Final timeline for assurance over your mandatory sustainability report

This article was originally published in October 2024 and has been updated in February 2025. On 28 January 2025, the Auditing and Assurance Standards Board (AUASB) approved a final standard, ASSA 5000 General Requirements for Sustainability Assurance Engagements which applies to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025. On the same day, the AUASB also approved ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001.

Legislation to mandate sustainability reporting received Royal Assent on 17 September 2024, ushering in a new era of sustainability reports accompanying the financial reports of many entities lodging financial statements with the Australian Securities and Investments Commission (ASIC). Our decision tree will help you determine if your entity is subject to mandatory sustainability reporting, and when.

The legislation started on 1 January 2025, so Group 1 entities don’t have much time to get ready. Their first sustainability report must cover years ending 31 December 2025 onwards, and the question on everyone’s minds is, will this sustainability information have to be audited, and when?

Is an audit required for the sustainability report?

Section 301A of the Corporations Act 2001 (Act) requires the sustainability report to be audited in accordance with the auditing standards. The Act also requires the Australian Auditing and Assurance Standards Board (AUASB) to make standards to specify the extent of and provide for the audit and review of sustainability reports for financial years beginning on or before 30 June 2030.

On 28 January 2025, the Auditing and Assurance Standards Board (AUASB) approved a final standard for sustainability assurance engagements. ASSA 5000 General Requirements for Sustainability Assurance Engagements applies to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025.

Phase-in period for assurance

Although ASSA 5000 applies to sustainability assurance engagements for reporting periods beginning on or after 1 January 2025, there is a phase-in period until 2030 during which some sections of the climate disclosures prepared under AASB S2 Climate-related Disclosures will be subject to different levels of assurance. The phase-in timeline is set out in ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001, which the AUASB also approved on 28 January 2025.

A review engagement will result in the auditor providing limited assurance, and an audit engagement will result in reasonable assurance on the sustainability disclosures.

Despite the phase-in period, entities can choose to have their climate disclosures reviewed or audited before the mandatory dates set out in ASSA 5010. The start date of 1 January 2025 for ASSA 5000 will facilitate this.

AUASB timeline

ASSA 5010 sets out the AUASB’s timeline for entities to obtain limited or reasonable assurance on various aspects of the climate disclosures prepared under the Corporations Act 2001 and AASB S2. This phase-in model takes into account the likely maturity of an entity’s systems and processes, the demands for assurance over climate disclosures, and the capacity and capabilities of auditors and their experts during the initial years of reporting.

Summary of key phase-in reliefs

Governance and strategy disclosures (risks and opportunities), as well as the statement that there are no material climate-related risks and opportunities, will be subject to limited assurance in the first year, but reasonable assurance is only required in the fourth year.

Limited assurance must be provided by the auditor for all other disclosures from the second year, stepping up to reasonable assurance in the fourth year.

The AUASB initially proposed that Scope 1 and Scope 2 emissions be subject to reasonable assurance (audited) from the second year. However, the final timeline in ASSA 5010 has been amended to only require limited assurance in years 2 and 3 for Scopes 1 and 2 and reasonable assurance thereafter. This aligns with the requirement to have Scope 3 emissions subject to limited assurance in years 2 and 3 and reasonable assurance thereafter.

The first, second, third and fourth year of reporting

The timeline explains the first, second, third, and fourth years of reporting, detailing what information needs to be audited or reviewed and when. Understanding these terms is crucial, as the gap between reporting years isn’t always a straightforward one-year interval. The table below shows how an entity’s start date determines the relevant year for assurance purposes.

Group	First year – financial year commencing	Second year – financial year commencing	Third year – financial year commencing	Fourth year – financial year commencing
Group 1	1 January 2025 to 30 June 2026	1 July 2026 to 30 June 2027	1 July 2027 to 30 June 2028	1 July 2028 onwards
Group 2	1 July 2026 to 30 June 2027	1 July 2027 to 30 June 2028	1 July 2028 to 30 June 2029	1 July 2029 onwards
Group 3	1 July 2027 to 30 June 2028	1 July 2028 to 30 June 2029	1 July 2029 to 30 June 2030	1 July 2030 onwards

For Group 2 and Group 3 entities, there is a one-year gap between the first, second, third and fourth years, regardless of whether the financial year starts on 1 January or 1 July. The same applies to Group 1 entities whose financial year starts on 1 July.

Financial years beginning on 1 January

Group 1 entities with a financial year starting on 1 January will have two ‘first years’ because both the financial years commencing 1 January 2025 and 1 January 2026 fall into the ‘first year’. This effectively extends the phase-in period for reasonable assurance for these entities from four to five years. The example below illustrates this point.

