Does CSRD Reporting Need to Be Audited for SMEs?

Introduction

One of the biggest questions small and growing businesses (SMEs) face about the Corporate Sustainability Reporting Directive (CSRD) is whether their sustainability information needs to be audited — and if so, to what level.

The short answer is: most small and growing businesses (SMEs) do not yet need a formal audit, but larger or listed ones will, and limited assurance is becoming the EU standard.

This article explains how assurance works under CSRD, when SMEs are covered, what “limited assurance” means, and how to prepare your company for future verification — even if you’re starting with voluntary reporting under the VSME Standard (EFRAG, 2024).

For help preparing your data for review, see How to Prepare for Your First CSRD Audit or Review.

1. What CSRD Requires on Assurance

The CSRD Directive (EU 2022/2464) requires all sustainability information disclosed under the European Sustainability Reporting Standards (ESRS) to be subject to assurance — meaning it must be reviewed by an independent auditor.

This assurance requirement applies in two phases:

1. Limited assurance (from 2025 onwards) – Auditors confirm the data is plausible, traceable, and consistent with other information (not a full audit).
2. Reasonable assurance (later phase) – Expected around 2028–2030, similar in depth to financial audit verification.

Auditors check:

• Whether the company applied ESRS correctly.
• If data sources and methods are documented.
• Whether key disclosures are free from material misstatements.

The goal is credibility, not perfection — the same principle that guides financial assurance.

2. Which SMEs Need to Be Audited (and When)

CSRD’s audit rules depend on company size and listing status.

In practice:

• Unlisted SMEs using the VSME Standard can publish unaudited reports.
• Listed SMEs will need to undergo limited assurance by their statutory auditor (or another qualified assurance provider).

Even without a legal obligation, voluntary assurance can improve credibility, especially if you supply to larger CSRD-reporting companies.

3. What “Limited Assurance” Means in Practice

Limited assurance is not a full audit — it’s a reasonableness check. The auditor reviews your systems and data at a moderate level of detail.

They will:

• Review your data sources and methods (not every single number).
• Check that estimates and emission factors are logical and documented.
• Ensure internal controls exist (e.g. how data is approved).
• Verify that the report matches your financial statements.

Example expectation:

If you estimated emissions using spend-based methods and cited EEA factors, the auditor ensures the calculation is traceable and the assumptions are reasonable — not that they recalculate every factor.

Under both CSRD and VSME, the focus is on consistency, transparency, and improvement, not precision.

For more on data expectations, see How Accurate Does CSRD Data Need to Be?.

4. Who Can Perform the Audit or Assurance

Member States can allow assurance by:

• Statutory auditors (the same firm that audits financial statements), or
• Independent sustainability assurance providers accredited by national authorities.

The assurance engagement must follow ISAE 3000 (Revised) — the international standard for non-financial information assurance.

SMEs choosing voluntary assurance under the VSME Standard should ensure the provider meets basic professional independence and competence requirements.

5. How SMEs Can Prepare Now

Even if assurance isn’t mandatory yet, preparing early will save time and effort later. Key steps:

1. Document your data sources – invoices, surveys, and estimation methods.
2. Keep calculation spreadsheets traceable – include units, factors, and assumptions.
3. Assign internal data owners – clarify who validates energy, waste, or HR data.
4. Use consistent methods year to year.
5. Store evidence securely – auditors may sample files to verify traceability.

Many small and growing businesses already collect most of the needed information for client requests or certifications — assurance just formalises that process.

6. Benefits of Voluntary Assurance for SMEs

Even if not required, assurance can add real value:

• Builds trust with large customers who must report value chain data.
• Strengthens ESG credibility for banks and tenders.
• Reduces future compliance costs once assurance becomes mandatory.
• Improves internal confidence in your sustainability metrics.

Voluntary assurance can be scoped — for example, verifying only GHG emissions or energy data in early years.

Frequently Asked Questions

Is external assurance mandatory for VSME reports?

No. It’s optional, but encouraged for credibility. You can still follow assurance-ready practices like keeping documentation and using reliable data sources.

What’s the difference between “limited” and “reasonable” assurance?

Limited assurance means the auditor checks for plausibility; reasonable assurance involves in-depth verification, closer to a financial audit.

Can I use my financial auditor for sustainability assurance?

Yes, if they’re accredited and qualified. Many accounting firms are expanding services to cover CSRD assurance.

What happens if my data isn’t perfect?

That’s fine. Auditors don’t expect perfection — they expect transparency and continuous improvement.

Key Terms

• Limited assurance – Moderate-level audit confirming plausibility and traceability.
• Reasonable assurance – Full verification comparable to financial auditing.
• ISAE 3000 (Revised) – International standard for non-financial information assurance.
• VSME Standard – Simplified sustainability reporting framework for SMEs.
• Material misstatement – Significant inaccuracy affecting report interpretation.

Conclusion

Most SMEs don’t need a CSRD audit yet — but the EU’s direction is clear: assurance will soon be the norm. For now, focus on collecting reliable, traceable data and documenting your estimation methods.

By adopting assurance-ready practices early, your small and growing business will be fully prepared for future verification while building trust with clients and stakeholders.

For a step-by-step preparation guide, read How to Prepare for Your First CSRD Audit or Review.

To help prepare your data for audit or assurance, use our checklist generator to ensure all necessary documentation is in place:

This tool will help you identify all the data points and documentation you need to collect to prepare for audit or assurance review.