IAPI proposes single standard as reference for sustainability assurance
The Indonesian Institute of Certified Public Accountants (IAPI) has proposed the use of a single international standard as the official reference for sustainability assurance, while also calling for equal supervisory infrastructure for all service providers before mandatory assurance requirements come into force.
IAPI Chairman Tarkosunaryo assessed that Indonesia’s sustainability reporting ecosystem currently lacks the maturity of the financial reporting ecosystem. “As a result, there is a risk of misstatement, bias, and misleading sustainability claims or greenwashing. This condition has the potential to erode the trust of investors and other stakeholders in the sustainability information published by companies,” Tarkosunaryo said at a Business Morning Forum in Jakarta on Wednesday.
He expressed the view that three internationally adopted standards need to be established as official references in Indonesia. First, SAKb 5000, which adopts the International Standards on Sustainability Assurance (ISSA) 5000 as the sole sustainability assurance standard. Second, quality management standards as the foundation for implementation, namely Quality Management Standard (SMM) 1 and SMM 2 (adopting International Standards on Quality Management/ISQM 1 and ISQM 2). Third, ethical standards for sustainability assurance (adopting the International Ethics Standards for Sustainability Assurance) as the ethical standard for all practitioners.
Tarkosunaryo explained that the three standards regulate different but complementary aspects. First, the ethical standard regulates the ethical requirements that practitioners must fulfil in carrying out engagements, including the requirement for practitioners to be independent of the entity being examined. Second, the quality management standard regulates the components that must be met by the firm where practitioners work, to ensure that every engagement is carried out to the highest quality. Third, the assurance standard regulates the provisions for carrying out the engagement itself.
“The three are designed to work as a single unit: practitioners who are independent and behave ethically, working under an adequate quality management system, and following clear engagement provisions, as the combination needed to effectively reduce the risk of greenwashing,” said Tarkosunaryo.
He said the three standards—SAKb 5000, SMM 1 and SMM 2, and the Ethical Standard for Sustainability Assurance—will soon be available as ready-to-use standard infrastructure, but the availability of standards alone is not sufficient to guarantee consistent quality of sustainability assurance.
Referring to the stages in the OJK Draft Regulation (RPOJK) on the Implementation of Sustainable Finance, which will require sustainability information disclosure for Financial Services Sector Business Actors (PUSK), Issuers, and Public Companies, the limited assurance obligation for Group 1 entities will come into effect for the 2029 period.
Based on that timeline, Tarkosunaryo expressed hope that all assurance service providers will have a level playing field from the outset, with supervisory infrastructure covering four elements—registration, certification, inspection, and enforcement—needing to be prepared by regulators before the obligation comes into force.
“Whoever obtains certification must have the ability to apply quality management standards and comply with applicable ethical standards, because technical competence alone is considered insufficient,” said Tarkosunaryo.
With the adoption of international standards (ISSA 5000 and IESSA) into the professional standards framework for public accountants in Indonesia, IAPI affirmed its commitment to being an active part of building a credible sustainability assurance ecosystem in Indonesia.
“IAPI views credibility not merely as formal compliance, but as the foundation for the trust of investors, regulators, and the public in the sustainability information published by the business world,” said Tarkosunaryo.