ethics etc... Approach to providing assurance on
The Co-operative Bank's Partnership Report
|
|
|
Introduction
| |
These notes are intended to help explain in further detail the methods and standards used by The Co-operative Bank's social assurance provider. The assuror's task is to assess and report on the reliability, completeness and balance of a company's sustainability1 report, as well as the extent to which the company is responsive to stakeholders' concerns and interests. Described below is the basis of the assuror's work assessing The Co-operative Bank's Partnership Report, but the principles are equally relevant to any assurance engagement.
|
|
- In this context 'sustainabillity' is taken to cover the 'triple bottom line' of ethical, economic and ecological performance.
|
|
Assurance Statement
|
The easiest place to start is to explain the content of the assurance statement (follow this link to the auditor's statement). It contains the following information:
- Who the assurance provider is and some indication of their qualifications to carry out the assignment;
- That the assurance provider does not have any relationship with the company or with its stakeholders that may compromise their ability to make objective judgements about the report and the company's management systems. In particular the assuror should not have been involved in designing the systems tested or in writing parts of the report other than the stated reviews and commentary;
- That the directors are responsible for the content of the Partnership Report;
- That the assurance provider is responsible for considering the interests of stakeholders and not those of the company's managers;
- A short description of the reporting and assurance standards the assurance provider has used, the scope of the assurance work and the methods used to assess the company's report and management systems;
- A statement of the assurance provider's opinion. This is produced after carrying out investigations and tests, and questions whether the report provides a reliable, complete and balanced view of the company's economic, social and ecological impact on its stakeholders. It also questions whether the company has behaved consistently with its stated values.
- The assurance provider's signature and the date the report was completed.
|
|
|
Assurance Standards and criteria
|
In order to avoid subjective judgements, it is beneficial if the company has prepared its report according to a recognised accountability reporting standard. Two sets of guidelines are currently available: The Institute of Social and Ethical AccountAbility's AA1000 Framework Standard for Social and Ethical Accounting, Auditing and Reporting (November 1999)2 and the Global Reporting Initiative's 2000 GRI Guidelines for Sustainability Reporting3. Both these standards are currently in the advanced stages of updating and revision, and ethics etc... has been involved in working groups and contributing revised text for both. The Co-operative Bank has used the AA1000 Framework and is partially compliant with the GRI Guidelines.
Both GRI and AccountAbility are preparing new guidelines on assurance which are based on the following principles. These have been used in the current assurance work:
- Completeness. The company should monitor and report all significant material information about its impacts on stakeholders and in the areas stakeholders consider to be important. The assurance provider will report significant gaps.
- Scope. The report should cover all its activities, products, services, sites and subsidiaries, or identify and explain omissions.
- Inclusiveness. The company should recognise the interests, concerns and information needs of all its stakeholders and include them in its accountability and reporting processes.
- Responsiveness. The company and its report should demonstrate the changes in policies, decisions and actions it has made in response to stakeholders interests and concerns.
- Evidence. The assurance provider will look for adequate evidence to support the accuracy, completeness and balance of claims, data and statements made in the company's report.
- Systems and control. The assurance provider will base any judgement about the reliability of information in the report not only on the accuracy of data, but also on the effectiveness of the company's management information systems and controls.
- Understanding, comparability and objectivity. The assurance provider's opinion about the company's report will be affected by whether the company reports to stakeholders regularly and in a way they find useful for understanding the company's performance. This will be helped if the company compares its performance with earlier years and with other companies in its sector. The assurance provider will also consider whether any information has been overemphasised (usually the good stuff) or under reported (the bad stuff).
|
|
- www.accountability.org.uk
- www.globalreporting.org
To follow any of the links mentioned within the Partnership Report 2001, please visit the links page
|
|
The assurance process
|
The process used with the bank follows a number of sequential steps:
- Engagement. This involves a preliminary discussion with bank staff working on the report to agree the scope of the assurance work (the full report and supporting management systems), a timetable and budget. These are confirmed in writing. The assuror needs to be satisfied at the outset that they will have access to all necessary information and people, and that enough time has been allowed to carry out the engagement effectively. The engagement for the 2001 Partnership Report was based on an estimated 25 days work; the total required was 30 days.
