Integrated reporting and assurance: where can research add value?

Purpose: This paper aims to provide insights into salient issues in the development of the Integrated Reporting () Framework, and emerging issues in the implementation of this Framework, with the aim of identifying opportunities for future research. The International Integrated Reporting Council (IIRC) has recently produced a reporting framework for the preparation of a concise, user-oriented corporate report which expands the scope of a company’s reporting using a multiple capitals concept and requires a description of a company’s business model, allowing a better communication of its value creation proposition. To gain international acceptance, the market-based benefits of adopting the framework must be demonstrated. Design/methodology/approach: The paper takes the form of an archival analysis of the responses to the IIRC’s public consultation phases, providing insights into arguments for and against salient aspects of the framework, and identifying issues that would benefit from future research. Findings: Identifying issues that arose during the framework preparation, this paper identifies a range of future research opportunities and outlines the research approaches by which academics can assess the costs and benefits of companies reporting in accordance with the Framework and assuring this information. Research limitations/implications: Research opportunities associated with the International () Framework and associated assurance are identified. Practical implications: This paper provides insights and details of the process of adoption of and has implications for adopters and assurance providers of integrated reports, standard setters and regulators. The development of a sophisticated business case informed by rigorous research will be critical to the further uptake of . Social implications: Research opportunities identified include the expansion of the Framework to reporting entities other than corporations, including government and not-for-profit organisations, as well as measurement and assurance of a broader array of capitals, including social capital. Originality/value: The paper identifies research opportunities from an archival analysis of the responses to the IIRC’s public consultation phases, providing insights into arguments for and against salient aspects of the framework that would benefit from future research.</p

Integrated reporting and directors' concerns about personal liability exposure: Law reform options

Integrated reporting () holds significant promise as a new reporting paradigm that is holistic, strategic, responsive, material, and relevant across multiple time frames. However, its uptake in Australia is being hampered by directors’ concerns about personal liability exposure, particularly for forward-looking statements that subsequently prove to be unfounded. This article seeks to illuminate the bases for these liability concerns by outlining the similarities between and the operating and financial review requirements under the Corporations Act 2001 (Cth), and the relevant grounds for liability for misleading and deceptive disclosures, and breach of directors’ duties. In light of this discussion, this article proposes four possible reform options, ranging from minor adaptations to the Framework to far-reaching reforms of the Corporations Act. As assurance is desirable to ensure that reliance can be placed on integrated reports, the development of a legal safe harbour for auditors of forward-looking information is also canvassed

Assurance of sustainability reports: Revision of ISAE 3000 and associated research opportunities

PurposeThe International Auditing and Assurance Standards Board (IAASB) is currently in the process of revising International Standard on Assurance Engagements (ISAE) 3000. The purpose of this paper is to review the implications of this revision process for providing assurance on sustainability reports, and identify policy‐related research opportunities associated with this review.Design/methodology/approachThe paper takes the form of a conceptual and critical review of standards development, and archival analysis of ISAE 3000 exposure draft responses.FindingsIn the revision of ISAE 3000, concerns have been expressed by a number of parties around the distinction between reasonable and limited assurance, the procedures necessary in properly undertaking a limited assurance engagement and the structure and content of a limited assurance report. These concerns can be addressed by appropriate research initiatives which can inform these policy issues.Research limitations/implicationsResearch opportunities are identified, in particular the use of experimental design to examine implications of changing the requirements of the procedures for limited assurance on assurance practitioners and of changing aspects of the assurance report on the level of assurance conveyed by limited assurance reports.Practical implicationsThe paper contains a review of the standard‐setting process and has implications for assurance providers of sustainability reports, standard setters and regulators.Originality/valueThe paper provides an update of relevant standards for assurers of sustainability reports and review and appraisal of issues raised in the recent revision process of ISAE 3000.</jats:sec

A critique of the international auditing and assurance standards board

Knowledge of initiatives and developments at the international level are important to the Australian auditing profession, which has adopted a policy of convergence with the International Auditing and Assurance Standards Board (IAASB). To aid this knowledge, this paper provides a critical review of developments at the IAASB and their impact on Australia, drawing on insights gained by the author as a member of the IAASB from 2002 to 2005. © 2007 CPA Australia

