engagement, anything has come to the practitioner’s attention that causes the practitioner to believe, on the basis of the procedures performed and evidence obtained, that the GHG statement is not prepared, in all material respects, in accordance with the applicable criteria; and

(c) To communicate as otherwise required by this SAE, in accordance with the practitioner’s findings.


14. For purposes of this SAE, the following terms have the meanings attributed below7:

(a)  Applicable criteria – The criteria used by the entity to quantify and report its emissions in the GHG statement.

(b) Assertions – Representations by the entity, explicit or otherwise, that are embodied in the GHG statement, as used by the practitioner to consider the different types of potential misstatements that may occur.

(c) Base year – A specific year or an average over multiple years against which an entity’s emissions are compared over time.

(d) Cap and trade – A system that sets overall emissions limits, allocates emissions allowances to participants, and allows them to trade allowances and emission credits with each other.

(e) Comparative information – The amounts and disclosures included in the GHG statement in respect of one or more prior periods.

(f) Emissions- The GHGs that, during the relevant period, have been emitted to the atmosphere or would have been emitted to the atmosphere had they not been captured and channeled to a sink. Emissions can be categorized as:

  • Direct emissions(also known as Scope 1 emissions), which are emissions from sources that are owned or controlled by the entity. (Ref: Para. A8)
  • Indirect emissions, which are emissions that are a consequence of the activities of the entity, but which occur at sources that are owned or controlled by another entity. Indirect emissions can be further categorized as:
    • Scope2 emissions, which are emissions associated with energy that is transferred to and consumed by the entity. (Ref: Para. A9)
    • Scope 3 emissions, which are all other indirect emissions. (Ref: Para. A10)

(g) Emissions deduction – Any item included in the entity’s GHG statement that is deducted from the total reported emissions, but which is not a removal; it commonly includes purchased offsets, but can also include variety of other instrument so mechanisms such as performance credits and allowances that are recognized by a regulatory or other scheme of which the entity is a part. (Ref: Para. A11-A12)

(h) Emissions factor – A mathematical factor or ratio for converting the measure of an activity (for example, liters of fuel consumed, kilometers travelled, the number of animals in husbandry, or tonnes of product produced) into an estimate of the quantity of GHGs associated with that activity.

(i) Emissions trading scheme – A market-based approach used to control greenhouse gases by providing economic incentives for achieving reductions in the emissions of such gases.

(j) Entity – The legal entity, economic entity, or the identifiable portion of a legal or economic entity (for example, a single factory or other form of facility, such as a land fill site), or combination of legal or other entities or portions of those entities (for example, a joint venture) to which the emissions in the GHG statement relate.

(k) Fraud – An intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage.

(l) Further procedures- Procedures performed in response to assessed risks of material misstatement, including tests of controls (if any), tests of details and analytical procedures.

(m) GHG statement – A statement setting out constituent elements and quantifying an entity’s GHG emissions for a period(sometimes known as an emissions inventory) and, where applicable, comparative information and explanatory notes including a summary of significant quantification and reporting policies. An entity’s GHG statement may also include a categorized listing of removals or emissions deductions. Where the engagement does not cover the entire GHG statement, the term ―GHG statement” is to be read as that portion that is covered by the engagement. The GHG statement is the ―subject matter information” of the engagement.8

(n) Greenhouse gases (GHGs) – Carbon dioxide (CO2) and any other gases required by the applicable criteria to be included in the GHG statement, such as: methane; nitrous oxide; sulphur hexafluoride; hydrofluorocarbons; perfluorocarbons; and chlorofluorocarbons. Gases other than carbon dioxide are often expressed in terms of carbon dioxide equivalents (CO2-e).

(o) Organizational boundary – The boundary that determines which operations to include in the entity’s GHG statement.

(p) Performance materiality – The amount or amounts set by the practitioner at less than materiality for the GHG statement to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the GHG statement. If applicable, performance materiality also refers to the amount or amounts set by the practitioner at less than the materiality level or levels for particular types of emissions or disclosures.

