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The International Auditing and Assurance Standards Board (IAASB) is currently in the process of revising International Standard on Assurance Engagements (ISAE) 3000. The purpose of this paper is to review the implications of this revision process for providing assurance on sustainability reports, and identify policy‐related research opportunities associated with this review.

The paper takes the form of a conceptual and critical review of standards development, and archival analysis of ISAE 3000 exposure draft responses.

In the revision of ISAE 3000, concerns have been expressed by a number of parties around the distinction between reasonable and limited assurance, the procedures necessary in properly undertaking a limited assurance engagement and the structure and content of a limited assurance report. These concerns can be addressed by appropriate research initiatives which can inform these policy issues.

Research opportunities are identified, in particular the use of experimental design to examine implications of changing the requirements of the procedures for limited assurance on assurance practitioners and of changing aspects of the assurance report on the level of assurance conveyed by limited assurance reports.

The paper contains a review of the standard‐setting process and has implications for assurance providers of sustainability reports, standard setters and regulators.

The paper provides an update of relevant standards for assurers of sustainability reports and review and appraisal of issues raised in the recent revision process of ISAE 3000.

This paper aims to critically analyse the content of the assurance statements of corporate sustainability reports to examine the degree to which assurance statements enhance and uphold organisational transparency and accountability to stakeholders.

This framework of content analysis draws on a research instrument developed by O’Dwyer and Owen (2005), as well as the most recent assurance guidelines (Global Reporting Initiative) and standards AA1000AS, 2008 and ISAE 3000.

Due to the lack of stakeholders’ engagement in the assurance process, due to the scope limitation placed on the assurance engagement and due to the reluctance of the assuror to address the assurance statements to the stakeholders groups, sustainability assurance practice cannot be considered as the accountability enabler. With persistent focus on internal systems, process, data generation and data capture, assurance practice is serving more as an internal control tool than as a social accounting/auditing instrument.

A single country context is studied. However, to the extent that assurances are conducted using common sets of assurance standards and guidelines, there is external validity of the findings.

Despite the institutional initiatives by the global and local institutions regarding social and environmental sustainability reporting and assurance, the assurance practice has not yet emerged as a tool of social accountability.

This study provides a comprehensive and up-to-date empirical assessment of the degree to which the sustainability assurance practice encompasses the issue of stakeholders’ interests and forms the potential basis for policy implications to the assurance practice and to the assurance standard setting process.

Credibility concerns regarding integrated reports can harm the intended decrease of information asymmetry between a firm and its investors. Therefore, it is crucial to examine whether voluntary third-party assurance enhances the credibility of integrated reports and, thus, decreases information asymmetry. Furthermore, this study aims to investigate the interaction effect between assurance quality and the disclosed connectivity of the capitals, a distinguishing feature of integrated reports.

Content analysis is performed of the 176 assurance statements included in the 269 integrated reports of Forbes Global 2000 firms disclosed from 2013 to 2015 and the 269 integrated reports themselves. Regression analyzes are applied to examine the associations between assurance, the disclosed connectivity of the capitals and information asymmetry.

The presence of an assurance statement in an integrated report significantly decreases information asymmetry. Surprisingly, assurance quality is not significantly associated with information asymmetry. However, an interaction analysis reveals that combining high assurance quality with high disclosed connectivity of the capitals allows a significant decrease in information asymmetry.

The paper demonstrates that the connectivity of the capitals of integrated reports and assurance quality are connected and together are associated with information asymmetry.

The results imply, both for report preparers and standard setters, that assurance quality is advantageous only when combined with disclosed connectivity of the capitals.

More information on non-financial information measured by the connectivity of the capitals of integrated reporting has an interaction effect together with assurance quality on information asymmetry.

This paper builds on a unique data set derived from the contents of integrated reports and accompanying assurance statements. Furthermore, it extends the integrated reporting literature by investigating the interaction between assurance quality and the disclosed connectivity of the capitals, which had not previously been examined in combination.

This study aims to provide a snapshot of voluntary sustainability assurance in New Zealand (NZ) in 2020. we assess the frequency of different assurance elements and discuss aspects of current practices that potentially contribute to the audit expectation gap. we also test whether the determinants of voluntary sustainability assurance in NZ are consistent with international findings.

For 118 companies listed on the New Zealand Stock Exchange in 2020, we hand collected data on whether sustainability information was assured, subject matter assured, assurance level, outcome, provider, disclosure of detailed procedures, standard referenced and criteria applied. we then examine the influences of voluntary sustainability assurance using both univariate and regression analysis.

