I attended the Institute of Internal Auditor’s (IIA’s) GAM (now “Great Audit Minds”) conference March 11 – 13, 2024 in Las Vegas.   If you weren’t among the 1000+ there or online (or in different sessions), I offer some takeaways, plus my own perspectives. 

SEC climate rule is out, but it’s not the only thing.  The California climate regulations could apply to you, and so could EU’s Corporate Sustainability Reporting Standard (CSRS).  And watch out for FAR’s proposal.  [Risk Advisory Partner, Top 20 accounting firm]

Hileman Perspective:     There has been almost obsession with the SEC climate rule, as if this were the only requirements.  Granted, the bar for the quality of content in an SEC filing is high.  Nonetheless, there are also risks of incomplete, inaccurate, or false reporting to government entities for compliance.  Ditto for reporting to analysts or customers; loss of a key customer (and the sales that go with it) is a material financial hit however you look at it.  The FAR (Federal Acquisition Regulations) has been a sleeper.  Climate- and Sustainability-requirements would likely work their way up the supply chain.  

ESG concepts aren’t new.  An auditor approaching Sustainability disclosures for the first time should spend less time ticking and tying, and more time understanding.  [In-house Internal Auditor who has led audits of Sustainability reporting]

Hileman Perspective:     It seems like we’ve been hearing about an SEC climate disclosure rule forever, and like it’s something radically new.  I began my career in environmental compliance decades ago.  Compliance involves reporting to regulatory authorities, which, in turn, requires people, process, controls and technology.  The SEC Conflict Minerals rule is a decade old.  UK’s Modern Slavery Act came into force in 2015.  But just like “internal controls” sounds foreign to second line leaders (Environmental, Safety, Procurement, etc.), the workings of these areas are often foreign to Internal Audit.  A key objective of the COSO ICSR[1] supplemental guidance was to bridge this gap.  

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