How to run your own AASB S2 gap check before your auditor does

Ask the companies that reported first under AASB S2 what they'd do differently, and one answer keeps coming back: start earlier. In the AICD's review of the first Group 1 reporters (those with December year-ends), the consistent reflection from first reporters was to "engage auditors 12 to 18 months before the first mandatory report". Organisations that began at least a year before their reporting deadline still found the work resource intensive.

For a Group 2 business with a June year-end, the first reporting year started on 1 July 2026. That advice points to now.

The most useful thing to do first is a gap check: an honest look at where you stand against each requirement, before anyone else looks. You can start it in-house, with or without outside advice, and it doesn't need to be perfect. It needs to be specific.

Where do you start?

Work requirement by requirement, not chapter by chapter. AASB S2 is organised into governance, strategy, risk management, and metrics and targets, but each area breaks into individual disclosures. A broad "we're mostly fine on governance" hides the detail an assurer will test.

For each requirement, make one of three calls: you have it, you partly have it, or you don't. Be strict about what counts as "have it". If you can't point to the evidence today, it's a partly at best.

If you want a list to work from, Drova's AASB S2 disclosures checklist sets out every required disclosure, its clause, and the audit evidence assurance providers review. You can work through it on the page or download the PDF.

What counts as evidence?

The kind of evidence an assurer can follow. The AICD found that auditors of Group 1 reports examined governance arrangements, including interviews with key people, walkthroughs of the process, and reviews of internal documents such as policies, charters and committee minutes. They also challenged how specific numbers were broken down, and whether assumptions and qualifications were enough.

So for each requirement you mark as covered, note where the proof lives: the board paper, the risk assessment, the data behind a figure, and who approved it. Organisations that prepared evidence packs early told the AICD the assurance process was far more manageable than for those working under time pressure.

Which judgements need writing down?

The big ones, before year end. Directors from the first wave told the AICD that the judgements that matter most, such as materiality, value chain boundaries, putting numbers on financial effects and scenario choices, need to be formally documented and endorsed by the board or a committee before year end, not during the audit.

Materiality deserves particular care. ASIC notes that AASB S2 sets no threshold for what is material, and in its review of the first reports it saw entities leave information out as 'not material' without explaining the thresholds, judgements or assumptions behind that call. Your gap check should flag every judgement like that and ask: is the reasoning written down, and has the right person signed it off?

Where should you look hardest?

Where assurers are most concerned. In a June 2026 study funded by the AUASB, AASB and CA ANZ, assurance providers named forward-looking information, scenario analysis and reasonable assurance of Scope 3 emissions among the reporting requirements that concern them most. On the assurance side, connection with the audited financial statements and the auditor's assessment of materiality were among their concerns too.

ASIC's review of the first reports points the same way: it saw room for improvement in forward-looking disclosures and those resting on assumptions or judgement. A gap check that treats every requirement as equal will miss where the real work is.

Who should run it?

Finance, with the business around the table. The AICD found climate reporting should be driven by finance teams, and Carolyn Cosgrove of PwC Australia put the alternative plainly: "Where sustainability teams try to do this alone, they run into challenges."

Bring your assurer in early, too, but keep the roles clear. The same study found some confusion about whether early work for a client counts as sustainability consulting or pre-assurance, which matters for auditor independence. Agree what each party is doing before the work starts.

Keep the gap check live

A gap check done once in a spreadsheet goes stale as soon as the work starts. Finding it first means keeping the picture current as gaps close, all year.

Drova's AI does the reading: it turns each AASB S2 clause into clear, practical requirements. Your team assigns owners, adds tasks with due dates, and attaches evidence such as board minutes, reports or certifications to the requirement it supports. Every clause shows a compliance result, such as compliant, partially compliant or not compliant, so you can see what's left at any point in the year.

Find your AASB S2 gaps before they're findings. Find it first: start free and run your gap check on your own organisation.