The American Institute of CPAs (AICPA) and California Society of CPAs (CalCPA) have jointly called for clearer guidance on California’s climate risk disclosure rules.
In their recent comment letter to the California Air Resources Board (CARB), the accounting bodies highlighted the need for clarity in implementation and compliance, especially in the first year.
The letter reads: “Transparency and accountability in sustainability reporting and assurance are crucial for building stakeholder trust and meeting market and public expectations.
“To strengthen confidence in reported information, we encourage legislators and regulators to incorporate recognised sustainability reporting and assurance standards, which already outline different levels of assurance, and establish uniform requirements for assurance practitioners”
In their letter, the AICPA and CalCPA emphasised the need for clear guidance on implementation and compliance in the initial year.
“CARB should update its rulemaking timeline, clarify how it will address statutory deadlines if rulemaking is delayed, and provide implementation guidance on reporting and clarity on assurance requirements for the first reporting cycle,” the letter added.
The accounting bodies also urged CARB to broaden the range of acceptable reporting standards.
AICPA and CalCPA also suggested that climate-related disclosures aligned with the International Financial Reporting Standards (IFRS) Foundation should be recognised under California’s regulations. This would simplify the process and ensure consistency among entities.
In addition, the letter addressed the need for aligning assurance standards with recognised terminology.
“The use of non-standard terms can create confusion for practitioners, preparers and report users, making it harder to apply standards correctly. AICPA assurance standards guide CPAs in assurance engagements, which are subject to ongoing monitoring and quality control,” the letter reads.
The AICPA and CalCPA also stressed the importance of setting rigorous minimum qualifications for assurance practitioners, including aspects such as independence, competency, ethics, oversight, and quality management.
These qualifications are required to meet or exceed the standards CPAs follow when assuring financial and nonfinancial information.
Following the enactment of California’s legislation, the AICPA and CalCPA established a climate-disclosure working group to review implementation and compliance issues.
