Mandatory corporate social responsibility assurance practices: The case of King III in South Africa

Abstract

Purpose

Despite its voluntary nature, the Johannesburg stock exchange (JSE) requires all listed companies to apply the King III principles, including providing independent CSR assurance. King III has accordingly made independent CSR assurance a de facto mandatory requirement, albeit on an “apply or explain” basis. The purpose of this paper is to examine the impact mandatory corporate social responsibility (CSR) assurance practices in South Africa, within a King III context.

Design/methodology/approach

To understand the impact of King III on South African CSR assurance practices, a longitudinal study covering reporting periods both before and after King III implementation. The first stage reviewed the annual reports of the 200 largest JSE-listed companies to establish the frequency of CSR assurance provision. The second stage involved performing a content analysis on the CSR assurance reports.

Findings

King III is driving the institutionalisation of CSR assurance practices in South Africa, as evidenced by the growth in CSR assurance since the implementation of King III. The study also found that the audit profession’s dominance was being eroded by specialist CSR assurors providing higher levels of assurance, despite concerns about the rigour of their assurance methodologies. Voluntary CSR assurance practices have resulted in the inconsistent application of CSR assurance practices, impairing the ability of stakeholders to understand the nature and scope of CSR assurance engagements. It is argued that this deficiency may be overcome through the imposition of a mandatory CSR assurance regime.

Originality/value

The pervasive impact of the King Code of Governance on South African organisations makes it appropriate to examine its impact on South African CSR assurance practices. As such, this paper represents one of the first studies to specifically consider the impact of a mandatory regulatory requirement for independent CSR assurance and suggests a future direction for global CSR assurance practices.

Citation

Ackers, B. and Eccles, N.S. (2015), "Mandatory corporate social responsibility assurance practices: The case of King III in South Africa", Accounting, Auditing & Accountability Journal, Vol. 28 No. 4, pp. 515-550. https://doi.org/10.1108/AAAJ-12-2013-1554