(q) Purchased offset – An emissions deduction in which the entity pays for the lowering of another entity’s emissions(emissions reductions) or the increasing of another entity’s removals (removal enhancements), compared to a hypothetical baseline. (Ref: Para. A13)

(r) Quantification – The process of determining the quantity of GHGs that relate to the entity, either directly or indirectly, as emitted (or removed) by particular sources (or sinks).

(s) Removal – The GHGs that the entity has, during the period, removed from the atmosphere, or that would have been emitted to the atmosphere had they not been captured and channeled to a sink. (Ref: Para. A14)

(t) Significant facility – A facility that is of individual significance due to the size of its emissions relative to the aggregate emissions included in the GHG statement or its specific nature or circumstances which give rise to particular risks of material misstatement. (Ref: Para. A15- A16)

(u) Sink – A physical unit or process that removes GHGs from the atmosphere.

(v) Source – A physical unit or process that releases GHGs into the atmosphere.

(w) Type of emission – A grouping of emissions based on, for example, source of emission, type of gas, region, or facility.


Guidance Note on Reports or Certificates for Special Purposes

15. The practitioner shall not represent compliance with this SAE unless the practitioner has complied with the requirements of both this SAE and the Guidance Note. (Ref: Para. A5-A6, A17, A21-A22, A37, A127)

Acceptance and Continuance of the Engagement
Skills, Knowledge and Experience

16. The engagement partner shall:

  • Have competence in assurance skills and techniques developed through extensive training and practical application, and sufficient competence in the quantification and reporting of emissions,to accept responsibility for the assurance conclusion; and
  • Be satisfied that those persons who are to perform the engagement collectively have the

appropriate competence and capabilities, including in the quantification and reporting of emissions and inassurance, to perform the assurance engagement in accordance with this SAE. (Ref: Para. A18-A19)

Preconditions for the Engagement

17. In order to establish whether the preconditions for the engagement are present:

(a) The engagement partner shall determine that both the GHG statement and the engagement have sufficient scope to be useful to intended users, considering, in particular: (Ref: Para. A20)

(i) If the GHG statement is to exclude significant emissions that have been, or could readily be, quantified, whether such exclusions are reasonable in the circumstances;

(ii) If the engagement is to exclude assurance with respect to significant emissions that are reported by the entity, whether such exclusions are reasonable in the circumstances; and

(iii) If the engagement is to include assurance with respect to emissions deductions, whether the nature of the assurance the practitioner will obtain with respect to the deductions and the intended content of the assurance report with respect to them are clear, reasonable in the circumstances, and understood by the engaging party. (Ref: Para. A11-A12)

(b) When determining the suitability of the applicable criteria, as required bythe Guidance Note9, the practitioner shall determine whether the criteria encompass at a minimum: (Ref: Para. A23- A26)

(i) The method for determining the entity’s organizational boundary; (Ref: Para. A27-A28)

(ii) The GHGs to be accounted for;

(iii) Acceptable quantification methods, including methods for making adjustments to the base year (if applicable); and

(iv) Adequate disclosures such that intended users can understand the significant judgments made in preparing the GHG statement. (Ref: Para. A29-A34)

(c) The practitioner shall obtain the agreement of the entity that it acknowledges and understands its responsibility:

(i) For designing, implementing and maintaining such internal control as the entity determines is necessary to enable the preparation of a GHG statement that is free from material misstatement, whether due to fraud or error;

(ii) For the preparation of its GHG statement in accordance with the applicable criteria; and (Ref: Para. A35)

(iii) For referring to or describing in its GHG statement the applicable criteria it has used and, when it is not readily apparent from the engagement circumstances, who developed them. (Ref: Para. A36)

Agreement on the Terms of the Engagement

18. The terms of the engagement required to be agreed bythe Guidance Note10shall include:

(Ref: Para. A37)

(a) The objective and scope of the engagement;

(b) The responsibilities of the practitioner;

(c) The responsibilities of the entity, including those described in paragraph 17(c);

(d) Identification of the applicable criteria for the preparation of the GHG statement;

(e) Reference to the expected form and content of any reports to be issued by the practitioner and a statement that there may be circumstances in which a report may differ from its expected form and content; and

(f) An acknowledgement that the entity agrees to provide written representations at the conclusion of the engagement.


