Audit Committee consideration of ESG fraud risk – Deloitte Audit Committee Brief, and Tate comments

Audit Committee consideration of ESG fraud risk – I have provided below links to the full paper and to the Audit Committee Brief, and scans of the first two pages of the specific discussion in the July 2022 Deloitte Audit Committee Brief – the discussion is about the audit committee’s consideration of ESG as a fraud risk. As I have written, we have seen and will continue to see new issues and possible risks for the audit committee to consider – in this instance we are talking about financial statement reporting and financial statement notes (and possibly company public statements) relating to ESG, including measurements, disclosures, and related internal controls. The preceding sentence is a mouthful, but the ESG topic area is a mouthful, not only including climate and sustainability which receive most of the attention, but also the social and governance areas.

While Deloitte’s article is written in the context of fraud risks to consider with respect to ESG, at a more base level, and without having to get into whether an act or a failure to act legally rises to the level of fraud, as an audit committee member I would first focus on these topics from compliance, legal, materiality, and internal control perspectives, and thereby first working to prevent having to get into an investigation of possible fraud. Of course materiality can be both quantitative and qualitative. Thus, while the issue or act or occurrence might not be material from a quantitative perspective, qualitative materiality might also be at issue, for example, in light of reputation or optics.

Collectively there is a lot to do and to prepare for, including audit committees, boards, executive officers, corporate counsel, corporate communications, corporate ESG, climate and sustainability professionals, internal and outside auditors, and in some circumstanced people who are involved in internal investigations. You will need a team effort, collaboration and coming together (silos will not work), plus a law firm or firms.

You will find several prior ESG, climate and sustainability posts on this blog – please also consider the recent NOCLAR post and prior CAM posts, in addition to other related topics. It has been a short while since I last used discussions from my Tate’s Excellent Audit Committee Guide, but I will again be bringing those topics out in this blog and also updating them as appropriate.

The following is a link to Deloitte’s omnibus webpage for the Deloitte Audit Committee Brief (current and prior editions),

The following is a link to the specific Deloitte July 2022 article Emerging fraud risks to consider: ESG,

The following are scans of the first two pages of Deloitte’s article Emerging fraud risks to consider: ESG – but read the entire article as there are helpful comments throughout:

Thanks for reading. Please pass this along to other people who would be interested.

* * * * * * *

Best to you,

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, trade secret, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are: – business, D&O, audit committee, governance, compliance, etc. – previously at

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

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