Dutch Authority for the Financial Markets issues four pillars for a robust CSRD assurance approach by audit firms

The Dutch Authority for the Financial Markets (AFM) published a report setting out four pillars for developing a robust approach to assurance on sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD), following the first year in which audit firms that audit public interest entities provided CSRD assurance. Nearly all large listed companies voluntarily prepared sustainability reports for financial year 2024 in line with the CSRD, despite the directive not yet being incorporated into Dutch law. AFM reports that audit firms have taken steps since its 2023 exploratory work, including further developing quality management for CSRD assurance and improving capacity and expertise. The four pillars focus on a robust quality management system for CSRD assurance, a competent assurance team and strong project management, understanding the client and its processes to underpin the assurance plan, and aligning procedures with assessed assurance risks and assurance materiality. The guidance is positioned as relevant for both public interest entity audit firms and other licensed audit firms ahead of the CSRD extending from financial year 2027 to large companies with more than 1,000 employees and turnover above EUR 450 million, where CSRD assurance may also be performed by audit firms with a regular licence. AFM underlines that CSRD assurance differs from financial assurance, including the greater focus on non-financial information, value chains and more frequent estimates.