GRI ESRS-Professional ESRS Professional Certification Exam Practice Test

Answer : B

The statement that 'Policymakers and regulators worldwide are increasingly mandating limited assurance for sustainability reporting in Europe and mandatory assurance in all Asian and African countries' is false for the following reasons:

Limited Assurance in Europe

Under the Corporate Sustainability Reporting Directive (CSRD), the European Union (EU) is progressively implementing mandatory assurance for sustainability reporting, but it is starting with limited assurance before transitioning to reasonable assurance by 2028.

The Committee of European Auditing Oversight Bodies (CEAOB) has issued non-binding guidelines on limited assurance to harmonize the approach across EU member states.

No Universal Mandatory Assurance in Asia and Africa

Sustainability assurance varies by country in Asia and Africa, with some jurisdictions adopting voluntary or limited requirements rather than mandatory assurance.

The EU approach is influencing global discussions, but there is no blanket requirement for full mandatory assurance across all Asian and African countries.

While certain Asian countries (e.g., Japan, Singapore, China, and India) are enhancing their sustainability reporting frameworks, assurance requirements remain diverse and sector-dependent.

In Africa, sustainability reporting is growing, especially in South Africa under King IV principles, but assurance is not uniformly mandatory across the continent.

Conclusion:

Limited assurance is currently being phased in across the EU, but not yet fully mandated at the reasonable assurance level.

There is no global requirement for mandatory assurance across all Asian and African countries.

Therefore, the statement is false.

Official Commission Delegated Regulation (EU) 2023/2772, various EFRAG guidance documents, and CSRD-related references:

EU CSRD Recital 60: Roadmap for assurance from limited to reasonable.

CEAOB Limited Assurance Guidelines (September 2024).

Answer : C

The Corporate Sustainability Reporting Directive (CSRD) significantly strengthens sustainability reporting and assurance requirements compared to the Non-Financial Reporting Directive (NFRD). The key shift introduced by CSRD is the mandatory assurance of sustainability reports, which includes defined standards, scope, and providers.

Key Differences Between CSRD and NFRD:

Feature

NFRD (Previous Directive)

CSRD (New Directive)

Assurance Requirement

Voluntary

Mandatory

Who Can Provide Assurance?

Organizations could choose any provider

Member States decide between statutory auditors and independent assurance providers

Assurance Scope

Limited guidance

Defined ESRS-based scope

Assurance Level

No formal requirement

Limited assurance initially, transitioning to reasonable assurance by 2028

Reporting Scope

Limited to large public-interest entities

Expanded to all large companies and listed SMEs

Disclosure Framework

High-level requirements

Detailed ESRS framework with sector-specific standards

Key Provisions of the CSRD:

Mandatory Assurance:

Unlike the NFRD, the CSRD requires sustainability reports to be assured by an independent external provider.

The assurance process follows ESRS standards to ensure consistency.

Defined Standards and Scope:

CSRD specifies the scope of assurance, focusing on material sustainability disclosures, governance, and risk disclosures.

The European Commission is developing a standard methodology for assurance.

Transition to Reasonable Assurance:

Initially, limited assurance is required.

By October 2028, the EU aims to transition to reasonable assurance, aligning sustainability assurance with financial audits.

Why Other Answers Are Incorrect:

Option A: Incorrect -- The CSRD makes assurance mandatory, whereas the NFRD had a voluntary approach.

Option B: Incorrect -- The CSRD does not eliminate sustainability reporting assurance; it makes it more structured and rigorous.

Thus, the correct answer is C: The CSRD introduces mandatory assurance for ESRS reporting, with defined requirements for scope, standards, and providers.

Official Reference:

CSRD Directive (EU) 2022/2464 -- Assurance Provisions.

EU Platform on Sustainable Finance Report (February 2025) -- Assurance and Compliance Guidelines.

CEAOB Guidelines on Assurance of Sustainability Reporting (2024) -- Limited Assurance Transitioning to Reasonable Assurance.

Answer : B

Not all EU Member States have decided that only statutory financial auditors are allowed to conduct the assurance of the sustainability statement. The Corporate Sustainability Reporting Directive (CSRD) mandates that sustainability reports be assured by an external party, but it allows Member States to decide whether assurance engagements can be performed by firms other than statutory financial auditors.

Key Provisions:

Limited Assurance Requirement:

The CSRD introduces a phased approach to assurance, starting with limited assurance and transitioning to reasonable assurance over time (expected by 2028).

Initially, limited assurance is required across all Member States.

Flexibility for Member States:

EU Member States have discretion to allow other independent assurance service providers to conduct the sustainability assurance, in addition to statutory auditors.

Some countries may restrict sustainability assurance to statutory auditors, but this is not an EU-wide rule.

Upcoming EU Assurance Standards:

The European Commission is working on developing a common EU assurance standard for sustainability reporting.

The Committee of European Auditing Oversight Bodies (CEAOB) has issued non-binding guidelines on limited assurance for sustainability reporting.

