APES 110 Sustainability Assurance Independence in Australia 2026: What Businesses Must Know When Choosing an Auditor

Australia's mandatory climate reporting regime has fundamentally changed what it means to engage an auditor in 2026. From 1 January 2026, the Accounting Professional and Ethical Standards Board (APESB) introduced sweeping amendments to APES 110 Code of Ethics for Professional Accountants, imposing new independence, objectivity, and professional scepticism obligations specifically for sustainability assurance engagements. For Australian businesses now required to produce climate-related financial disclosures, understanding these changes is essential before selecting an assurance provider.

Understanding the 2026 APES 110 Amendments

APES 110 is the foundational ethical code governing all professional accountants in Australia, including registered company auditors. The January 2026 amendments were introduced to align Australian standards with international ethical frameworks and to support the mandatory climate-related financial disclosure regime that commenced for Group 1 entities in 2025.

The updated code now contains dedicated provisions for sustainability assurance engagements — a recognition that assuring climate and ESG disclosures presents unique independence and objectivity challenges that differ materially from traditional financial statement audits.

At its core, the amendments require auditors and assurance practitioners to apply the same rigorous independence framework to sustainability engagements as they do to financial audits. This means identifying, evaluating, and eliminating or managing threats to independence before accepting or continuing any sustainability assurance engagement.

Key Changes: What the New Rules Require

The 2026 APES 110 amendments introduce several specific obligations that businesses and their boards should understand when engaging an assurance provider.

Independence for Sustainability Assurance

Auditors must now formally assess independence threats across the full scope of a sustainability assurance engagement. This includes evaluating whether any advisory, consulting, or non-assurance services provided to the same client create self-review or advocacy threats that could compromise objectivity.

Where an auditor has assisted a client in preparing its sustainability report — for example, by helping design emissions measurement methodologies — they may be precluded from also providing assurance over that same report. Businesses should ask prospective assurance providers to clearly disclose any prior advisory work and explain how independence is maintained.

Use of External Experts and Specialists

Sustainability assurance frequently requires input from specialists outside the accounting profession — engineers, climate scientists, environmental consultants, and legal professionals. The updated APES 110 now provides explicit guidance on how auditors must manage these relationships.

While external experts are not required to sign the APES 110 code, auditors remain responsible for ensuring that any specialist advice used in the engagement is consistent with the fundamental principles of integrity, objectivity, and professional competence. In practice, this means auditors may require specialists to complete independence questionnaires, disclose conflicts of interest, and confirm their qualifications before their work can be relied upon.

Professional Scepticism in Sustainability Contexts

The amendments place heightened emphasis on professional scepticism when assuring sustainability disclosures. Auditors are now explicitly required to challenge vague or unsubstantiated sustainability claims — including buzzwords such as "eco-friendly," "carbon neutral," or "net zero" — by seeking specific, measurable, and independently verifiable data.

This obligation is directly linked to Australia's growing concern about greenwashing. ASIC has made clear that misleading sustainability disclosures will attract enforcement action, and auditors who fail to apply appropriate scepticism risk both regulatory sanction and reputational damage.

ASIC's 2026-27 Audit Quality Surveillance Program

The APES 110 amendments do not exist in isolation. ASIC has simultaneously elevated audit quality as a central focus of its 2026-27 surveillance program, with specific attention to sustainability assurance engagements.

ASIC has announced it will review 25 audit files during the 2026-27 period, selected based on risks of material misstatement, internal and external data indicating audit quality concerns, and random selection. Sustainability assurance methodology is a specific area of review, with ASIC engaging directly with large audit firms to assess their assurance frameworks.

ASIC is also monitoring compliance with auditor rotation, appointment, and resignation requirements as they apply to the new sustainability reporting framework. Businesses should ensure their chosen auditor is fully across these obligations and can demonstrate a documented, compliant assurance methodology.

Common Mistakes When Engaging a Sustainability Assurance Provider

As sustainability assurance is a relatively new discipline in Australia, businesses frequently make avoidable errors when selecting and engaging an assurance provider. Understanding these pitfalls can save significant time, cost, and regulatory risk.

