AFREF joined Public Citizen and other organizations in a letter to the Public Company Accounting Oversight Board (PCAOB) urging the board to strengthen and finalize its proposals to update AS 2405, A Company’s Noncompliance with Laws and Regulations, and AS 2110, Identifying and Assessing Risks of Material Misstatement.
“The climate crisis and the economy-wide decarbonization transition are creating new incentives, risks, and opportunities for companies to misrepresent their financial position. Auditors serve as a “public watchdog” to reasonably assure the absence of material misstatements and financial fraud. With a focus on the growing material threat of climate change to corporations and their investors, PCAOB should direct auditors to scrutinize companies’ systemic noncompliance with environmental laws and regulations, that leads to the overestimation of assets and understatement of liabilities. Auditors too often have served as enablers of corporate misconduct rather than bolstering social trust to investors and the public writ large.”