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Open Access
Article
Publication date: 14 November 2022

Sara Trucco, Maria Chiara Demartini, Kevin McMeeking and Valentina Beretta

This paper aims to investigate the effect of voluntary non-financial reporting on the evaluation of audit risk from the auditors’ viewpoint in a post-crisis period…

Abstract

Purpose

This paper aims to investigate the effect of voluntary non-financial reporting on the evaluation of audit risk from the auditors’ viewpoint in a post-crisis period. Furthermore, this paper analyses whether auditors perceive that voluntary non-financial reporting impacts audit risk differently for old clients as compared with new clients.

Design/methodology/approach

This study is conducted on a sample of Italian audit firms through a paper-based questionnaire. Both Big4 and non-Big4 audit firms have been included in the sample.

Findings

Results show that integrated reporting is perceived to be the most relevant reporting method and intellectual capital statement the least relevant. Surprisingly, empirical findings over the sample period show that auditors do not perceive statistically significant differences between old and new clients.

Practical implications

Auditors can identify opportunities to adapt their assessment model to include voluntary non-financial report information. Moreover, they can use different assessment models regarding the research variables in the case of new and old clients.

Originality/value

Empirical findings highlight the growing role of voluntary non-financial reporting in the auditors’ perception of their client’s audit risk. All the observed voluntary non-financial reporting forms, except for intellectual capital, are considered as relevant by auditors in the evaluation of their client’s audit risk when compared to an indifference point. In addition, findings reveal that female auditors perceive a reduced gap in the relevance between integrated reports and intellectual capital reports compared to their counterparts.

Details

Meditari Accountancy Research, vol. 30 no. 7
Type: Research Article
ISSN: 2049-372X

Keywords

Book part
Publication date: 28 March 2022

Daniel Zdolšek, Vita Jagrič, Tjaša Štrukelj and Sabina Taškar Beloglavec

Purpose/Aim: Over the last quarter of a century, several voluntary frameworks and non-financial reporting standards have been developed by various initiatives and

Abstract

Purpose/Aim: Over the last quarter of a century, several voluntary frameworks and non-financial reporting standards have been developed by various initiatives and organisations. Especially after the 2008 financial crisis, which deepened into values crises, the need for evaluating social, environmental, and economic consequences and herein for non-financial disclosures accrued. This chapter aims to outline the current state in the ecosystem for non-financial reporting and its projected future developments and suggests further developments in this field. Since financial institutions played a negative role in the crises and will be important in future responsible investing, the authors also addressed some financial institutions’ specific non-financial issues.

Method: In search of an answer to our questions about whether existing non-financial reporting pronouncements meet (various) stakeholders’ expectations and whether international pronouncements are needed, we rely on triangulation. We start with the identification of phenomena of non-financial reporting. Description of phenomena is further on supplemented with a literate overview. Based on a review of prior research and study of the current framework’s pros and cons, we present a possible path of further development in non-financial reporting. Making that mixed-methodological approach is used (i.e. deductive and inductive reasoning).

Results/Findings: The authors deduce that there has been a substantial increase in demand for non-financial information, social responsibility ratings and other non-financial information services on behalf of preparers, users of such reports and the public. The authors particularly highlight the shortcomings that currently exist and outline the characteristics that future international non-financial reporting frameworks would have to meet with the awareness that such framework or standards will have their advantages and disadvantages. As seen by the authors, the main problem is how to achieve political consensus and then general acceptance by users.

Originality/Significance: The International Financial Reporting Standards (IFRS) Foundation has become active in the field of non-financial reporting and started a project to become an internationally recognised standard-setter. However, with many mandatory or voluntary initiatives being started in this field, IFRS Foundation will need to address many challenges and ambiguities to become a leading organisation in non-financial reporting. Therefore, the research question is whether a new board, comparable to the International Accounting Standards Board, with the straightforward task of setting non-financial reporting standards would be needed in the future.

Details

Managing Risk and Decision Making in Times of Economic Distress, Part B
Type: Book
ISBN: 978-1-80262-971-2

Keywords

Open Access
Article
Publication date: 2 June 2021

Ewelina Zarzycka and Joanna Krasodomska

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed…

4602

Abstract

Purpose

The paper aims to examine if corporate characteristics, general contextual factors and the internal context differentiate the quality and quantity of the disclosed non-financial Key Performance Indicators (KPIs).

