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Modifying assurance practices to meet the needs of integrated reporting

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  • Warren Maroun

Abstract

Purpose - Traditional methods of assurance outlined by current professional standards are risk-based models where the emphasis is on the veracity of published data rather than on the rigour of the interpretation or analysis of information provided to users. As such, they are not well suited for expressing an opinion on qualitative, subjective or forward-looking assessments typically included in integrated reports. In this context, the purpose of this paper is to describe an alternate approach to assurance and identifies the initial elements of an “interpretive assurance model”. Design/methodology/approach - The research is exploratory/interpretive. It relies on detailed interviews with experienced auditors and preparers to develop an initial approach for providing some level of assurance over an integrated report. Findings - The research identifies elements of an interpretive assurance model which focusses on providing assurance on the interpretation and analysis of information included in an integrated report rather than on underlying data. These include an examination of the completeness of the explanation of the value creation process provided in an integrated report; the methods used to support management discussion and analysis; and the reasonability of the review process used to ensure the reliability of qualitative, subjective and forward-looking representations contained in an integrated report. Research limitations/implications - The study is conducted in a South African setting. While limiting the study to a single jurisdiction may be seen as a limitation, local preparers and auditors have had at least five years of experience with the application of an integrated reporting framework and are in a strong position to provide detailed insights. Practical implications - An interpretive assurance model shifts the focus from objective verification of data using defined test procedures to evaluation of the interpretation and analysis process used to prepare an integrated report. Application of the proposed model will require practitioners and auditing students to be trained extensively in qualitative analytical techniques. The inherent complexity of contemporary business models and the multi-dimensional focus of integrated reports will also result in changes in the composition of audit teams which are currently dominated by experts in financial reporting rather than integrated or strategic business management. Originality/value - The paper is the first to offer a practical approach for providing assurance over an integrated report. It responds to calls form the International Integrated Reporting Council and International Auditing and Assurance Standards Board for more innovative assurance models for addressing the reporting needs of contemporary organisations.

Suggested Citation

  • Warren Maroun, 2018. "Modifying assurance practices to meet the needs of integrated reporting," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 31(2), pages 400-427, February.
  • Handle: RePEc:eme:aaajpp:aaaj-10-2016-2732
    DOI: 10.1108/AAAJ-10-2016-2732
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    Citations

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    Cited by:

    1. Justin Logie & Warren Maroun, 2021. "Evaluating Audit Quality Using the Results of Inspection Processes Performed by an Independent Regulator," Australian Accounting Review, CPA Australia, vol. 31(2), pages 128-149, June.
    2. Stefania Veltri & Antonella Silvestri, 2020. "The value relevance of corporate financial and nonfinancial information provided by the integrated report: A systematic review," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3038-3054, December.
    3. Stéphane Lhuillery & Marion Tellechea & Stéphanie Thiery, 2021. "Open innovation in managerial innovation: the case of internal audit," Working Papers of BETA 2021-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Othmar Manfred Lehner & Alex Nicholls & Sarah Beatrice Kapplmüller, 2022. "Arenas of Contestation: A Senian Social Justice Perspective on the Nature of Materiality in Impact Measurement," Journal of Business Ethics, Springer, vol. 179(4), pages 971-989, September.
    5. Camille Gaudy & Christophe Godowski & Jonathan Maurice, 2022. "CSR auditing at a crossroads. What the auditors' daily experience teaches us [L'audit RSE à la croisée des chemins. Ce que nous enseigne le vécu quotidien des auditeurs]," Post-Print hal-03842902, HAL.
    6. Lhuillery, Stéphane & Tellechea, Marion & Thiéry, Stéphanie, 2023. "Innovation in lieu of compliance: Internal audit departments’ standardized and non-standardized knowledge sources," Technovation, Elsevier, vol. 123(C).
    7. Warren Maroun, 2020. "A Conceptual Model for Understanding Corporate Social Responsibility Assurance Practice," Journal of Business Ethics, Springer, vol. 161(1), pages 187-209, January.
    8. Mahalaxmi Adhikariparajuli & Abeer Hassan & Mary Fletcher, 2021. "Integrated Reporting Implementation and Core Activities Disclosure in UK Higher Education Institutions," Administrative Sciences, MDPI, vol. 11(3), pages 1-26, August.
    9. Hien Hoang & Robyn Moroney & Soon‐Yeow Phang & Xinning Xiao, 2023. "Investor reactions to key audit matters: Financial and non‐financial contexts," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3325-3349, September.
    10. Cerbone, Dannielle & Maroun, Warren, 2020. "Materiality in an integrated reporting setting: Insights using an institutional logics framework," The British Accounting Review, Elsevier, vol. 52(3).
    11. Genevé Richard & Elza Odendaal, 2020. "Integrated reporting assurance practices—a study of South African firms," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(4), pages 245-266, December.
    12. Kılıç, Merve & Kuzey, Cemil & Uyar, Ali, 2021. "An international investigation on assurance of integrated reports: Institutions, assurance quality, and assurers," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    13. Channuntapipat, Charika & Samsonova-Taddei, Anna & Turley, Stuart, 2020. "Variation in sustainability assurance practice: An analysis of accounting versus non-accounting providers," The British Accounting Review, Elsevier, vol. 52(2).
    14. Genevé Richard & Elza Odendaal, 2021. "Credibility-enhancing mechanisms, other than external assurance, in integrated reporting," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(1), pages 61-93, March.
    15. Estibaliz Goicoechea & Fernando Gómez-Bezares & José Vicente Ugarte, 2019. "Integrated Reporting Assurance: Perceptions of Auditors and Users in Spain," Sustainability, MDPI, vol. 11(3), pages 1-19, January.

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