ethics etc... Approach to providing assurance on
The Co-operative Bank's Partnership Report
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Introduction
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These notes are intended to help explain in further detail the methods and standards used by The Co-operative Bank's assurance provider for its Partnership Report. The assuror's task is to assess and report on the reliability, completeness and balance of a company's sustainabilityi report, and 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.
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Assurance Statement
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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 impartial and objective judgements about the report and the company's management systems. In particular the assuror should not have been involved in designing the systems or in writing parts of the report, other than reviews and commentary that have been clearly identified.
- That the directors are responsible for the content of the Partnership Report;
- That the assurance provider's primary responsibility is to consider 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 states 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.
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Accounting and Assurance Standards
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In order to avoid subjective judgements, the company should prepare 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) (www.accountability.org.uk) and the Global Reporting Initiative's 2002 GRI Guidelines for Sustainability Reporting (www.globalreporting.org). The Co-operative Bank has used the AA1000 Framework and is partially compliant with the GRI Guidelines.
AccountAbility's AA1000 Assurance Standard has been used in the assurance work for the Partnership Report 2002. The following principles apply;
- Completeness. The company should monitor and report all significant 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.
- Materiality. The assurance provider will test the extent to which the company monitors and reports on issues identified as relevant by its stakeholders and that the information is relevant to the time-frame of the reporting period.
- 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).
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- www.accountability.org.uk
- www.globalreporting.org
To follow any of the links mentioned within the Partnership Report 2002, please visit the links page
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The assurance process
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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 2002 Partnership Report took 25 days work.
- 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).
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 assurance cycles that the relevant 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 the following activities:
- Interviewing managers and staff in order to gain an understanding of how specific policies, management information systems and controls have been designed and their 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 and their 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 or its consultants.
- Testing all data in the report for source and accuracy, on a full or sample basis depending on the previously detailed risk analysis.
- Assessing the materiality of information to be included in the Report to the interests of the bank's stakeholders (Partners) and the time period covered by the report.
- Assessing the extent to which the bank has responded to stakeholder concerns and whether actions during the year covered by the report are likely to impact on stakeholder interests later on.
- 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, the assurance provider will advise the bank's managers of any discrepancies and inaccuracies in the data, weaknesses in the systems, 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.
- 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.
- 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 2003
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- In this context 'sustainability' is taken to cover the 'triple bottom line' of ethical, economical and ecological performance.
To follow any of the links mentioned within the Partnership Report 2002, please visit the links page.
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