Mandatory GHG assurance and its implications for standard setting

As Australia moves toward mandatory GHG assurance, it is critical to ensure that AUASB standards and guidance evolve in line with regulatory expectations while maintaining efficiency and effectiveness. A recent working paper (Lee, Kim, Zhang, & Gul, 2025) explores the impact of regulatory requirements on planned assurance effort. More specifically, it examines whether assurance providers adjust their engagement strategies differently under voluntary versus mandatory GHG assurance frameworks. The findings reveal that in voluntary GHG assurance, assurers adjust planned site-visit efforts based on risk, applying more extensive procedures for high-risk firms while reducing effort for firms with strong internal GHG controls. In mandatory GHG assurance, however, assurers do not differentiate effort based on risk. Even when firms have strong internal GHG management, assurance providers maintain high site-visit levels, likely due to regulatory scrutiny and compliance concerns. These findings suggest that regulatory pressure may lead to a conservative approach, where uniform procedures take priority over risk-based effort allocation. While regulatory oversight ensures credibility, it may also limit professional judgment in effort allocation, increasing the burden on assurance practitioners.