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Article
Publication date: 28 October 2021

Laila Aladwey, Adel Elgharbawy and Mona Atef Ganna

This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social…

Abstract

Purpose

This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports.

Design/methodology/approach

From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis.

Findings

The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision.

Research limitations/implications

The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers.

Practical implications

The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms.

Social implications

Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure.

Originality/value

The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

Details

Corporate Governance: The International Journal of Business in Society, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 21 March 2008

Andrew Chambers

The purpose of this paper is to investigate whether there is a significant deficit in the assurance needs of boards and, if so, what might be done to fill this gap and

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1440

Abstract

Purpose

The purpose of this paper is to investigate whether there is a significant deficit in the assurance needs of boards and, if so, what might be done to fill this gap and whether internal auditors have a role to play in this.

Design/methodology/approach

Contemporary examples of boards being taken by surprise are analysed, making extensive use of high quality reports and other information. The role played by internal audit, both in these cases and with reference to what is currently regarded as “best practice” is explored to assess internal audit's potential to evolve to meet the challenge.

Findings

Boards are exposed to a partial assurance vacuum which urgently needs to be filled. If internal audit can make a further quantum leap, as internal audit has done in other respects in the past, then internal audit may fulfil this need.

Research limitations/implications

This research is based on the plentiful information in the public domain which has been sufficient to reliably support the conclusions drawn.

Practical implications

Nothing less than a root and branch revamp of internal auditing is called for. If responded to, the rewards for internal audit and the added value for boards and their stakeholders will be massive.

Originality/value

While internal auditors are tentatively moving into the audit of governance processes, this paper argues that internal audit must be much bolder to become a respected corporate governance partner to the board.

Details

Measuring Business Excellence, vol. 12 no. 1
Type: Research Article
ISSN: 1368-3047

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Article
Publication date: 29 June 2017

Jennifer Martinez-Ferrero, Lázaro Rodríguez-Ariza and Isabel María García-Sánchez

The purpose of this paper is to analyze how family ownership influences the strength of the board’s monitoring function in companies’ decisions regarding the assurance of…

Abstract

Purpose

The purpose of this paper is to analyze how family ownership influences the strength of the board’s monitoring function in companies’ decisions regarding the assurance of sustainability reports.

Design/methodology/approach

The international sample consists of 536 companies operating in more stakeholder-oriented countries during the period 2007-2014. The paper proposes alternative logit models of analysis using the random-effects estimator.

Findings

The results provide evidence that a firm’s sustainability assurance and its choice of accounting professionals as higher quality assurers are positively associated with board size and independence. The main result is the positive impact of family businesses on these assurance issues. The paper evidences the greater orientation toward sustainability issues of family businesses. Furthermore, it verifies the greater impact of board size on family firms’ assurance demand.

Originality/value

This study sheds some light on the unexplored topic of sustainability assurance in family firms. One of the differentiating aspects with respect to previous studies is the consideration of the moderating factor of family property. This study also contributes to the understanding of family firms’ demand for assurance and its practitioners, and the literature’s focus on its determinants.

Details

Journal of Small Business and Enterprise Development, vol. 24 no. 4
Type: Research Article
ISSN: 1462-6004

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Article
Publication date: 5 January 2015

Loïc Decaux and Gerrit Sarens

– This purpose of this paper is to investigate how to implement a combined assurance program.

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1816

Abstract

Purpose

This purpose of this paper is to investigate how to implement a combined assurance program.

Design/methodology/approach

This paper uses qualitative data obtained through semi-structured interviews with six multinationals at different stages of combined assurance implementation maturity.

Findings

The paper finds that organizations are still learning through combined assurance implementation because no organization seems to have attained a mature combined assurance program. Nevertheless, our descriptive findings reveal that a successful combined assurance implementation follows six important components.

Research limitations/implications

One limitation of this study is that, as the organizations studied are at different stages of combined assurance program implementation, data may have comparability issues. Another limitation is that different interviewees were studied from one case to another.

Practical implications

The results have implications both for organizations that do not yet have a combined assurance program in place and for those currently at the implementation stage. It has also implications for chief audit executives who are good candidates to lead a combined assurance implementation and for regulators, as the study describes combined assurance as an important accountability mechanism that helps boards and audit committees exercise their oversight role properly.

