Glossary›Emissions accounting and measurement›Base year recalculation policy
Glossary term
Cluster D · D19
Tier 1 · differentiator
Base year recalculation policy
Definition
A base year recalculation policy is the written rule stating when historical emissions will be restated and by how much a change must move the figure before restatement is triggered. Typical triggers are acquisitions, disposals, structural change, methodology change and the discovery of significant errors. Writing the policy before it is needed is what makes a restatement credible.
GHG Protocol Corporate Standard (2004)
· chapter 5 ·
In force
On this page
In practice
This entry exists because of a timing problem rather than a technical one. Everything about recalculation is straightforward to do and impossible to do credibly after the fact.
The policy answers two questions. Which events trigger a recalculation, and how big must the effect be before the trigger fires.
On events, the standard set is acquisitions and disposals of entities or facilities, insourcing or outsourcing of activities, a change in the calculation methodology or emission factor basis that materially affects the figure, a change in the inventory boundary, and discovery of a material error. Organic growth and decline are deliberately not on the list: a business that simply grows does not restate its base year, because the growth is the performance the target is measuring.
On the threshold, the policy should state a significance level, expressed as a percentage of base year emissions, below which no restatement occurs. Without a stated threshold every immaterial acquisition raises a question, and the absence of a threshold is itself a finding because it means each restatement decision is being made on its own, in the moment, by someone with an interest in the outcome.
The credibility point is blunt and worth saying to a board directly. A restatement decided after the entity knows whether it helps or hurts the trend is a result-driven adjustment, whatever the merits. The same decision, made against a policy written and approved in a prior period, is an accounting outcome. The technical work is identical. The difference is entirely in the sequence, and the assurer can see the sequence from the approval dates.
For a private Australian business the trigger that fires most often is acquisition. Mid-market groups acquire regularly, and each acquisition changes the emissions boundary in a way that makes the current year non-comparable to the base year. A policy that handles acquisitions cleanly (restate the base year to include the acquired entity’s emissions on a like basis, where the effect exceeds the threshold) removes a recurring argument.
What the assurer does with it
The assurer asks for the policy before asking about any specific restatement, and they note the approval date. A policy approved in the same period as the restatement it governs gets a harder look than one approved two years earlier.
Where a restatement has occurred they test four things: that the trigger was one named in the policy, that the quantified effect exceeded the stated threshold, that the recalculation was applied consistently across all affected years rather than only the convenient ones, and that the restatement was disclosed with its reason and quantum.
They accept a restatement made under a pre-existing written policy, quantified, approved at the right level and disclosed. They reject a restatement with no policy behind it, a restatement where the trigger is not in the policy, a restatement applied to the base year but not to intervening years, and any restatement that has not been disclosed: an unexplained movement in a prior-period figure is one of the fastest routes to a modified conclusion.
The inverse test is also run and it is the one entities forget. Where a trigger event clearly occurred (a disclosed acquisition in the financial statements) and no recalculation happened, the assurer asks why. Non-restatement is as much a decision as restatement, and it needs the same documentation.
Commonly confused with
Restatement of prior-period emissions, which is the act; this is the rule that governs the act. They are frequently used interchangeably and the distinction is the whole value of the term. Also confused with a change in accounting policy in the financial statements sense, which has its own standard and disclosure regime and is not this.
Sources
1
Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004 revised edition)
GHG Protocol
2
Review status
Review required
Last reviewed
15 September 2026
Editorial pass, unsigned
Reviewer required
Carbon accounting specialist and registered company auditor
Next scheduled review
1 July 2027
Part of
Cluster D, Emissions accounting and measurement
49 terms from the head term carbon accounting down to individual Scope 3 categories and the mechanics of factors, boundaries and data quality. The largest cluster in the glossary.
Related terms
The reference period the policy protects
The act the policy governs and the disclosure it triggers
The most common source of a trigger event
Related questions
What happens if we have to restate last year’s emissions?
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You restate the comparative and disclose what changed, why, and the effect. Restatement is expected as data improves and is not treated as a failure. What the assurance practitioner tests is whether you have a written policy setting out when you restate, and whether you applied it consistently.
Do we need comparatives in our first report?
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No. AASB S2 relieves first-time reporters from disclosing comparative information in their first annual reporting period, and comparatives are required from year two. That means your year-one numbers and working papers will be looked at again, so build the year-one file as if it will be re-examined.
Where this sits commercially
Carbonhalo writes the recalculation policy in year one, before there is a result to protect, which is the only sequence an assurer reads as an accounting outcome.
Other terms in this cluster
Base year recalculation policy