Design/methodology/approach

The study is based on content analysis of the disclosures provided by large public interest entities operating in Poland after the introduction of the Directive 2014/95/EU. The quality of the KPIs disclosures is measured with the disclosure index. Regression analysis and selected statistical tests are used to examine the influence of the selected factors on the differences in the index value and corporate disclosure choices as regards the KPIs.

Findings

The study findings indicate that the sample companies provide a variety of non-financial KPIs in a manner that makes their effective comparison difficult. The research confirms that mainly industry, ecologists and the reporting standard determine the significant differences in the quality of the KPIs disclosures and the quantity of presented KPIs.

Research limitations/implications

The paper adds to the understanding of the differences in the quality of KPIs presentation and the choice of disclosed KPIs.

Practical implications

The paper includes suggestions on how to change corporate practice with regard to the non-financial KPIs disclosures.

Originality/value

We shed additional light on the importance of internal contextual factors such as the reporting standard and the reporters' experience in providing non-financial KPIs disclosures.

Details

Journal of Applied Accounting Research, vol. 23 no. 1
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 7 April 2015

Sebastian Knebel and Peter Seele

The purpose of this paper is to examine the status of non-financial reporting according to the Global Reporting Initiative (GRI) 3.1 A+ standard. By examining the…

1986

Abstract

Purpose

The purpose of this paper is to examine the status of non-financial reporting according to the Global Reporting Initiative (GRI) 3.1 A+ standard. By examining the comprehensiveness of the GRI performance in corporate non-financial reports classified as A+ the authors challenge the external assurance system imposed by GRI 3.1 A+ and discuss future directions for the application of GRI 4.0, particularly with regard to the standardized corporate reporting software language XBRL.

Design/methodology/approach

The authors applied a three-step-research design based on four literature-derived hypothesis and examined all 177 GRI 3.1 A+ reports (2012-13) by coding along 41 variables plus the 84 performance indicators of GRI 3.1 to test accessibility, ability to download, achievability, and the possibility to compare them to older reports.

Findings

The results indicate a lack of completeness of GRI’s 3.1 key performance indicators in A+ assured reports, that is made possible due to the reporting flexibility and voluntariness of the guideline. The authors find that the average of disclosed core indicators is 77.66 percent. Single A+ reports disclose even fewer GRI core indicators that B+ reports, which challenges the validity of the assurance system of GRI 3.1.

Research limitations/implications

In this study the (core) indicators were taken as given by GRI 3.1; the quality of the indicators was not measured or weighted.

Practical implications

Implications may emerge for redesigning non-financial reporting guidelines.

Social implications

By critically indicating possible weaknesses of the GRI 3.1 guidelines the authors aim to contribute to a more transparent and effective non-financial reporting.

Originality/value

As an increasing number of contributions criticize the credibility of non-financial reporting and also GRI’s role, the research for the first time provides empirical evidence of the shortcomings of CSR and sustainability reporting regarding comprehensiveness, accessibility, and comparability.

Details

Corporate Communications: An International Journal, vol. 20 no. 2
Type: Research Article
ISSN: 1356-3289

Keywords

Open Access
Article
Publication date: 30 July 2020

Francesca Manes-Rossi, Giuseppe Nicolò and Daniela Argento

Research dealing with non-financial reporting formats in public sector organizations is progressively expanding. This paper systematizes the existing literature with the…

3416

Abstract

Purpose

Research dealing with non-financial reporting formats in public sector organizations is progressively expanding. This paper systematizes the existing literature with the aim of understanding how research is developing and identifying the gaps in need of further investigation.

Design/methodology/approach

A structured literature review was conducted by rigorously following the steps defined in previous studies. The structured nature of the literature review paves the way for a solid understanding and critical analysis of the state of the art of research on non-financial reporting formats in public sector organizations.

Findings

The critical analysis of the literature shows that most existing studies have focused on sustainability reporting in higher education institutions, local governments and state-owned enterprises, while remaining silent on the healthcare sector. Additional theoretical and empirical approaches should feed future research. Several areas deserve further investigations that might impactfully affect public sector organizations, standard setters, practitioners and scholars.

