ISAE 3410

Assurance Engagements on Greenhouse Gas Statements

1Objective and scope

ISAE 3410 deals with assurance engagements to report on an entity's greenhouse gas (GHG) statement. It is a subject-specific standard under ISAE 3000 (Revised) and applies to both reasonable and limited assurance engagements, whether the GHG statement is a stand-alone document or part of a sustainability report or an integrated report. It covers emissions (Scope 1 direct, Scope 2 energy indirect, and, where included, Scope 3 other indirect), removals, and emissions deductions such as purchased offsets; it does not itself cover the rest of a sustainability report, which since 2026 is addressed by ISSA 5000 (a GHG statement within a sustainability report may be assured under either, and ISSA 5000 draws on ISAE 3410). The subject matter is a quantification, so the standard borrows from the audit of estimates and of information systems: emissions are calculated from activity data (fuel litres, kilowatt-hours, tonnes of cement) multiplied by emission factors, with uncertainty at every step, and the practitioner needs competence in GHG quantification or must use experts.

The objectives are to obtain reasonable or limited assurance, as appropriate, about whether the GHG statement is free from material misstatement, whether due to fraud or error; to report on the GHG statement, and communicate as required by the standard; and to implement quality management procedures at the engagement level.

2Key definitions

GHG statement

A statement setting out constituent elements and quantifying an entity's GHG emissions for a period (and, where relevant, comparative information and explanatory notes including a summary of significant quantification and reporting policies) and, where applicable, removals or emissions deductions. It may also include a categorised listing of removals or deductions.

Greenhouse gases

Carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride (the Kyoto gases), and any other gas the applicable criteria require to be included, expressed in carbon dioxide equivalent (CO2-e) using global warming potentials.

Scope 1, 2 and 3 emissions

Scope 1: direct emissions from sources owned or controlled by the entity (boilers, vehicles, process emissions). Scope 2: indirect emissions from the generation of purchased electricity, steam, heat or cooling consumed by the entity. Scope 3: other indirect emissions occurring in the value chain (purchased goods, business travel, use of sold products), which carry the highest measurement uncertainty.

Applicable criteria

The criteria used to quantify and report emissions: the GHG Protocol Corporate Standard, ISO 14064-1, a regulator's scheme rules, or an entity's own criteria if suitable and made available. Emission factors and global warming potentials are part of the criteria or must be disclosed.

Emissions deduction and removal

Any item deducted from total emissions in the GHG statement (purchased offsets, renewable energy certificates) and the GHG the entity removes from the atmosphere during the period (afforestation, carbon capture). Both are separately quantified and disclosed.

3Requirements

Acceptance, planning and materiality

Accept only where the practitioner (with any experts) has the competence in GHG quantification and reporting and in assurance, the criteria are suitable and available, the entity's boundaries (organisational: equity share, financial control or operational control; and operational: which sources and scopes) are clearly defined, and the engagement has a rational purpose. Agree the terms, including which scopes and which sources are covered and the level of assurance.
Plan the engagement with an understanding of the entity's activities that generate emissions, its organisational and operational boundaries, the regulatory and market context (carbon pricing, emissions trading, a lender's covenant), the quantification methods and emission factors used, and the entity's information system for collecting activity data and computing emissions, including the controls over it and the use of estimates and extrapolations.
Determine materiality, considering the information needs of intended users, quantified in tonnes of CO2-e for the statement as a whole and, where appropriate, for particular scopes or sources, and performance materiality for designing procedures; qualitative factors (a small misstatement in Scope 1 at a site subject to a regulatory cap) are considered as well.

Procedures

Area	Reasonable assurance	Limited assurance
Understanding internal control	Obtain an understanding of the components of internal control relevant to the quantification and reporting of emissions, including the IT systems and the controls over activity data, evaluate their design and determine whether they have been implemented.	Inquire about the process used to prepare the GHG statement and the controls over it, without evaluating design and implementation.
Risk assessment	Identify and assess the risks of material misstatement at the statement level and at the assertion level for each type of emission and for each site or source, considering fraud risk, estimation uncertainty, and the complexity of the methods.	Identify areas where material misstatement is likely to arise, considering the same factors at a higher level.
Response	Tests of controls where reliance is planned; substantive procedures on activity data (agree fuel purchases to invoices and meter readings, reconcile electricity consumption to utility bills, test the completeness of sources against the asset register and site list), on emission factors (agree to the published source, check the version and units), and on the calculations (recalculate, test the model, test unit conversions and the CO2-e aggregation); site visits where sites are significant; analytical procedures (emissions per unit of output, year on year, site against site).	Primarily inquiry and analytical procedures, with additional procedures (recalculation, agreement of a sample of activity data to source, site visits) where the practitioner concludes they are needed to obtain a meaningful level of assurance or where a matter suggests possible misstatement.
Estimates and Scope 3	Evaluate the methods, assumptions and data used for estimated and extrapolated quantities (a meter not read; a supplier's data not available) as under ISA 540, and the completeness of the Scope 3 categories against the criteria.	Inquire about the basis of estimates and the selection of Scope 3 categories and evaluate whether they are consistent with the criteria and the practitioner's understanding.

Where the entity uses the work of an expert (an engineer who measured process emissions), evaluate competence, capabilities and objectivity and the adequacy of the work; where the practitioner uses an expert, apply ISA 620 principles.
Where the GHG statement includes a quantification of emissions deductions, obtain evidence that the deductions exist, that the entity is entitled to them (retired certificates, contracts) and that they are quantified and disclosed in accordance with the criteria.
Obtain written representations from the appropriate party covering the boundaries, the completeness of sources, the methods and factors, uncorrected misstatements, and subsequent events; read other information accompanying the GHG statement for material inconsistency; and evaluate uncorrected misstatements, individually and in aggregate, against materiality.

4Documentation and reporting

The assurance report follows ISAE 3000 with GHG-specific content: it identifies the GHG statement, the period, the scopes and any excluded sources, and the criteria including emission factors where not disclosed in the statement; it describes the entity's responsibility for the GHG statement, the boundaries and the criteria, and the practitioner's responsibility; it states the level of assurance and, for limited assurance, summarises the procedures and their limited nature; it includes a statement that GHG quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emission factors and the values needed to combine emissions of different gases; it gives the conclusion (positive or negative form) and, where modified, the basis; and where the practitioner's report covers emissions deductions, the report notes that assurance is on the quantification and disclosure of the deductions, not on their environmental effectiveness. Modifications follow ISAE 3000: a qualified conclusion for material but not pervasive misstatements or limitations, adverse for pervasive misstatements, a disclaimer for pervasive limitations. The documentation records the boundaries and sources, the risk assessment, the site visits and the tests performed with the results, the evaluation of estimates and of experts' work, the materiality in tonnes of CO2-e, the misstatements, and the basis for the conclusion.

5Examinable focus

What KASNEB tests

This is an emerging Advanced Auditing topic: a cement, tea, floriculture, airline or manufacturing company publishes a GHG statement (often to satisfy an export customer, a lender or the NSE's ESG disclosure guidance) and engages the auditor for assurance. Be ready to explain the three scopes with examples, the acceptance considerations (competence, criteria, boundaries), the difference between reasonable and limited assurance procedures on activity data, emission factors and calculations, the treatment of estimates and Scope 3, the inherent uncertainty statement in the report, and the modified conclusions. Link to ISAE 3000 for the framework, ISA 540 for estimates, and ISSA 5000 for the wider sustainability report.