Approximately 20% of listed companies that disclosed sustainability information provide a sustainability assurance report, indicating low levels of assurance compared to international practices. we note that the presence of different forms of assurance and certification, placement of sustainability information before financial statements and the associated audit report and mixture of assurance levels potentially contribute to the audit expectation gap. Further, voluntary sustainability assurance practices are diverse, and there are notable differences between Big Four accounting firms and other providers in terms of assurance level and standard referenced. Consistent with prior studies, we find size and industry classification as two main drivers of voluntary sustainability assurance.

We contribute NZ-specific insights to the sustainability assurance literature. The findings on voluntary sustainability assurance practices and reflection on the audit expectation gap are timely and relevant to the new climate-related disclosure mandate and pending assurance requirements.

This study examines how assurors make sense of sustainability assurance (SA) work and how interactions with assurance team members and clients shape assurors’ sensemaking and their actual SA work.

To obtain detailed accounts of how SA work occurs on the ground, this study explores three SA engagements by interviewing the main actors involved, both at the client firms and at their Big Four assurance providers.

Individual assurors’ (i.e. partners and other team members) sensemaking of SA work results in the crafting of their logics of action (LoAs), that is, their meanings about the objectives of SA work and how to conduct it. Without organizational socialization, team members may not arrive at shared meanings and deviate from the team-wide assurance approach. To fulfill their objectives for SA work, assurors may engage in socialization with clients or assume a temporary role. Yet, the role negotiations taking place in the shadows of the scope negotiations determine their default role during the engagement.

Two options are available to help SA statement users gauge the relevance of SA work: either displaying the SA work performed or making it more uniform.

This study theoretically grounds how assurors make sense of SA work and documents how (the lack of) professional socialization, organizational socialization and socialization of frequent interaction partners at the client shape actual SA work. Thereby, it unravels the SA work concealed behind SA statements.

This paper aims to clarify whether assurance on non-financial corporate social responsibility (CSR) reports impacts the perceptions and decisions of banks as capital providers. The authors investigate the effects of the type of assurance provider and the level of assurance provided on decisions by banks to grant credit, make their own personal investments or recommend share purchases to their customers. The study aims to expand the domain of assurance on CSR reports (CSRR) by taking up a call by Cohen and Simnett (2015), who ask for behavioral research on how non-financial report’s intended users interpret and react to assurance.

The paper is based on an experiment case on a fictitious company with a 2 × 2 + 1 between-subjects design. To overcome concerns regarding external validity and to prove results in a real-world setting, the authors selected German bank directors as subjects due to the extremely high relevance of banks to the German economy. The authors investigated the perceptions of 69 bank directors and analyzed the influence of CSR assurance on their decisions.

The findings suggest that assurance positively influences confidence in CSRR and that, consequently, bankers are more likely to make favorable decisions toward the reporting companies, such as approving applications for credit, investing themselves in the company or recommending the purchase of shares to their clients. These effects are stronger when an accounting firm provides the assurance and when the assurance level is reasonable rather than limited.

The arguments presented are, strictly speaking, limited to the case in the experiment and the views held by the bank directors at the time the authors sent out the questionnaires. Moreover, the cell sizes are quite small. Nevertheless, the authors were able to find highly significant results.

The main implication of the paper is that the purchase of CSRR assurance services has a positive effect on bank directors’ perceptions and decisions. They favor the provision of such services by accounting firms and they prefer a reasonable assurance level. Thus, it can be concluded that bank directors perceive quality differences between assurance providers, are able to recognize the difference between reasonable and limited assurance and that the related information is relevant for their decisions.

This paper fulfils an identified need to study the influence of CSRR assurance on decisions by bank directors. The observation of a high decisions-usefulness of CSRR assurance suggests that regulators should consider mandating some form of assurance on non-financial reports throughout the EU member states.

This study aims to investigate the effect of assurance provider types on the independent assurance statement quality of Asian companies' sustainability report (SR) and examine environmental risk’s role as a moderating variable.

This study analyzes large Asian companies' stand-alone SR using moderated regression analysis to test hypotheses. Textual analysis is conducted to identify environmental risk disclosures.

This study shows that accounting assurance providers affect independent assurance statement quality in terms of compliance with assurance statement elements, while nonaccounting assurance providers can better accommodate environmental risk information required by the intended users.

This study has several limitations. The research focuses on assurance statements and stand-alone SR of large companies in Asia; therefore, future research could examine similar analyses using integrated reports from Asia to investigate whether the results will differ. Additionally, this study does not divide assurance providers into Big-N and non-Big-N; thereby, it can be extended in future research.

Assurance providers need to consider environmental risk as a critical issue for the intended users to issue a high-quality independent assurance statement.

Assurance statements issued by assurance providers increase public confidence in the reliability of the information contained in the SR. Therefore, regulators are expected to immediately set mandatory standards for sustainability assurance practices.