Originality/value

The study is the first to address combined assurance implementation. It complements the study of the Institute of Internal Auditors UK and Ireland (2010), which identifies the reasons for failed attempts to coordinate assurance activities, by illustrating combined assurance implementation through six international case studies of organizations at different combined assurance implementation stages.

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Article
Publication date: 5 January 2015

Andrew D. Chambers and Marjan Odar

The purpose of this paper is to explore how internal auditing may recover from being one of the corporate governance gatekeepers that failed to prevent the global…

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6819

Abstract

Purpose

The purpose of this paper is to explore how internal auditing may recover from being one of the corporate governance gatekeepers that failed to prevent the global financial crisis.

Design/methodology/approach

This paper draws on the theory of professions and provides a brief analysis of internal auditing history, ending with an appraisal of contemporary status.

Findings

Internal auditing has not been “fit for purpose” and can be enhanced. Low expectations of internal audit are currently addressed by enhanced guidelines from a number of parties. Internal audit needs to move firmly into the corporate governance space – to audit corporate governance more effectively and to provide more dependable assurance to boards.

Practical implications

The global Institute of Internal Auditors can use recent enhanced internal auditing guidelines as a springboard to regain their lead. Internal audit needs to cut the umbilical cord that ties it to management. The accepted “dual reporting” of internal audit is flawed.

Social implications

Society cedes professional status to an occupational group when it is in society’s best interests to do so. An attribute of a profession is its accent on serving the public interest. It is unsatisfactory that, five years after the global financial crisis broke, the international Standards for internal auditing still do not articulate the correct professional conduct on making external disclosures in the public interest when internal auditors are aware of serious wrongdoing not satisfactorily addressed internally.

Originality/value

This paper comprises a conceptual analysis to challenge the internal audit profession.

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Article
Publication date: 22 June 2012

Rainer Lenz and Gerrit Sarens

The purpose of this paper is to investigate and discuss potential reasons why the internal auditing (IA) profession has been marginalized in the governance debate on…

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3374

Abstract

Purpose

The purpose of this paper is to investigate and discuss potential reasons why the internal auditing (IA) profession has been marginalized in the governance debate on solutions after the financial crisis that started in 2007, also noting recent studies questioning the value of IA's work. The key aim of this paper is to make readers aware of ambiguities concerning the ultimate customer of IA and its core business, and to stimulate critical reflection thereon.

Design/methodology/approach

The conceptual discussion of this paper is based on an objective review of relevant literature, both practitioner and academic.

Findings

Positioning IA as agent to the board/audit committee and, at the same time, as partner to management is challenging in practice. The IA function should clarify the customer dimension in its organizational context. Furthermore, this paper argues for a consolidation of internal audit around its core function of providing assurance when seeking to establish IA as a profession.

Practical implications

Practitioners will benefit as this paper demands fundamental questions to be addressed in the organizational context, about the ultimate customer and the core business of the IA service rendered. The Institute of Internal Auditors will benefit from this paper and subsequent discussions in academia and practice, supporting its pursuit to gain universal recognition for IA as a profession.

Originality/value

This paper may open a new research area in IA that addresses a more critical way of evaluating IA practices.

Details

Managerial Auditing Journal, vol. 27 no. 6
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 9 October 2020

Patrick Velte

This paper aims to analyze the governance-related and financial determinants and consequences of corporate social responsibility assurance (CSRA).

Abstract

Purpose

This paper aims to analyze the governance-related and financial determinants and consequences of corporate social responsibility assurance (CSRA).

Design/methodology/approach

Based on a legitimacy theoretical framework and on the business case argument, the author conducts a structured literature review and includes 66 quantitative peer-reviewed empirical (archival) studies on key CSRA proxies (CSRA adoption, choice of CSR assuror and CSRA quality).

Findings

In line with the business case for CSRA, the literature review indicates that internal corporate governance, country-related governance and specific financial determinants as reporting, firm size and industry (sensitivity) have a positive impact on CSRA adoption.

Research limitations/implications

A detailed analysis of CSRA proxies is needed in future archival research to differentiate between symbolic and substantive use of CSRA. In view of the current regulatory initiatives on CSR reporting and their decision usefulness, future research should also analyze in greater depth CSRA proxies as moderator and mediator variables.

Practical implications

With regard to the increased stakeholder demand on CSRA after the financial crisis of 2008–2009, firms should be aware of the value-added of CSRA to increase the decision usefulness of their CSR reports and firm reputation.

