Sustainability Development and the Quality of Assurance Reports: Empirical Evidence

Abstract

There is a rising trend among companies to publish their sustainability or corporate social responsibility (CSR) reports. Assurance of these reports is a valuable voluntary tool to provide them with higher credibility. Nonetheless, the quality of assurance reports differs in practice and the objective of this paper is to provide evidence in this new area of research. Indeed, we are pioneers in developing an index to measure the quality of assurance reports. We choose the Spanish setting because it is the worldwide leading country as regards CSR reporting (KPMG, 2011; Sierra et al., 2012). We have found evidence on the determinants for CSR reporting posited by existing literature that have an impact on (a) the decision of companies to publish their CSR reports, (b) the decision to assure the CSR report or not and (c) the decision to hire the assurance services from an auditor or a consultant and the subsequent quality of the assurance report. Last but not least, our results from a sample of 161 CSR assurance reports evidence that assurance reports are of fairly acceptable quality, according to the index proposed. Furthermore, the value of the quality index is significantly higher if the assurance services are provided by an auditor (as opposed to a consultant) and if the CSR reporting company is larger. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment.

A Provider’s Approach to the Assurance Market of Sustainability Reports in Spain

“…The average score of the quality index (0.552) is slightly above the medium potential value (0.500). In consonance with Zorio et al (2013), we evidenced an acceptable level of assurance quality in Spain, although there is still room for improvement. Expertise, independence, specialization by industry and stakeholder consultation are individual quality indicators that present lower average values.…”

“…Besides the provider's classification as Big 4 and non-Big 4 firms, literature often distinguishes between two groups of professionals: auditors and consultants (Perego and Kolk 2012;Zorio et al 2013). This classification considers professional background, namely whether the assuror belongs to the accounting profession, bearing in mind that each of them uses different approaches to perform SR assurance (Manurung and Basuki 2010).…”

“…This may allow them to export their skills and rigor to assurance procedures and reporting formats (Wallage 2000;Perego 2009;Simnett et al 2009). Sometimes all of these features contribute to perceiving auditors as providers offering a higher quality for the assurance of SR (Simnett et al 2009;Pflugrath et al 2011;Zorio et al 2013). However, the qualitative nature of CSR information leads to the need for other assurance methods, beyond the rigor defined by financial auditing (Ballou et al 2006).…”

“…As asserted by Junior et al (2014), a greater understanding of the assurance process and the relationships emanating from it are required to support its effectiveness and increase its transparency towards stakeholders. Furthermore, assessing assurance quality is necessary to improve the services offered within the assurance market (Zorio et al 2013). Previous literature on assurance quality considers key issues such as the performed procedures, the assuror's independence and experience, the assurance scope and the contents and drafting of the assurance report (O'Dwyer and Owen 2005;Knechel et al 2006;Hodge et al 2009;Gillet 2012;Herda et al 2014).…”

“…Previous literature on assurance quality considers key issues such as the performed procedures, the assuror's independence and experience, the assurance scope and the contents and drafting of the assurance report (O'Dwyer and Owen 2005;Knechel et al 2006;Hodge et al 2009;Gillet 2012;Herda et al 2014). However, the scarce literature on assurance practices and its quality assessment has approached this topic by applying the content analysis methodology to the assurance statements, the only visible part of the process (Deegan et al 2006;Fonseca 2010;Zorio et al 2013;Herda et al 2014;Gürtürk and Hahn 2016;Sethi et al 2017). This approach could be only partly accurate if we consider the great heterogeneity of assurance statements, in both format and content (Perego 2009;Jones et al 2014;Rossi and Tarquinio 2017).…”