Originality/value

This paper offers a comprehensive review of the literature on different reporting formats that public sector organizations adopt to report various dimensions of their performance to both internal and external stakeholders. The structured literature review enables the identification of future directions for the literature in this field.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 32 no. 4
Type: Research Article
ISSN: 1096-3367

Keywords

Article
Publication date: 27 November 2019

Federica Doni, Silvio Bianchi Martini, Antonio Corvino and Michela Mazzoni

The recent European Union Directive 95/2014 enforced a radical shift from voluntary to mandatory disclosure of non-financial information. Given radical changes in reporting

1765

Abstract

Purpose

The recent European Union Directive 95/2014 enforced a radical shift from voluntary to mandatory disclosure of non-financial information. Given radical changes in reporting practices, there is an urgent need to assess the firms’ attitude to disclose non-financial information regarding the new requirement. This paper aims to investigate whether the quantity and quality of non-financial information, voluntarily disclosed in the years before the directive came into force, were linked to the level of compliance.

Design/methodology/approach

Selecting a sample of 60 Italian companies from the obliged entities, the authors carried out a manual content analysis on corporate reports and developed some research hypotheses to explore if their sustainability practices can affect non-financial disclosures required by the Italian adoption of the European directive (i.e. Legislative Decree 254/2016).

Findings

Evidence showed that prior skills and competencies in non-financial reporting made a significant contribution especially regarding to the presence of business model, but further efforts are expected to improve the quality of non-financial reports.

Practical implications

This study yields an initial assessment of the implementation of the European directive in Italy. It may, therefore, help policymakers to identify ways to improve the harmonization of reporting practices. Preparers can also be supported in choosing different positioning of reporting on non-financial information.

Originality/value

This research provides interesting insights into the ex ante and ex post adoption of the European directive by investigating how Italian companies are reacting to regulatory and institutional requirements. One of the main problems remains the lack of a shared understanding of the term “non-financial”, which can make the communication process difficult and unclear.

Details

Meditari Accountancy Research, vol. 28 no. 5
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 10 February 2020

Joanna Krasodomska, Jan Michalak and Katarzyna Świetla

This paper aims to explore accountants’ views on mandatory corporate social responsibility (CSR) reporting. It focuses on three main factors underpinning their…

Abstract

Purpose

This paper aims to explore accountants’ views on mandatory corporate social responsibility (CSR) reporting. It focuses on three main factors underpinning their understanding and attitude towards non-financial disclosures: general understanding of the concept, gender and work experience.

Design/methodology/approach

The study uses social identity theory as the theoretical framework. The findings are based on a survey conducted among 73 accountants in 2018. The questionnaire consisted of 86 questions divided into 9 main areas. The Mann–Whitney U test was used to determine if there are any significant differences between the accountants’ attitudes towards non-financial disclosures.

Findings

Study results suggest that the general knowledge of CSR reporting among accounting specialists is insufficient. The attitude towards mandatory CSR disclosures significantly differs between accountants who participated in training related to non-financial reporting and those who did not. Contrary to expectations, there were no significant differences in responses either between female and male accountants or between accountants at the beginning of their career path (with experience shorter than five years) and the more experienced ones. The paper contributes to social theory studies as it refers to the problem of the influence of professional associations, governments and big accounting firms on the transformation of accountants’ social identity. It also discusses the relations between the characteristics influencing personal identity and social identity of accountants in shaping their attitude towards mandatory non-financial disclosures.

Practical implications

The findings could be of interest to the higher education and professional certification institutions which should consider bringing accounting curricula more closely to the realities of the current business environment.

Originality/value

The study contributes to the body of literature mainly because it investigates a diversified sample of accountants in a relatively unexplored institutional setting. It may also serve as a starting point for research that more broadly explores accountants’ engagement in non-financial disclosures on CSR.

Details

Meditari Accountancy Research, vol. 28 no. 5
Type: Research Article
ISSN: 2049-372X

Keywords

Article
Publication date: 3 December 2018

Lina Dagilienė and Rūta Nedzinskienė

The paper aims to explore the impact of institutional factors on non-financial reporting in the Baltic countries. The vast majority of research in the scientific…

Abstract

Purpose

The paper aims to explore the impact of institutional factors on non-financial reporting in the Baltic countries. The vast majority of research in the scientific literature references practices of sustainable disclosures in developed countries with a focus on legal factors and their effect on corporate reporting. Meanwhile, there is a lack of in-depth empirical data for identifying correlations between institutional (mandatory, normative and company-specific) factors and non-financial reporting in developing countries.

Design/methodology/approach

The theoretical framework of neo-institutional theory was applied to explore how the external environment affects practices of non-financial reporting in developing countries. The approach used in the paper is quantitative.