Thus, the statement is false because not all EU Member States have restricted sustainability assurance to statutory financial auditors. Some allow other independent assurance providers to conduct the engagements.

Official Reference:

CSRD (Directive (EU) 2022/2464) Assurance Provisions.

EU Platform on Sustainable Finance Report (February 2025) -- Assurance Standards and Guidelines.

CEAOB Guidelines on Limited Assurance for Sustainability Reporting (September 2024).

Answer : A, C

2023/2772, various EFRAG guidance documents, and reports related to CSRD, ESRS, stakeholder engagement, double materiality, external assurance, and digital reporting Study guide Reference at the end of each question

Under the ESRS framework, effective internal controls for assurance purposes must meet key characteristics to ensure reliability, traceability, and auditability.

Correct Options Explained:

(A) Documentation & Implementation: Internal controls must be formally documented, implemented as per the designated schedule, and consistently applied.

(C) Testability by External Assurance Providers: Assurance providers must be able to verify the controls, test their effectiveness, and ensure compliance with CSRD assurance requirements.

Incorrect Options Explained:

(B) Same Staff Performing & Assuring the Control: A fundamental principle of internal control is the separation of duties to avoid conflicts of interest. The control must be performed by one team and assured independently.

(D) No Need for Documentation: Proper documentation is mandatory for internal controls to enable traceability, testing, and regulatory compliance.

ESRS Reference:

Commission Delegated Regulation (EU) 2023/2772, GOV-5: Risk management and internal controls over sustainability reporting, highlighting the necessity of internal control mechanisms.

EFRAG Assurance Guidelines: Stipulating that documented controls must be verifiable and tested for external assurance.

Answer : A

2023/2772, various EFRAG guidance documents, and reports related to CSRD, ESRS, stakeholder engagement, double materiality, external assurance, and digital reporting Study guide Reference at the end of each question

Under the ESRS framework, employee-related data such as headcount, turnover, and health and safety statistics are typically the responsibility of the Human Resources (HR) department. HR is responsible for managing workforce metrics, diversity, inclusion, hiring, terminations, and employee well-being, including health and safety programs.

While Health and Safety (H&S) teams may contribute data related to occupational safety and health incidents, the responsibility for aggregating and reporting on overall workforce statistics lies with HR. The Compliance department ensures legal and regulatory adherence but does not maintain core employee records, while Marketing has no role in employee-related data reporting.

ESRS Reference:

ESRS S1-6: Characteristics of the undertaking's employees, requiring disclosure of total headcount and workforce breakdown.

ESRS S1-14: Health and Safety Metrics, detailing occupational safety measures, incidents, and employee well-being programs.

EFRAG Implementation Guidance on Workforce Reporting, which confirms HR as the responsible entity for employee data aggregation.

Answer : A

Under ESRS 2 and topical ESRS, external assurance is not required for all information reported. Instead, assurance requirements depend on specific regulatory obligations and the phase-in periods set by the Corporate Sustainability Reporting Directive (CSRD).

Limited Assurance Requirement Initially

CSRD mandates limited assurance over sustainability information at first, with reasonable assurance (more stringent) to follow in later years.

However, not all data points require assurance---only those specifically outlined in the European Commission's assurance framework.

Mandatory Assurance for Some Disclosures

ESRS 2 covers general disclosures, but only certain metrics and targets under specific topical ESRS require external assurance.

Appendix C of ESRS 2 outlines which disclosures require assurance.

Entity-Specific Exemptions & Phase-in Rules

Some disclosures do not require assurance if they are deemed immaterial based on the materiality assessment.

SMEs and first-time reporters have phased-in assurance requirements.

Thus, external assurance is not required for all ESRS 2 and topical ESRS disclosures, making the statement True.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772

Compilation Explanations January - November 2024

Answer : C

The Environmental Section of the topical ESRS includes disclosure requirements covering environmental sustainability matters. This section specifically relates to environmental objectives as defined in the EU Taxonomy, ensuring alignment with broader European sustainability goals.

The topical ESRS environmental standards (ESRS E1 - E5) cover:

ESRS E1 -- Climate Change (Mitigation & Adaptation)

ESRS E2 -- Pollution

ESRS E3 -- Water and Marine Resources

ESRS E4 -- Biodiversity and Ecosystems

ESRS E5 -- Resource Use and Circular Economy

These standards align with the environmental objectives of the EU Taxonomy Regulation (Regulation (EU) 2020/852) and require organizations to report on their material environmental impacts, risks, and opportunities (IROs).

Why Other Options Are Incorrect:

A . Social impact and labor rights: Incorrect, as this belongs to the Social (S) section (ESRS S1 - S4).

B . Financial performance information: Incorrect, as this is part of financial reporting, not ESRS environmental disclosures.

D . Corporate governance and board diversity: Incorrect, as governance matters are covered under ESRS G1 Business Conduct.

Official Reference:

Commission Delegated Regulation (EU) 2023/2772

Compilation Explanations January - November 2024