Originality/value

The analysis makes useful contributions to prior literature by focussing on empirical quantitative (archival) research method, structuring research on the business case for CSRA with respect to its governance and financial determinants and consequences for firms and stressing moderator analysis in archival CSRA research.

Details

Society and Business Review, vol. 16 no. 1
Type: Research Article
ISSN: 1746-5680

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Article
Publication date: 1 January 2012

Wendy Green and Qixin Li

This paper aims to examine whether an expectation gap exists between different stakeholders (i.e. emissions preparers, emissions assurers and shareholders) in relation to…

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2580

Abstract

Purpose

This paper aims to examine whether an expectation gap exists between different stakeholders (i.e. emissions preparers, emissions assurers and shareholders) in relation to the assurance of greenhouse gas emissions. Further, the paper seeks to explore whether stakeholder expectations are influenced by the uncertainties inherent in the assurance engagement for different industry sectors (i.e. greenhouse gas emitter or greenhouse gas user entities).

Design/methodology/approach

An experimental survey was used to address the stated aims. Three stakeholder groups: shareholders, greenhouse gas emissions preparers and assurers, completed a survey based on the greenhouse gas emissions assurance for either an emitter or user entity.

Findings

The results provide support for the existence of an expectation gap in the emission assurance setting. Fundamental differences were identified between the stakeholder groups in relation to the responsibilities of the assurer and management; as well as the reliability and decision usefulness of the emissions statement. Moreover, the extent of the gap was found to differ between user entity engagements and emitter entity engagements.

Research limitations/implications

The paper highlights the need for the assurance services profession and assurance standard setters to consider mechanisms to enhance the effectiveness of communicating the assurance function in this setting in order to enhance the credibility and social value of emissions assurance.

Originality/value

The paper is the first to examine the expectation gap in the greenhouse gas emissions assurance context. It thereby also contributes to the literature on the expectation gap in the assurance of non‐financial information. Moreover, the research findings provide standard setters with unique insights into areas to consider as they work toward the development of an international assurance standard for greenhouse gas emissions statements.

Details

Accounting, Auditing & Accountability Journal, vol. 25 no. 1
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 2 September 2021

Hanna Silvola and Eija Vinnari

The purpose of this paper is to enrich extant understanding of the role of both agency and context in the uptake of sustainability assurance. To this end, the authors…

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1995

Abstract

Purpose

The purpose of this paper is to enrich extant understanding of the role of both agency and context in the uptake of sustainability assurance. To this end, the authors examine auditors' attempts to promote sustainability assurance and establish it as a practice requiring the professional involvement of auditors.

Design/methodology/approach

Applying institutional work (Lawrence and Suddaby, 2006) and institutional logics (Thornton, 2002; Thornton et al., 2012) as the method theories, the authors examine interview data and a variety of documentary evidence collected in Finland, a small society characterized by social and environmental values, beliefs in functioning institutions and public trust in companies behaving responsibly.

Findings

With this study, the authors make two main contributions to extant literature. First, the authors illustrate the limits that society-level logics related to corporate social responsibility, together with the undermining or rejected institutional work of other agents, place especially on the political and cultural work undertaken by auditors. Second, the study responds to Power's (2003) call for country-specific studies by exploring a rather unique context, Finland, where societal trust in companies is arguably stronger than in many other countries and this trust appears to affect how actors perceive the need for sustainability assurance.

Originality/value

This is one of the few accounting studies that combines institutional logics and institutional work to study the uptake of a management fashion, in this case sustainability assurance.

Details

Accounting, Auditing & Accountability Journal, vol. 34 no. 1
Type: Research Article
ISSN: 0951-3574

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Book part
Publication date: 24 May 2012

Andrew Chambers

True to form, it is no surprise that ‘public interest entity’ (which, by EC requirement, must include all listed companies but other entities only at the discretion of…

Abstract

True to form, it is no surprise that ‘public interest entity’ (which, by EC requirement, must include all listed companies but other entities only at the discretion of individual member states) has been defined in the United Kingdom in the minimal permissible way – it excludes large privately held companies, mutuals, large professional partnerships and so on – about all of which the public has a real interest – as the current financial crisis has clearly shown. Think, for instance, of the need to widen choice in the audit market.

Details

Business Strategy and Sustainability
Type: Book
ISBN: 978-1-78052-737-6

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