19. When planning the engagement as required by the Guidance Note11,the practitioner shall: (Ref: Para. A38- A41)

(a) Identify the characteristics of the engagement that define its scope;

(b) Ascertain the reporting objectives of the engagement to plan the timing of the engagement and the nature of the communications required;

(c) Consider the factors that, in the practitioner’s professional judgment, are significant in directing the engagement team’s efforts;

(d) Consider the results of engagement acceptance or continuance procedures and, where applicable, whether knowledge gained on other engagements performed by the engagement partner for the entity is relevant;

(e) Ascertain the nature, timing and extent of resources necessary to perform the engagement, including the involvement of experts and of other practitioners; and (Ref: Para. A42- A43)

(f) Determine the impact of the entity’s internal audit function, if any, on the engagement.

Materiality in Planning and Performing the Engagement

Determining Materiality and Performance Materiality When Planning the Engagement

20. When establishing the overall engagement strategy, the practitioner shall determine materiality for the GHG statement. (Ref: Para. A44-A50)

21. The practitioner shall determine performance materiality for purposes of assessing the risks of material misstatement and determining the nature, timing and extent of further procedures.

Revision as the Engagement Progresses

22. The practitioner shall revise materiality for the GHG statement in the event of becoming aware of information during the engagement that would have caused the practitioner to have determined a different amount initially. (Ref: Para. A51)

Understanding the Entity and Its Environment, Including the Entity’s Internal Control, and Identifying and Assessing Risks of Material Misstatement

Obtaining an Understanding of the Entity and Its Environment

23. The practitioner shall obtain an understanding of the following: (Ref: Para. A52-A53)

(a) Relevant industry, regulatory, and other external factors including the applicable criteria.

(b) The nature of the entity, including:

(i) The nature of the operations included in the entity’s organizational boundary, including: (Ref: Para. A27-A28)

a. The sources and completeness of emissions and, if any, sinks and emissions deductions;

b. The contribution of each to the entity’s overall emissions; and

c. The uncertainties associated with the quantities reported in the GHG statement. (Ref: Para. A54-A59)

(ii) Changes from the prior period in the nature or extent of operations, including whether there have been any mergers, acquisitions, or sales of emissions sources, or outsourcing of functions with significant emissions; and

(iii) The frequency and nature of interruptions to operations. (Ref: Para. A60)

(c) The entity’s selection and application of quantification methods and reporting policies, including the reasons for changes thereto and the potential for double-counting of emissions in the GHG statement.

(d) The requirements of the applicable criteria relevant to estimates, including related disclosures.

(e) The entity’s climate change objective and strategy, if any, and associated economic, regulatory, physical and reputational risks. (Ref: Para. A61)

(f) The oversight of, and responsibility for, emissions information within the entity.

(g) Whether the entity has an internal audit function and, if so, its activities and main findings with respect to emissions.

Procedures to Obtain an Understanding and to Identify and Assess Risks of Material Misstatement

24. The procedures to obtain an understanding of the entity and its environment and to identify and assess risks of material misstatement shall include the following: (Ref: Para. A52-A53, A62)

(a) Inquiries of those within the entity who, in the practitioner’s judgment, have information that is likely to assist in identifying and assessing risks of material misstatement due to fraud or error.

(b) Analytical procedures. (Ref: Para. A63-A65)

(c) Observation and inspection. (Ref: Para. A66-A68)

Download Full Text of Exposure Draft- Standard on Assurance Engagements(SAE) 3410 Assurance Engagements on Greenhouse Gas Statements


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October 2020