• Engaging the same firm for both advisory and assurance — If your auditor helped design your emissions measurement framework, they may be unable to provide independent assurance over the resulting disclosures. Always clarify the scope of prior engagements before appointment.
• Assuming financial auditors are automatically qualified for sustainability assurance — Sustainability assurance requires specialist knowledge of climate science, emissions accounting standards (such as AASB S1 and AASB S2), and sector-specific reporting frameworks. Not all registered company auditors have this expertise.
• Overlooking the registered company auditor requirement — In Australia, sustainability assurance reports must be signed by a registered company auditor (RCA). Engaging a sustainability consultant who is not an RCA will result in a non-compliant assurance report.
• Failing to assess the auditor's independence from the outset — Independence threats should be identified and managed before engagement, not discovered mid-engagement. Request a formal independence declaration at the proposal stage.
• Accepting assurance reports with prohibited disclaimers — ASIC has specifically warned against sustainability reports containing disclaimers that suggest users should not rely on the information for investment decisions. An auditor who accepts such disclaimers without challenge may not be applying appropriate scepticism.

Australian Regulatory Context: ASIC, APESB, and the Corporations Act

The regulatory framework governing sustainability assurance in Australia is multi-layered, and businesses must understand how each element interacts.

The Corporations Act 2001 now mandates climate-related financial disclosures for large entities, with Group 1 entities (those with $500 million or more in consolidated gross assets, or $500 million or more in annual consolidated revenue) required to report for financial years commencing on or after 1 January 2025. Group 2 and Group 3 entities face staggered commencement dates in subsequent years.

ASIC is the primary regulator for both financial reporting and sustainability reporting compliance. ASIC has issued early observations on sustainability reports lodged by Group 1 entities for the December 2025 reporting cycle, identifying areas requiring improvement including the use of prohibited disclaimers, insufficient disclosure of judgments and assumptions, and inadequate identification of climate-related risks.

The APESB sets the ethical standards that govern all professional accountants, including the updated APES 110 requirements described above. Compliance with APES 110 is mandatory for members of CPA Australia, Chartered Accountants ANZ, and the Institute of Public Accountants.

The AUASB (Auditing and Assurance Standards Board) has issued ASSA 5000 and ASSA 5010 as the Australian assurance standards for sustainability reporting. Businesses should confirm that their chosen assurance provider is conducting engagements in accordance with these standards.

Questions to Ask When Choosing a Sustainability Assurance Provider

Given the complexity of the 2026 regulatory environment, businesses should conduct thorough due diligence before appointing a sustainability assurance provider. The following questions provide a practical starting point.

• Are you a registered company auditor (RCA) with ASIC? — This is a non-negotiable requirement for signing sustainability assurance reports in Australia.
• What sustainability assurance engagements have you completed, and under which standards? — Look for experience with ASSA 5000, ASSA 5010, and the AASB S1/S2 reporting standards.
• How do you manage independence when your firm also provides advisory services to clients? — Request a written independence declaration and ask for the firm's documented independence policies.
• How do you engage and oversee external specialists such as climate scientists or engineers? — Confirm the firm has a documented process for assessing specialist independence and qualifications.
• What is your approach to professional scepticism in relation to sustainability claims? — A credible provider should be able to describe specific procedures for challenging unsubstantiated disclosures.
• Are you familiar with ASIC's early observations on sustainability reporting, and how do they inform your methodology? — Providers who are actively monitoring ASIC guidance are better positioned to deliver compliant assurance.
• What is your fee structure, and does it reflect the complexity of the engagement? — Sustainability assurance is resource-intensive. Unusually low fees may indicate insufficient rigour.

How MyMoney Can Help

Navigating the 2026 sustainability assurance landscape requires an auditor with specialist expertise, documented independence procedures, and a thorough understanding of ASIC's evolving expectations. Finding the right provider is not straightforward — but MyMoney makes it easier.

MyMoney connects Australian businesses with qualified, experienced auditors who are equipped to deliver compliant sustainability assurance engagements under the updated APES 110 framework. Whether you are a Group 1 entity already subject to mandatory reporting or a Group 2 entity preparing for your upcoming obligations, our platform helps you find the right professional for your specific needs.

Post a Brief to describe your sustainability assurance requirements and receive competitive proposals from qualified auditors. Or Browse Auditors to explore professionals with verified credentials and relevant experience. The right assurance provider is a critical governance decision — MyMoney helps you make it with confidence.