By: Melisa Galasso
Blog Series (Part 2 of 3)
Per the previous blog in this series, I had the privilege of interviewing Dr. Jean Rogers, the Founder and Executive Director of SASB, on October 8, 2013. This post contains the question-and-answer style interview we had concerning the SASB Sustainability Standards. Please note that this transcript has been edited for brevity and clarity.
Question: “Both the name ‘Sustainability Accounting Standards Board,’ and its position supporting the SEC, link the SASB to the accounting profession. However, isn’t the work of the organization more related to engineering standards than to true accounting?”
Jean: “Accounting can be financial or managerial. SASB is in the area of management accounting. We are developing metrics, useful for inclusion in the Form 10-K and 20-F. These factors impact operating performance and while not financial, they are considered by investors.”
Q: “Auditors currently have limited responsibility for auditing the MD&A, which is where the SASB indicates most of its standards would be applied. In the future, will auditors be required to audit new SASB standards or do special attest engagements? Or is little change expected to the day to day actions of an auditor?”
Jean: “SASB standards will not change the responsibility of the auditor for MD&A. However, the Public Company Accounting Oversight Board (PCAOB) does have interim attestation standards related to MD&A. Companies can engage a practitioner under AT 701 to perform an examination engagement, and express an opinion on the MD&A presentation taken as a whole engagement. This is not a requirement, but is an option to public companies.”
Q: “Once the standards are finalized, what type of enforcement will SASB have?”
Jean: “Similar to US Generally Accepted Accounting Practices (GAAP) and the FASB, the SASB does not have an enforcement function. The SEC can enforce the disclosure of material information, and this will remain its role. However, compliance with the disclosures will be easier once the standards are completed.”
Q: “Currently the focus of SASB appears to be partnering with the SEC to embed the SASB work-product into the 10-K form. Does this mean that new standards would apply to public companies only? Are there plans to involve private companies?”
Jean: “SASB is only designing standards for use by public companies in the Form 10-K. SASB is looking to provide information relevant to investors in public companies. Private companies don’t have the same reporting requirements, therefore these standards are specifically designed for public companies. An example of this is the healthcare field, in which the four largest companies are private. The issues and metrics are applicable but they don’t file the Form 10-K. Therefore, they can look to these standards as a guide, but realize that it’s not exactly going to line up. It is potentially applicable for private companies, but the standards were created for a different purpose.”
The second part of this interview will be covered in the third and final installment of this series. Stay tuned for more!
Melisa is an Audit Manager in the Professional Practices Department at Cherry Bekaert, LLP, in Charlotte. She currently serves on NCACPA’s Accounting & Attestation Committee and is Chair-Elect of the Charlotte Chapter. Melisa can be reached at [email protected]