In her letter, the Commissioner officially mandated EFRAG to revise the ESRS in line with the simplification objectives laid out in the draft Omnibus Directive. The aim is to reduce reporting burdens—particularly for SMEs—while preserving the quality and usefulness of sustainability disclosures.

EFRAG has been asked to:

• Follow the simplification priorities from the Omnibus recitals;
• Deliver its technical advice by 31 October 2025 (subject to possible adjustment depending on the Omnibus finalisation);
• Engage with first-year reporters to identify the most critical datapoints;
• Propose an innovative due process that balances speed with stakeholder input.

The ECIIA continues to follow developments closely, as internal auditors are instrumental in supporting organisations’ sustainability reporting and assurance processes.

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Update – Public Call for Input on ESRS Set 1

EFRAG has launched a public consultation to collect feedback on the simplification and revision of ESRS Set 1. This initiative follows the European Commission’s mandate and aims to ensure clearer and more usable sustainability reporting standards. Internal auditors are encouraged to share their views, especially based on their experience with Wave 1. You can also send us your comments to the info@eciia.eu

Submit your feedback here – deadline is 6 May 2025.

ECIIA’s Response to the Consultation

ECIIA has submitted its reaction to EFRAG’s consultation, highlighting the importance of aligning ESRS revision with effective governance and audit practices. Our key messages include:

• Strong governance is essential to support ESRS. Governing bodies need the right tools, internal assurance, and competencies to oversee sustainability reporting. Clear responsibilities, quality management of stakeholder relationships, and an independent internal assurance chain are key elements of this model.
• Data quality challenges remain. ECIIA suggests a gradual integration approach to improve data reliability and reduce the burden on reporting entities.
• Implementation takes time. Both organisations and external auditors need space to build adequate policies and standards. Therefore, we recommend that the assurance report is not required immediately and that clear assurance guidelines are defined in advance.

ECIIA remains committed to supporting high-quality, practical, and sustainable reporting practices in Europe.

Read our full response.

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• A risk-based and proportional approach across the AI lifecycle,
• Ensuring fairness and ethical use of AI, prioritising consumer interests,
• Clear roles and responsibilities, including expectations for internal audit,
• The ability to explain AI-driven outcomes,
• Robust data governance and regular AI audits,
• Comprehensive documentation and record-keeping.

The ECIIA Insurance Committee will provide a response to this consultation.

For more details, visit the official consultation page: EIOPA Consultation on AI Governance and Risk Management.

Update: ECIIA has submitted its response to the EIOPA consultation on AI governance and risk management in insurance.

Our main recommendations:

• Clarify the distinction between the roles of Internal Audit (IA) and External Audit (EA)
• Reinforce the importance of strong governance structures
• Define how this guidance aligns with existing regulations such as the AI Act

Read our full response here.

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Our response outlines several key recommendations aimed at enhancing the guide:

• Diverse Governance Systems: ECIIA emphasises the need to consider various governance systems and the interactions between the IAF, management body, and audit committee. A tailored approach will ensure a more effective implementation of risk culture.
• Integration of General Internal Audit Standards: The General Internal Audit Standards (GIAs) should be seamlessly integrated into the guidance as they are essential for professional practices and the quality assessment of the IAF.
• Emphasis on Risk-Based Approaches: We urge the ECB to highlight a risk-based approach throughout all audit processes, particularly in following up on supervisory findings.
• Audit Universe Cycle Considerations: The current recommendation of a five-year cycle for all audit components should be revisited to align with the risk-based nature of audit plans.
• Clarification of “Good Practices”: The term “good practices” requires clearer definitions to avoid potential misinterpretations in upcoming regulatory examinations.

See our feedback summary.
For the detailed response click here.

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The guide is open for public consultation until 16 October 2024.

As part of this process, the ECB will host a virtual stakeholder meeting on 26 September 2024 from 11 am to 1 pm CET. For more details, please visit the public consultation page.

ECIIA advocates the critical role of internal audit in maintaining strong corporate governance and is committed to continuous dialogue with the ECB. The reaction to the consultation will follow in the upcoming weeks.

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The deadline for participation closed on 22 July 2024.

ECIIA has submitted a final reaction to it, advocating for the integration of the role of internal audit within the CEAOB guidelines. The draft of the International Standard on “Sustainability Assurance Engagements” (ISSA 5000) recognises Internal Audit as a vital engagement resource that external assessors can rely upon.

Internal audit is integral to strong governance, providing the Board and Governing Bodies with assurance that ESG (Environmental, Social, and Governance) principles are effectively embedded.

The role of internal audit is necessary for:

• Achieving ESG reporting objectives: consistency, comparability, reliability, and usefulness for decision-making.
• Assisting the Board and Governing Bodies in their new ESG reporting roles.

For more details, read our full response:

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The Guide aims to clarify the ECB’s understanding of related legal requirements and its expectations for supervised banks. This will make supervision more consistent while helping ensure a level playing field for all banks. Drawing from risks and best practices observed through ongoing supervision and dedicated on-site inspections by Joint Supervisory Teams, the Guide seeks to strengthen regulatory oversight.

The consultation period closed on July 15th.

ECIIA has submitted a detailed response, emphasising the role of internal audit and offering key recommendations for enhancing the ECB guidance. These suggestions include:

• Incorporating practical examples to illustrate key technical elements.
• Clearly defining the minimum audit work for different types of cloud services, taking into account challenges in obtaining information from CSPs.
• Providing clear definitions of key items such as “critical functions”, considering those outlined in the Digital Operational Resilience Act (DORA).

View the full reaction below:
– Final comments
– Final with details

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ECIIA is also concerned about the fact that the assurance guidance will only be issued in 2026, while many companies must comply as of next year. It creates confusion and leaves open questions for all involved in the reporting and assurance chain.

Read ECIIA’s reaction here.

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We recommend emphasizing the role of internal audit in the whole ESG embedding process and better defining the requirements to rely on internal audit work ( the conformance with IIA Global Standards).

Please read ECIIA’s reaction here. You can also read the recommendation letter.

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The objective is to make a comprehensive assessment of the framework to assess potential shortcomings – focusing on legal certainty, the useability of the regulation and its ability to play its part in tackling greenwashing. The consultation is available here.

The post European Commission: consultation on the implementation of the Sustainable Finance Disclosures Regulation (SFDR) appeared first on ECIIA.

draft of the proposed Global Internal Audit Standards

Read ECIIA’s reaction.

Read the general letter.

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