Building Your Mandatory Climate Report — Session 2: Preparing for Climate Report Assurance

What the webinar was about

Sharon Broekhuizen, Managing Director at KSIB — formerly a Partner at a large Professional Services firm with 20+ years of experience implementing complex accounting standards — joined Afonso Firmo (co-CEO, NetNada) for session 2 of the 5-part series. The session is for sustainability, finance and climate professionals approaching their first audited climate report under AASB S2. Sharon walks through what assurance actually means, what the auditor will and won’t opine on, how scope expands year on year, and the practical preparation that separates a smooth Year 1 from a painful one.

Watch if you’re a CFO, sustainability manager, climate lead or company secretary at a Group 2 or Group 3 reporter heading into your first audited climate report.

Top takeaways

1. Assurance lifts data quality, not just credibility. The auditor’s opinion adds external trust to a report full of judgment and emerging methodology — but the bigger benefit is the forcing function. Preparing for audit tightens up the data, processes and controls that sit behind every number.
2. The auditor opines on disclosure accuracy, not target achievability. They don’t prepare the report and they don’t validate whether your net zero target is realistic. They opine on whether what you’ve said about it is materially correct and in line with S2.
3. Phased scope, escalating cost. Year 1 covers governance, parts of strategy, and Scope 1 & 2. Scope 3 enters Year 2. Reasonable assurance kicks in from Year 4. Both your preparation cost and your audit fee will rise year on year — budget for it now, not later.
4. Limited vs reasonable assurance is not a technicality. Limited assurance (Years 1–3) is a negative-form opinion: “nothing has come to our attention.” Reasonable assurance (Year 4+) requires affirmative testing back to source documents, like a financial statement audit. “Audit” and “assurance” get used interchangeably, but only reasonable assurance is technically an audit.
5. Auditors read the whole report, not just the in-scope sections. Greenwashing is on ASIC’s radar and the auditor will flag anything misleading even if it sits outside formal scope. Private company reports lodged with ASIC can still be purchased by anyone — don’t assume confidentiality.
6. The audit runs in three stages. Planning (auditors build understanding of your business, value chain, systems and controls), fieldwork (review of draft, sampling, management inquiries), and evaluation and reporting (opinion, board sign-off, recommendations for next year). Resource each stage differently.
7. Treat the engagement as a project from day one. Start from the board sign-off date and work backwards. Bi-weekly check-ins. Clear escalation protocols. Walk auditors through your end-to-end Scope 1 & 2 process. Ask for the budget itemised so you can scope effort and cost against each section.
8. Document every decision as you make it. Climate scenarios, methodology choices, who decided, why — capture it in the moment, not later under audit pressure. The evidence hierarchy auditors apply: third-party beats internal, documented beats verbal, senior-reviewed beats unreviewed, recent beats old. Show gaps and contradictory information openly; auditors want balanced judgment, not a one-sided narrative.

FAQs

Does our whole climate report get audited in Year 1?

No. Year 1 assurance covers governance disclosures, parts of strategy, and Scope 1 and 2 emissions only. The scope expands each subsequent year, with Scope 3 entering in Year 2 and reasonable assurance applying from Year 4.

What’s the difference between limited and reasonable assurance?

Limited assurance (Years 1–3) is a negative-form opinion — “nothing has come to our attention that would cause us to believe the report is materially misstated.” Reasonable assurance (Year 4+) is a positive opinion based on affirmative testing back to source documents, equivalent to the standard applied to financial statements. Technically, only reasonable assurance is an “audit.”

Will the auditor comment on sections that aren’t in scope?

Yes. Even though only select sections require an opinion in Year 1, the auditor will read the entire report and flag anything misleading, inconsistent or greenwashing-adjacent. ASIC has been clear that greenwashing is a focus area.

What does the auditor opine on for targets?

Whether your disclosures about your targets are accurate and prepared in line with S2 — not whether the targets themselves are achievable. The auditor will check that what you’ve written about your target, baseline, methodology and progress is true. They will not validate the ambition itself.

What are the three stages of the audit?

Planning (auditors learn your business, value chain, systems and controls), evidence gathering and fieldwork (review of draft report, sampling, management inquiries), and evaluation and reporting (final opinion, board sign-off, recommendations for the next cycle).

How should we prepare practically?

Bring the right people into early meetings. Walk auditors through your end-to-end process for Scope 1 and 2 data collection. Ask for the budget itemised by section. Run the engagement like a project — start from the board sign-off date, work backwards, hold bi-weekly check-ins, and agree an escalation protocol up front.

What evidence will auditors prioritise?

Third-party evidence over internal. Documented over verbal. Reviewed by a senior person over unreviewed. Recent over old. Show contradictory information and acknowledged gaps openly — auditors want to see balanced judgment, not a curated narrative.

What about governance — does S2 introduce new obligations?

S2 itself does not create new governance requirements, but the Corporations Act and RG 280 do. Directors are accountable for governance over sustainability risks and opportunities, and there are new record-keeping requirements specific to sustainability reports. Get directors briefed early.

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If you have any questions about the session, please email us at support@netnada.com.au