- Planning. Planning involves two stages:
- Ongoing issues and risks. The assuror makes an independent review of findings from earlier assurance engagements with the company, taking account of previous Assurance Statements, working papers and reports to directors (see 4 below). Outstanding issues for 2001 included: wider consultation prior to the forthcoming Ethical Policy Review ballot; clarifying operational issues and extending internal auditing for ethical and ecological screening processes; reporting customer complaints and continuity of policy following changes in management of the bank's public campaigns.
The assuror carries out an assessment of those aspects of performance and reporting where there may be a risk of information being omitted, misrepresented or inadequately supported by evidence and effective management systems. In practice this involves going through the indicators and targets, assessing their importance (or materiality) and deciding which data sets will need detailed investigation and which will just require sample checks (because the assuror is confident from previous work that the systems are robust and reliable).
The assuror pays particular attention in planning assurance work to the bank's responses to issues and concerns stakeholders have raised through previous reports, current engagements or directly with the assuror.
- Planning the assurance work. On the basis of the described risk assessment, the assuror will discuss with bank staff arrangements and times for interviewing managers, staff and other stakeholders, and for accessing bank records and information systems relevant to investigations.
- The Assurance Work. This involves a number of activities:
- Interviewing managers and staff in order to gain an understanding of how specific policies, management information systems and controls have been designed and views on their effectiveness. Discussions will focus on systems that have changed since the previous audit cycle or systems that have been identified as weak or at risk.
- Testing systems data output on a sample basis where appropriate.
- A review of accounting processes and the findings of internal audit procedures requested by the assuror.
- Interviewing managers and staff about stakeholder engagement processes and stakeholder surveys that have taken place during the year.
- Checking the output from stakeholder surveys for compliance with the intended sample frame, bias, accuracy of processing, and misinterpretation or understatement in the reported results and commentary.
- Consulting stakeholder representatives (e.g. the bank staff trade union representatives) where necessary to corroborate stakeholder survey findings or their interpretation by the bank.
- Testing all data in the report for source and accuracy on a full or sample basis, depending on the previously detailed risk analysis.
- Checking that all commentary in the report and all graphical presentations are consistent with the underlying data and do not misrepresent performance.
- Carrying out independent reviews of bank data relating to the 'campaign' issues and consulting independent experts and external parties involved in the campaigns as appropriate.
- Documenting investigations and findings.
During this assurance work, advice will be given to the bank's managers as to any discrepancies and inaccuracies in the data or misrepresentations in the commentaries. Some issues raised during the assurance process will result in corrections being made in the final version of the bank's report. Discussions about changes to the report between the bank and assuror are robust and may only be resolved after further investigations of the evidence. This helps to ensure that information in the report is based on auditable evidence rather than any personal or 'corporate' view, or the assurance provider's personal interests or biases. In the 2001 process, for example, there were instances where the commentary interpreting findings from the staff survey was amended following feedback.
- Assurance Statement. The published 'opinion' and the comments included in the web-based version of the report are based on the final published version of the report. The company agreed at the start of the engagement to publish the Assurance Statement and comments in full. If there are issues arising from the assurance work that have not affected the reliability, completeness and balance of the current report, but which may do so in future. The assuror can advise the directors in a separate, unpublished letter. Examples are given of the issues raised in the report to directors following the audit of the 2000 Partnership Report (see 2 above).
- Competence. It is essential that the assurance provider is competent to undertake an assurance assignment. This involves knowledge of the principles of assurance provision and experience in using current standards for auditing techniques. It also involves sufficient understanding of the business sector and the issues relating to its economic, social and ecological impacts and performance measurements.
Finally, if assurance providers are to give a useful and valued service to stakeholders, as well as to the client, they must have substantial and credible experience in multi-stakeholder engagement processes and have a publicly acknowledged commitment to stakeholder accountability.
Richard Evans
ethics etc...
26 March 2002
|
|