Findings

The research results reveal that if companies are likely to disclose voluntarily one of non-economic aspects in their reports, they are also likely to disclose more about the other non-economic issues. However, no significant correlations were detected between the disclosure of voluntary (non-economic) and mandatory (economic) aspects. Mandatory factors promote both – economic and non-economic reporting – while normative and company-specific factors promote non-economic reporting more.

Practical implications

The authors contribute to the foreign investors and practitioners by helping to better understand corporate non-financial reporting practices in post-communistic countries.

Originality/value

The research adds to the growing body of research on non-financial reporting practices with particular reference to the developing Baltic context. This study also contributes to scientific literature by exploring the impact of different institutional factors to non-financial reporting in developing countries.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 23 February 2022

Simone Pizzi, Andrea Caputo, Andrea Venturelli and Fabio Caputo

The purpose of this paper is to evaluate blockchain’s enabling role for sustainability reporting. This study extends the scientific knowledge about the impacts related to…

Abstract

Purpose

The purpose of this paper is to evaluate blockchain’s enabling role for sustainability reporting. This study extends the scientific knowledge about the impacts related to the notarisation of mandatory sustainability reports through a publicly available blockchain.

Design/methodology/approach

Building on the idea journey framework, this paper presents the case study of Banca Mediolanum in Italy, a first-mover who notarised its non-financial declaration on a public blockchain to mitigate the information asymmetries that negatively impact stakeholder engagement.

Findings

The analysis reveals that the notarisation of the non-financial reports through a publicly available blockchain can represent a tool useful to mitigate the asymmetric information between organisations and stakeholders.

Practical implications

Although academics and practitioners have observed the benefits of its implementation, only a few companies have adopted blockchain systems to ensure their information’s reliability. The findings underline the opportunity for socially responsible organisations to signal their orientation towards sustainable development through the adoption of an innovative tool.

Social implications

The proliferation of non-financial reports prepared on mandatory basis mitigated the signalling effects related to the disclosure of non-financial information. The case study underlines the opportunity for socially responsible organisations to overcoming this criticism through notarisation.

Originality/value

To the best of the authors’ knowledge, this is the first study about sustainability reporting practices and blockchain. This research contributes to the currently scarce discussion about the role of blockchain in non-financial reporting. In addition, the authors contribute to the scientific conversation about the need to rethink assurance in non-financial reporting practices.

Details

Sustainability Accounting, Management and Policy Journal, vol. 13 no. 3
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 1 May 2020

Simone Pizzi, Andrea Venturelli and Fabio Caputo

The purpose of this paper is to evaluate the effectiveness of the comply-or-explain principle in the Italian context. In particular, the analysis will evaluate, which…

Abstract

Purpose

The purpose of this paper is to evaluate the effectiveness of the comply-or-explain principle in the Italian context. In particular, the analysis will evaluate, which factor impact on firms' voluntary adoption of this tool to adequate their non-financial reports to the legal requirements of Directive 95/2014/EU.

Design/methodology/approach

The methodology consists of two different levels of analysis. The first part is statistical descriptive, and it consists of a rhetorical analysis on the justifications provided by the firms about their omissions to comply with Directive 95/2014/EU. The second part is inferential and its aim is to evaluate, which factors impact on comply-or-explains adoption.

Findings

The findings reveal how the comply-or-explain application in Italy has been characterized by several criticisms. The result highlight how the justifications adopted by the firms is influenced by their sector of activity and omission's type. Moreover, the analysis suggests how the sector of activity and the level of adherence to global reporting initiative influenced the average number of omissions.

Research limitations/implications

The limitations of the research are represented by the focuses on a single country and by the short period of analysis. In this sense, future research could be addressed to the analysis of countries different from Italy. Moreover, accounting scholars could provide further contributions to the political debate through the evolution of the “comply-or-explain” principle’s strategies over the years.

Practical implications

The practical implications connected to the present research are twofold. The first one is represented by the possibility for policymakers to increase the degree of attention about the use of comply-or-explain as legitimization's tool. The second one is represented by the possibility for practitioners to identify a new reporting framework.

Social implications

The social implications are represented by the possibility for stakeholders to evaluate the reliability's degree of the disclosure produced by Italian public interest entities after the implementation of Directive 95/2014/EU.

Originality/value

Despite the growing attention paid by academics regard Directive 95/2014/EU, this is the first attempt to analyze the comply-or-explain from a rhetorical perspective.

Details

Sustainability Accounting, Management and Policy Journal, vol. 12 no. 1
Type: Research Article
ISSN: 2040-8021

Keywords

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