Internal auditor’s role in ESG disclosure and assurance: An analysis of practical insights

Abstract

Using survey data of 107 internal auditors, we provide empirical evidence about internal auditor’s role in environmental, social, and governance (ESG) disclosure and assurance. So far, academics and practitioners have not agreed on the responsibilities of internal auditing in ESG matters. Our regression results give evidence for organizations’ and internal audit functions’ (IAFs) ESG maturity being associated with ESG reporting, while IAFs’ involvement in ESG shows a significant association with assurance of ESG reports. Our results support the notion that the environmental pillar is perceived as the core element of sustainability bearing the highest risk, therefore propelling the need for assurance. The imbalance between assurance and consulting activities on part of IAFs stresses the potential to position the IAF as a value-adding entity in a complementary relation towards external auditors. We further elaborate on IAFs’ non-involvement in ESG and demonstrate the respective lack of awareness on part of stakeholders. Our research provides valuable initial insights for internal audit practitioners in the field of ESG and implications for future research

Mapping the Landscape of the Literature on Environmental, Social, Governance Disclosure and Firm Value: A Bibliometric Analysis and Systematic Review

“…This may be due to active commercial activities, cultural backgrounds, and a high concentration of academic institutions [58]. In addition, many countries have implemented regulatory systems and launched ESG-themed indices to enhance ESG implementation, including China [59], India [60], and Europe [61]. This has motivated researchers in different countries to investigate this topic.…”

Connection Between the Audit Characteristics and Corporate ESG Performance in Indonesia

“…Internal auditors also need appropriate skills, expertise and techniques to maximize company performance [24]. Investigating the skills and competencies of internal auditors today requires internal auditors who can handle social, economic and environmental issues [25]. Thus, the company's ESG performance will increase because internal auditors have sufficient experience in areas related to ESG.…”

Comprehensive board composition and corporate social responsibility disclosure: a case of Jordan before and after the Arab Spring crisis

“…Corporate social responsibility (CSR) is defined as “corporations’ broader responsibility towards society” (Rao and Tilt, 2016a, p. 327). Unlike financial disclosures, which are heavily regulated, non-financial information related to social responsibility, the environment governance and sustainability is mostly disclosed voluntarily (Bonrath et al , 2022; de Villiers and Marques, 2016; Sassen and Azizi, 2018). Companies use non-financial disclosure to achieve accountability and express to stakeholders their commitment to society (Muttakin et al , 2015) or as a strategy for enhancing their image (Patten and Zhao, 2014) and reputation (Axjonow et al , 2018).…”