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The paper aims to examine the question whether legislative reform is the silver bullet for the problems generated by the failure of a company which is exposed to claims arising from the non-fulfilment of its environmental obligations. The limited capacity of the UK insolvency regime to facilitate the fulfilment of a debtor company’s environmental obligations is often illustrated with reference to some significant judicial decisions. However, no real picture has emerged of the frequency with which these issues arise, based on which firm proposals for reform could be advanced. This paper argues that greater regard should be paid to existing mechanisms which provide a means of enabling insolvency risks to be managed or minimised because these point towards the scope for these issues to be resolved through the environmental protection framework rather than through reliance on company and/or insolvency law.

Research was conducted into the statutory and non-statutory regulations (such as statutory guidance) and case law principles, which underpin the treatment of the claims against an insolvent (or potentially insolvent) company resulting from its environmental activities. This included research into policies which have a bearing on this area, developed through governmental and civic consultations and studies.

The paper concludes that the likelihood of a case for legislative reform being made out is weak, and the focus should accordingly shift to strengthening the effectiveness of existing law, policy and practice.

This paper is the first (in the UK context) to challenge the perceived need for reform in this area, engaging with recent examples of such corporate failures and the impact of recent legislative and policy developments.

We investigate the state of environmental financial reporting since the increased regulation imposed by the Securities and Exchange Commission and other regulatory bodies during the 1990s by examining mandatory environmental disclosures for a sample of petroleum firms. Our results indicate that while the majority of firms stated that they accrued remediation liabilities and environmental exit costs, only about half or less of these firms disclosed the amount of the accrual, even though disclosure is required if the amount is material. Consistent with prior research, we find that cross-sectional variation in disclosure is positively related to firm size and financial leverage. Our results show that environmental disclosures increased during the 1990s, concurrent with increased regulatory pressure and corresponding threats to oil companies’ legitimacy. Firms’ disclosure levels in 1998 were strongly related to their disclosure levels in 1989 –i.e., those companies that reported more (less) information in 1989 did the same in 1998. Thus, individual firms appear to have distinctive environmental disclosure policies.

The purpose of this paper is to examine how New Zealand financial auditors could be motivated to improve current practices in regards to auditing the effects of environmental matters in financial reports.

This is a qualitative study. The views of 27 New Zealand private and public sector auditors were solicited via semi‐structured interviews. Concepts from new institutional theory, and in particular institutional isomorphism, are used to interpret the research findings.

The interview evidence indicates that a combination of normative, coercive and mimetic forces would be necessary to advance current practices in auditing environmental matters. A crucial driver of change would be a mindset shift within the profession about the importance of environmental accountability, reporting and auditing – i.e. increased normative pressures for change. Coercive forces of negative media publicity, the “fear factor” and government intervention can serve to reinforce the audit profession's normative obligations. Since public sector auditors have already developed effective audit practices around environmental matters, emulating their approach within the private sector would drive improvements in practice.

By identifying the potential drivers for improving auditors' practices, this paper can inform the discussions and strategies of professional bodies, regulators and government on improving the audit of environmental matters in financial reports.

Few prior studies have solicited financial auditors' views on the factors they perceive as motivating change in their professional practice, and none have done so in regard to the important and emerging area of environmental matters. This New Zealand study offers a timely contribution, as well as geographical diversity, to the international literature on audit theory and practice.

The purpose of this paper is to investigate insights into current practices in auditing “environmental matters” in accordance with Audit Guidance Statement 1010: The Consideration of Environmental Matters in the Audit of Financial Reports, which was introduced by the New Zealand Institute of Chartered Accountants in 2001.

The approach to gathering evidence for this study is qualitative semi‐structured in‐depth personal interviews with 27 auditors: 18 financial auditors (FAs) in chartered accounting practice and nine public sector auditors (PSAs) from the office of the Auditor‐General.

The interview findings confirmed that the auditors respond to isomorphic pressures that affect them, either by employing acquiesce or compromise strategies and that institutional theory fits best as an appropriate theory to frame the research. Environmental matters are only considered in the planning of a company audit when it is significant and relevant to financial reporting. However, evidence showed that FAs are influenced by mimetic isomorphism by adopting the perspective of company management. On the other hand, PSAs are driven by the legislative mandate imposed by the Local Government Act 2002 to search out and verify the validity, accuracy and completeness of information on environmental matters. FAs auditing both companies in the private sector and public sector organisations are able to maintain two dissimilar approaches and attitudes, depending on the type of entities they are auditing.

As with all qualitative interviews, there are some limitations associated with individuals' responses to the semi‐structured open‐ended interview questions.

To prioritise the consideration of environmental matters in the audit practices of FAs for company audits will require both coercive and normative pressures in their organizational sphere.