This study proves that accounting assurance providers can improve assurance statement quality. The variable environmental risk is also proven to be a pure moderator in negatively interacting the effect of assurance provider types on independent assurance statement quality.

The purpose of this paper is twofold. First, the authors investigate a firm’s decision to provide a CSR report, and if so, whether to have the report assured and to seek higher quality assurance as reflected through the choices of the scope of the assurance and type of assurer, Big 4 accounting firm vs specialist consultant. Second, the authors investigate the impact of voluntary assurance of CSR reports, assurance scope and type of assurer on the likelihood of inclusion in the DJSI and on market valuation.

The study’s sample consists of 17,050 firm-year observations from 40 countries with CSR reports available from Corporate Register and ESG metrics available from ASSET4 over the period 2009–2015. The study first empirically examines the associations between CSR commitment and each of CSR report provision, CSR report assurance, assurance scope and type of assurer. It then examines that association between both inclusion in the DJSI and market valuation with each of CSR report assurance, assurance scope and type of assurer, using inclusion in the DJSI as an objective measure of a firm’s reputation for sustainability given its recognition as a leading indicator for corporate sustainability and market valuation as a reflection of the broader set of capital market participants.

The authors establish two key findings consistent with the predictions of signaling theory. First, we show that high CSR commitment firms are more likely to: provide standalone CSR reports; obtain assurance; obtain assurance from a Big 4 accounting firm; and, adopt higher assurance scope. Second, the authors find that both CSR report assurance and assurance scope increase the likelihood of inclusion in the DJSI, but that the type of assurance provider does not. Alternatively, the authors find that capital market participants appear to value the provision of a CSR report only when it is assured by a Big 4 accounting firm.

The results in the existing literature exploring the capital market benefits to CSR Assurance have been mixed. Firms that voluntarily obtain CSR Assurance incur a cost in doing so and must perceive a net benefit from obtaining such assurance. Despite the limited guidance currently provided by existing CSR standards, we establish the existence of benefits to obtaining CSR Assurance in terms of enhanced likelihood of DJSI inclusion and, more generally, enhanced market valuation. The discussions with DJSI analysts indicate that CSR assurance does enhance the perceived reliability of CSR data, thus improving user confidence.

With the growing attention around carbon emissions disclosure, the demand for external carbon assurance on emissions reports has been increasing by stakeholders as it provides additional credibility and confidence. This study investigates the association between the higher level of external carbon assurance and improvement in a firm's carbon emissions. It provides an understanding of corporate incentives for obtaining a higher level of carbon assurance, particularly in relation to carbon performance enhancements.

Data are collected from 170 US companies for the period 2012–2017 and are analysed using a change analysis. Generalised method of moment (GMM) is used to address endogeneity.

Following the rationales taken by legitimacy and “outside-in” management views, the findings reveal that a higher level of carbon assurance (i.e. reasonable assurance) marginally improves firms' carbon performance (i.e. reported carbon emissions). This is consistent with “outside-in” management view suggesting that a higher level of assurance could be utilised as a tool for accessing more information about stakeholders' needs and concerns, which can be useful in enhancing carbon performance.

The findings are generalisable to US firms and may not extend to other contexts.

The implication of this study for companies is that a high level of sustainability assurance is a useful tool to access detailed information about stakeholder concerns, of which internalisation can help to marginally improve carbon performance. For policymakers, the insights into and enhanced understanding of the incentives for obtaining carbon assurance can help policymakers to develop effective policies and initiatives for carbon assurance. Considering the possible improvements in carbon performance when obtaining a high level of sustainability verification, governments need to consider mandating carbon assurance.

This study extends the existing studies of assurance in sustainability context as well as in carbon context by explaining why companies voluntarily get expensive external verification (i.e. higher level of assurance) of their carbon emissions disclosure. This study responds to calls in the literature for empirical research investigating the association between environmental performance and external assurance with a focus on level of assurance.

1. A higher level of carbon assurance Marginally improves firms' carbon performance.

2. Corporate incentives to obtain higher level of carbon assurance is beyond seeking legitimacy.

3. Higher level of assurance is a useful tool for accessing more information about stakeholders' concerns.

4. Consistent with “ouside-in”management view, companies internalise stakeholders' concerns to marginally improve performance.

A higher level of carbon assurance Marginally improves firms' carbon performance.

Corporate incentives to obtain higher level of carbon assurance is beyond seeking legitimacy.

Higher level of assurance is a useful tool for accessing more information about stakeholders' concerns.

Consistent with “ouside-in”management view, companies internalise stakeholders' concerns to marginally improve performance.