Group 1 entity – Financial year commences 1 January
First year for assurance	First year for assurance	Second year for assurance	Third year for assurance	Fourth year for assurance
Year beginning 1 January 2025	Year beginning 1 January 2026	Year beginning 1 January 2027	Year beginning 1 January 2028	Year beginning 1 January 2029
Year ending 31 December 2025	Year ending 31 December 2026	Year ending 31 December 2027	Year ending 31 December 2028	Year ending 31 December 2029
Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (reasonable assurance)
Example: Scope 3 emissions (no need to disclose if apply one year deferral on first-time adoption of AASB S2.C4(b))	Example: Scope 3 emissions (disclose but no assurance required)	Example: Scope 3 emissions (limited assurance)	Example: Scope 3 emissions (limited assurance)	Example: Scope 3 emissions (reasonable assurance)

Entities with financial years starting on 1 January do not need to disclose Scope 3 emissions for the year ending 31 December 2025, due to the transitional relief in AASB S2, paragraph C4(b). However, they must disclose Scope 3 emissions for the year ending 31 December 2026, although these disclosures are not subject to assurance.

Group 1 entities with financial years starting 1 January effectively receive a six-month grace period compared to those starting on 1 July. For example:

The first review engagement required on Scope 3 emissions is for the year ended 31 December 2027, whereas, for entities with financial years starting on 1 July, it is for the year ended 30 June 2027
The first audit required on Scope 1, Scope 2 and Scope 3 emissions is for the year ending 31 December 2029, compared to the year ending 30 June 2029 for those with financial years starting on 1 July.

Financial years beginning on 1 July

Group 1 entities with a financial year starting on 1 July will only have one ‘first year’ as shown in the example below.

Group 1 entity – Financial year commences 1 July
First year for assurance	Second year for assurance	Third year for assurance	Fourth year for assurance
Year beginning 1 July 2025	Year beginning 1 July 2026	Year beginning 1 July 2027	Year beginning 1 July 2028
Year ending 30 June 2026	Year ending 30 June 2027	Year ending 30 June 2028	Year ending 30 June 2029
Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (limited assurance)	Example: Scope 1 and 2 emissions (reasonable assurance)
Example: Scope 3 emissions (no need to disclose if apply one year deferral on first-time adoption of AASB S2.C4(b))	Example: Scope 3 emissions (limited assurance)	Example: Scope 3 emissions (limited assurance)	Example: Scope 3 emissions (reasonable assurance)

Entities with financial years starting on 1 January do not need limited assurance for Scope 3 emissions for the period ending 31 December 2026. However, those with 1 July start dates must have their Scope 3 emissions reviewed for the period ending 30 June 2027. This is because entities with 1 January start dates have two ‘first years’, requiring Scope 3 emissions review only in the second year.

Summary of timelines

Assuming a 30 June year-end for a Group 1 entity, the table below compares when various aspects of sustainability reporting are subject to assurance, and when.

	First year	Second year	Third year	Fourth year	Fifth year	Sixth year
Sustainability disclosures	Ending 30 June 2026	Ending 30 June 2027	Ending 30 June 2028	Ending 30 June 2029	Ending 30 June 2030	Ending 30 June 2031
Governance	Limited	Limited	Limited	Reasonable	Reasonable	Reasonable
Strategy – Risks and opportunities (only subparagraphs 9(a), 10(a) and 10(b) of AASB S2)	Limited	Limited	Limited	Reasonable	Reasonable	Reasonable
Climate resilience/ scenario analysis	None	Limited	Limited	Reasonable	Reasonable	Reasonable
Transition plans	None	Limited	Limited	Reasonable	Reasonable	Reasonable
Risk management	None	Limited	Limited	Reasonable	Reasonable	Reasonable
Scope 1 and Scope 2 emissions	Limited	Limited*	Limited*	Reasonable	Reasonable	Reasonable
Scope 3 emissions	N/A (transition exemption defers disclosure to second year)	Limited	Limited	Reasonable	Reasonable	Reasonable
Climate-related metrics and targets	None	Limited	Limited	Reasonable	Reasonable	Reasonable
If the entity believes it has no material climate risks and no material climate opportunities, it must provide a statement detailing why (s296B(1)(c) and (d))	Limited	Limited	Limited	Reasonable	Reasonable	Reasonable

*The AUASB initially proposed reasonable assurance in these periods.

For Group 2 and 3 entities with 30 June reporting dates, the dates merely shift by one year. For Group 3 entities, the fourth year is the year ending 30 June 2031, by which time all sustainability disclosures must be audited.

Can we omit information from climate disclosures if no assurance is required?

The above table shows that in the first year, no assurance is required for information about climate resilience/scenario analysis, transition plans, risk management, Scope 3 emissions and metrics and targets. Preparers are, therefore, asking whether this information must be provided in the climate disclosures.

The answer is ‘Yes’. Other than the one deferral permitted for disclosures of Scope 3 emissions (AASB S2, paragraph C4(b)), all other information must be included with the climate disclosures for the purposes of the Corporations Act 2001, prepared in accordance with AASB S2.

How BDO can help

Our sustainability assurance experts are here to help you build trust and credibility through transparent and accurate reporting. With limited assurance required for Scopes 1, 2 and 3 emissions from the second year, it’s crucial to start preparing accurate climate disclosures now.