FRC publishes guidance on auditor climate-related reporting responsibilities

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17 Feb, 2022

The Financial Reporting Council (FRC) has published a new FRC Staff Guidance, 'Auditor responsibilities under ISA (UK) 720 in respect of climate related reporting by companies required by the Financial Conduct Authority'.

The staff guidance note sets out information for auditors that may assist them in determining their responsibilities under ISA (UK) 720 in their audits of financial statements of companies that are required to include climate-related disclosures consistent with the Taskforce on Climate-related Financial Disclosures (TCFD) Recommendations and Recommended Disclosures.

Following the TCFD aligned climate-related disclosure requirements for listed companies by the Financial Conduct Authority (FCA), auditors have increasingly requested guidance from the FRC, in respect of their specific responsibilities under ISA (UK) 720.  The ESG Statement of Intent, stated that the FRC would monitor the need for guidance on ESG-related audit and assurance and issue audit and assurance guidance at the national level as appropriate.  The guidance note is designed to address this commitment.

The staff guidance also includes a brief reminder of auditor’s responsibilities under ISA (UK) 720 in respect of the company’s Streamlined Energy and Carbon Reporting (‘SECR’) disclosures.  It does not deal with the other auditor’s responsibilities in respect of the auditor’s consideration of climate-related risks or climate-related disclosures in an audit of financial statements.

The press release and Staff Guidance are available on the FRC website. 

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