This study assists in understanding an audit phenomenon not widely known. It would also add a geographical variation to existing literature.

This paper presents an investigation of how the new demands for auditing environmental information in the administrative reports are perceived by Swedish accountants. Responses from 123 surveyed authorized public accountants show that they have a positive attitude towards environmental information. The accountants demand additional training and they believe that the amount of environmental information companies present is going to increase in the future, or at least not decrease. The survey results are analyzed from the basis of two perspectives: large auditing firms have better resources to educate, guide and train their employees than small auditing firms; and accountants with experiences in auditing environmental information have more training and a different attitude towards environmental information compared to accountants with no experiences. Whether or not accountants have received any special training differs significantly between accountants with experience from auditing environmental information, and those with none.

Financial assurance rules, also known as financial responsibility or bonding requirements, foster cost internalization by requiring potential polluters to demonstrate the financial resources necessary to compensate for environmental damage that may arise in the future. Accordingly, assurance is an important complement to liability rules, restoration obligations, and other regulatory compliance requirements. The paper reviews the need for assurance, given the prevalence of abandoned environmental obligations, and assesses the implementation of assurance rules in the United States. From the standpoint of both legal effectiveness and economic efficiency, assurance rules can be improved. On the whole, however, cost recovery, deterrence, and enforcement are significantly improved by the presence of existing assurance regulations.

There is ample evidence that many firms do not fully disclose environmental liabilities. Since it is likely that full disclosure of these liabilities may lead to greater accountability by a firm, it is important to identify factors related to the treatment and disclosure of these specific liabilities. This study reports on factors found to be related to the intentions of 263 financial executives to accrue and disclose environmental liabilities based on scenarios developed for this research. Using the Theory of Planned Behavior, we find that intentions to accrue and disclose environmental liabilities are positively related to an executive's attitudes, subjective norms, perceived behavioral control, and sense of obligation. We also provide evidence that the magnitude of the environmental and financial consequences has a positive, significant relation to these intentions and find that financial executives from privately held companies are less likely to accrue and disclose environmental liabilities than those from companies that are publicly traded. These findings suggest that encouraging positive attitudes toward environmental accruals and disclosures, enhancing the behavioral control of financial executives over the accrual decision, and heightening their moral obligation to disclosure these liabilities may lead to better accounting treatment and transparency of environmental matters.

We examine the relationship that exists among bond ratings, bond yields, and various estimates of a firm's contingent environmental remediation liability using a sample of new bond issues. Our results indicate that the largest external EPA-based estimates of the firm's environmental obligations are significantly associated with a firm's bond rating, providing relevant incremental information beyond that supplied by the environmental accruals presented in the financial statements. Furthermore, while the accrued environmental liability is shown to have a direct association with the bond yield, the external EPA-based estimates provide an indirect relationship with the bond yield through their influence on the bond rating. These results contribute to the extant literature by empirically clarifying the role of various environmental liability estimates in establishing a firm's bond rating and further indicating their connection with the pricing of corporate debt.

There are many decisions for which management must consider the broad interests of society at large (all stakeholders) in addition to the interests of the stockholders. One such situation is management's handling of decisions that could cause environmental damage. This paper will discuss the nature of the conflicts of interest between management and all stakeholders and how these conflicts affect the firms' incentives to disclose their responsibility for environmental liabilities. When faced with the choice of acting in the interest of current shareholders or society at large, management appears unwilling to disclose its responsibility for environmental cleanup in order to convince society that its interests are being protected. Businesses, as a group, have a massive responsibility to clean up environmentally damaged, hazardous sites. This responsibility leads to a large expected aggregate obligation (estimated in the hundreds of billions of dollars) for cleanup of environmental damage; however, there are many questions regarding how this responsibility is being accepted and communicated (reported) by the individual firms. Therefore, there is a discrepancy between the expected aggregate environmental obligation and the sum of the individual obligations as reported by firms.

Environmental costs and obligations are significantly growing and will continue to grow as our society becomes more environmentally conscious and environmental regulations increase. Examines the significance of environmental outlays, discusses existing governmental regulations and accounting standards pertaining to environmental concerns, investigates the current accounting practices of environmental costs and obligations, and makes recommendations for proper measurement, recognition and disclosure of environmental outlays. Examines annual reports of the studied companies and reveals inconsistencies in accounting practices for measurement, recognition and disclosures of environmental outlays. Suggests these inconsistencies are primarily due to lack of sufficient and uniform authoritative accounting standards and ever‐changing public policy and regulatory standards. Indicates that society will benefit from uniform and specified accounting standards for environmental reporting in protecting organizations′ financial health.