Options for assurance on areas such as climate, APMs and KPIs

Original recommendation

The Brydon Review recommended that Alternative Performance Measures and Key Performance Indicators should be subject to audit. (Source: Brydon 20.1.5 & 20.2.8)

The Brydon Review also indicated:

In the world of audit beyond today’s statutory audit, a similar process for setting scope would be followed. Here the breadth of the discretionary audit scope would be proposed by the audit committee in the same way. Now, at the same time, it would be open to the audit committee to indicate its intention that CO2 emissions, or published oil reserves, for example, are to be subjected to an audit process. The audit committee invitation to shareholders would include reference to the information which they wish to have audited and in what manner. (Source: Brydon 9.2.2/3)


The proposed Audit and Assurance Policy process in the White Paper (Section 6.7) will empower investors to ask companies to obtain specific assurance on Alternative Performance Measures (APMs) and Key Performance Indicators (KPIs) linked to remuneration, beyond any arising from the statutory audit of the financial statements, should they wish to do so. The Government also notes that companies may wish to engage a different firm to provide specific assurance on APMs or KPIs linked to remuneration, in particular non-financial KPIs for which specialist expertise is needed (e.g. employee satisfaction metrics, carbon emissions or oil reserves). It therefore cannot be assumed that the statutory auditor is always best placed to provide any assurance which companies and their shareholders may wish to obtain. The Audit and Assurance Policy will enable companies to explain their rationale for proposing to engage a particular firm and invite shareholders’ views as appropriate.

Government response

The Government will leave the market – companies, directors, investors – to shape the development of an enhanced wider assurance services market in the coming years, stimulated by the requirement to publish an Audit and Assurance Policy.

Correction list for hyphenation

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