Policy and insights report
The concept of internal control is fundamental to establishing and maintaining trust over financial data. As entities increasingly bring sustainability-related objectives into their performance management and external reporting systems, so the requirement to ensure trust in such data requires the application of the concepts of internal control beyond the traditional.
As part of our partnership with The Institute of Internal Auditors (The IIA) and through drawing on the opinions of approximately 50 ACCA and IIA members together with over 900 survey respondents, this report considers how the implementation of internal control over sustainability data is progressing.
Three key messages from the report
· The nature of the process flows related to sustainability data require a reappraisal of the accepted internal control concepts to ensure that they can be applied appropriately.
· A successful implementation of internal control over sustainability data fundamentally relies upon the executive and management of the entity establishing sustainability objectives as core strategic objectives monitored by robust key performance indicators (KPIs).
· Data ownership that embraces internal control must be established, especially in areas where control consciousness is not fundamental to personal conduct and all those involved in internal control need the appropriate skill sets.
The survey results highlight an expectation versus reality gap in the application of internal control in this area. The diagram below shows perspectives on controls over sustainability data – importance, leader support, and adequacy (among respondents with sustainability reporting) (n=658)
This report is aimed at the following audiences:
- Boards and executives – by focusing upon the imperative of sustainability and how accurate data drives organisational performance.
- CFOs and finance teams – through discussing the issues around how to establish internal control over non-financial data.
- Internal audit teams – in demonstrating the vital and proactive role of the third line in this area. The content available in addition to the main report includes a Shorthand site which summarises the report and provides downloadable action plans.
Policy and insights report
Internal control over sustainability data
"Trust in sustainability data is vital if we’re going to be successful in driving forward a more sustainable world, and a robust and effective approach to internal controls inside businesses is crucial to achieving this. Through this leading-edge research, we’re equipping accountancy, finance and internal audit professionals with the knowledge they need for the evolving sustainability landscape."
Helen Brand OBE, chief executive, ACCA
"By focusing on how we apply internal controls to sustainability data, our professions can collectively strengthen trust, support better decisions, and help build truly sustainable businesses. This report offers a clear path forward and a compelling call to action for accountancy, finance, and internal audit professionals to lead the way."
Anthony J. Pugliese, President and CEO of The Institute of Internal Auditors
