AICPA Comments on Assurance Standards for California Climate Law

Why It Matters

Uniform assurance standards and strict quality controls will boost credibility of California’s climate‑disclosure regime, shaping how large firms verify emissions data nationwide.

Key Takeaways

• AICPA backs CARB's use of IAASB and AICPA assurance standards.
• Calls for minimum independence, competency, ethics, oversight for all providers.
• Urges inclusion of all GHG Protocol accounting methods in regulations.
• Recommends permitting ESRS, ISSB, or similar standards for reporting.
• Highlights need for quality management under ISQM 1 for engagements.

Pulse Analysis

California’s S.B. 253 law marks a watershed for corporate climate reporting, mandating that firms with over $1 billion in revenue disclose Scope 1 and 2 greenhouse‑gas emissions. CARB, the agency tasked with enforcement, has opened the floor to a suite of assurance frameworks—including AICPA, IAASB, ISO and AccountAbility standards—to certify the accuracy of these disclosures. By aligning the state’s requirements with internationally recognized standards, California seeks to create a level playing field that reduces reporting friction for multinational companies while raising the bar for data integrity.

In its joint comment, the AICPA and CalCPA praised CARB’s inclusion of IAASB standards but warned that merely listing acceptable frameworks is insufficient. The letter calls for baseline requirements covering independence, competency, ethical conduct, oversight and robust quality‑control systems such as ISQM 1. This push is especially salient for non‑CPA assurance providers, whose oversight mechanisms may differ from traditional accounting firms. By codifying these minimums, CARB can safeguard the credibility of climate‑assurance engagements and prevent a race‑to‑the‑bottom in assurance quality.

The broader implication is a convergence of U.S. climate‑disclosure assurance with global sustainability reporting regimes. The AICPA’s recommendation to accept reports prepared under the European Sustainability Reporting Standards (ESRS) or the International Sustainability Standards Board’s ISSB framework signals an openness to cross‑border interoperability. Companies operating in California will likely adopt these internationally recognized standards to streamline reporting across jurisdictions, potentially accelerating the adoption of high‑quality assurance practices nationwide.