IFRS S1 and S2 Adoption Must Begin with Assurance Readiness

As Ghanaian organizations prepare to adopt IFRS S1 and IFRS S2, the focus must extend beyond producing a sustainability report. The real task is to establish a credible reporting system that can withstand management review, board scrutiny and independent assurance. Reporting readiness and assurance readiness should therefore be developed together from the beginning.

IFRS S1 and S2 require decision-useful disclosures about sustainability-related risks and opportunities, including climate-related matters that could affect an entity’s prospects. Implementing these standards demands clear governance, defined reporting boundaries, reliable data, approved methodologies, effective internal controls and evidence supporting every material figure, target and public claim. Assurance cannot repair weak processes after the report has been drafted. It must be anticipated when indicators, systems and responsibilities are designed.

Management remains responsible for preparing the sustainability disclosures. The ESG function may coordinate the process, but operational functions must own the data and controls within their areas. Finance should support reconciliations, estimates and alignment with financial reporting, while risk, compliance, legal and communications functions should challenge regulatory interpretations, methodologies, forward-looking statements and potentially misleading claims.

Internal audit will play a critical role in strengthening this environment. Its responsibility is not to prepare ESG data or take ownership of management’s disclosures. Internal audit should independently assess whether ESG governance is effective, reporting boundaries are properly defined, methodologies are consistently applied and controls over completeness, accuracy, validity, cut-off and traceability are operating as intended. It should also review data lineage, test selected indicators, evaluate evidence retention, assess greenwashing and communication risks, and monitor the remediation of identified weaknesses. A well-planned internal audit readiness review can reveal control failures before they become public reporting errors or external assurance findings.

External assurance provides an independent conclusion on specified sustainability information against suitable reporting criteria. The assurance practitioner will examine more than the published report. Attention will be given to the competence and integrity of preparers, materiality decisions, reporting boundaries, systems, internal controls, estimates, assumptions and evidence supporting both quantitative and qualitative disclosures. External assurance may be limited or reasonable, depending on the engagement, but neither level substitutes for management responsibility or effective internal controls. ISSA 5000 will provide the principal international framework for sustainability assurance engagements.

This transition creates an urgent need for upskilling. Internal auditors, accountants, ESG professionals, risk practitioners, engineers, data specialists and assurance teams must understand IFRS S1 and S2, ISSA 5000, greenhouse-gas accounting, climate risk, materiality, reporting boundaries, evidence evaluation and ESG control design. Technical sustainability knowledge must be combined with audit judgement, data analytics, professional scepticism and the ability to assess estimates and forward-looking information.

Organizations that begin assurance preparation only when publication approaches will face avoidable delays, evidence gaps and credibility risks. Those that embed assurance readiness into ESG adoption will produce disclosures that are controlled, traceable, balanced and capable of earning stakeholder confidence.

About the writer

Wilfred Neneh Addico is a Chartered Accountant, Certified Fraud Examiner and ESG practitioner with experience in internal audit, assurance, risk management, governance and sustainability reporting. He supports organizations with ESG adoption, embedding, operationalization, reporting controls and assurance readiness. He may be contacted for advisory, training and implementation support in these areas.