Assurance of environmental, social and sustainability information

This chapter outlines issues and identifies research opportunities for assurance of general purpose stand-alone reports whose subject matter covers environmental, social and sustainability issues. The focus of this chapter is assurance of general purpose reports because these reports are made available to shareholders (or more broadly stakeholders), rather than being available only for internal or specific regulatory purposes, and therefore assurance of these reports is a matter of broader public interest. Stand-alone reports are examined as they can give rise to assurance engagements separate from the audits of general purpose financial reports (GPFRs), even though GPFRs can sometimes include elements of nonfinancial performance. Two main categories of stand-alone general purpose environmental, social and sustainability reports are identified which give rise to separate assurance engagements, have significantly increased in frequency internationally over the last ten years, and for which separate subject matter reports and assurance reports are observable. These are analyzed separately as they comprise separate markets, are subject to different regulatory and standard-setting initiatives and give rise to different research opportunities. The first of these are assurance on general purpose reports which are voluntarily prepared and involve the public dissemination of information about an organization’s nonfinancial performance, including environmental, social and governance considerations, to produce what are commonly known as sustainability reports (a terminology used throughout this chapter). The second type of assurance engagement is on a specific aspect of environmental reporting which has gained increased attention over the last ten years, assurance on greenhouse gas (GhG) emissions reports. Throughout the world, there have been many regulatory initiatives which have led to reporting regulations being implemented by specific countries or regions, and global initiatives on disclosure and assurance by international bodies such as the Carbon Disclosure Standards Board (CDSB). A need for credible emissions figures has created a strong demand for assurance of GhG emission reports and this is further evidenced by the recent release from the International Auditing and Assurance Standards Board (IAASB) of an assurance standard providing comprehensive guidance on GhG assurance engagements, ISAE 3410 “Assurance on a Greenhouse Gas Statement” (IAASB 2012). At the same time that more organizations are publicly reporting these types of information, report users are demanding that the information reported be relevant and reliable. One of the main ways of demonstrating this is through having information independently assured. Providing assurance on environmental, social and sustainability reports is one way to mitigate the skepticism with which they are often received. Thus, around the world we have seen significant growth in the assurance of these stand-alone reports. Research on these two types of assurance engagements has the ability to contribute significantly to, or challenge, current knowledge about the assurance function. While research on financial statement audits is a mature area, with the knowledge gained from research adding to what is an extensive existing body of knowledge, research on assurance of sustainability and GhG information is in its infancy and offers many opportunities and abilities to challenge or extend existing knowledge of the assurance function. For example, the nature of the assurance market is different from that of the financial statement audit market, as it is potentially more competitive in structure; assurance is not mandatory and is therefore subject to (and is capable of being shaped by) a market evaluation. Thus, if it is determined that the benefits of assurance exceed the costs, there is then a choice of type of assurance provider from either within or outside the accounting profession. Further

Assurance of sustainability reports: Revision of ISAE 3000 and associated research opportunities

Purpose: The International Auditing and Assurance Standards Board (IAASB) is currently in the process of revising International Standard on Assurance Engagements (ISAE) 3000. The purpose of this paper is to review the implications of this revision process for providing assurance on sustainability reports, and identify policy-related research opportunities associated with this review. Design/methodology/approach: The paper takes the form of a conceptual and critical review of standards development, and archival analysis of ISAE 3000 exposure draft responses. Findings: In the revision of ISAE 3000, concerns have been expressed by a number of parties around the distinction between reasonable and limited assurance, the procedures necessary in properly undertaking a limited assurance engagement and the structure and content of a limited assurance report. These concerns can be addressed by appropriate research initiatives which can inform these policy issues. Research limitations/implications: Research opportunities are identified, in particular the use of experimental design to examine implications of changing the requirements of the procedures for limited assurance on assurance practitioners and of changing aspects of the assurance report on the level of assurance conveyed by limited assurance reports. Practical implications: The paper contains a review of the standard-setting process and has implications for assurance providers of sustainability reports, standard setters and regulators. Originality/value: The paper provides an update of relevant standards for assurers of sustainability reports and review and appraisal of issues raised in the recent revision process of ISAE 3000. © Emerald Group Publishing Limited