Question 6

The Commonwealth Bank of Australia's (CBA) woes are continuing, with a green activist group launching legal action on Tuesday on behalf of two mum and dad shareholders accusing the bank of failing to disclose climate change risk in its annual report adequately.

Lawyers representing Environmental Justice Australia filed proceedings in the Federal Court, with the group claiming it was the first case in the world to test how companies should acknowledge the impact of global warming on their operations.

Melbourne art curator Guy Abrahams and medical practitioner Kim Abrahams allege that by inadequately disclosing the risk climate change posed to its business in its 2016 annual report, the bank breached the Corporations Act by failing to give a true and fair value of its financial position and performance.

They also allege the 2016 report did not inform investors of climate change risks.

They are seeking an injunction to prevent the CBA making the same omissions in future annual reports.

Extract from the Australian Financial Review on 8 August 2017 by Andrew Tillett

Required

Discuss why auditors need to access environmental or climate risk oftheir clients.