Traditional methods of assurance outlined by current professional standards are risk-based models where the emphasis is on the veracity of published data rather than on the rigour of the interpretation or analysis of information provided to users. As such, they are not well suited for expressing an opinion on qualitative, subjective or forward-looking assessments typically included in integrated reports. In this context, the purpose of this paper is to describe an alternate approach to assurance and identifies the initial elements of an “interpretive assurance model”.
The research is exploratory/interpretive. It relies on detailed interviews with experienced auditors and preparers to develop an initial approach for providing some level of assurance over an integrated report.
The research identifies elements of an interpretive assurance model which focusses on providing assurance on the interpretation and analysis of information included in an integrated report rather than on underlying data. These include an examination of the completeness of the explanation of the value creation process provided in an integrated report; the methods used to support management discussion and analysis; and the reasonability of the review process used to ensure the reliability of qualitative, subjective and forward-looking representations contained in an integrated report.
The study is conducted in a South African setting. While limiting the study to a single jurisdiction may be seen as a limitation, local preparers and auditors have had at least five years of experience with the application of an integrated reporting framework and are in a strong position to provide detailed insights.
An interpretive assurance model shifts the focus from objective verification of data using defined test procedures to evaluation of the interpretation and analysis process used to prepare an integrated report. Application of the proposed model will require practitioners and auditing students to be trained extensively in qualitative analytical techniques. The inherent complexity of contemporary business models and the multi-dimensional focus of integrated reports will also result in changes in the composition of audit teams which are currently dominated by experts in financial reporting rather than integrated or strategic business management.
The paper is the first to offer a practical approach for providing assurance over an integrated report. It responds to calls form the International Integrated Reporting Council and International Auditing and Assurance Standards Board for more innovative assurance models for addressing the reporting needs of contemporary organisations.
The author would like to thank Linda de Beer, Daniel Cerbone, Robert Garnett, Wayne van Zijl and the participants at the Meditari Accountancy Research Conference (2015 and 2016) for comments on earlier versions of this paper. Special thanks also go to Lelys Maddock for her invaluable editorial services. Finally, the author would like to acknowledge the financial support provided by the British Academy and Newton Fund.
Maroun, W. (2018), "Modifying assurance practices to meet the needs of integrated reporting: The case for “interpretive assurance”", Accounting, Auditing & Accountability Journal, Vol. 31 No. 2, pp. 400-427. https://doi.org/10.1108/AAAJ-10-2016-2732Download as .RIS
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