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Corporate environmental responsibility and audit risk

Mary Mindak (School of Accountancy and MIS, DePaul University, Chicago, Illinois, USA)
Wendy Heltzer (School of Accountancy and MIS, DePaul University, Chicago, Illinois, USA)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 6 September 2011




The purpose of this paper is to examine the relationship between and corporate environmental responsibility (CER) and audit risk.


A survey participation request was mailed to 5,008 US auditors at random. The request provided a link to an electronic survey. The final sample consists of anonymous responses from 163 auditors.


The authors find that auditors, on average, do not perceive a significant relationship between corporate environmental strengths and audit risk; however, they do perceive an increase in audit risk among firms with corporate environmental concerns. Use of CER in the risk assessment process also varies across types of CER: 15 per cent of auditors use corporate environmental strengths to assess audit risk, while 43 per cent of auditors use corporate environmental concerns to assess audit risk. Perception of the CER/audit risk relationship is a significant determinant of CER use. Finally, both types of CER are found to have average usefulness in the risk assessment process.

Research limitations/implications

The findings are limited to US auditors; results may not be transferable to other countries.


Studies involving the impact of CER on earnings generally involve archival data. By examining the impact of CER on audit risk, using a unique dataset, the authors present a different and timely setting to study the CER/earnings relationship. To the best of the authors' knowledge, this is the first paper to document the relationship between CER and audit risk.



Mindak, M. and Heltzer, W. (2011), "Corporate environmental responsibility and audit risk", Managerial Auditing Journal, Vol. 26 No. 8, pp. 697-733.



Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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