Skip to main content
About HEC About HEC
Summer School Summer School
Faculty & Research Faculty & Research
Master’s programs Master’s programs
Bachelor Programs Bachelor Programs
MBA Programs MBA Programs
PhD Program PhD Program
Executive Education Executive Education
HEC Online HEC Online
About HEC
Overview Overview
Who
We Are
Who
We Are
Egalité des chances Egalité des chances
HEC Talents HEC Talents
International International
Campus
Life
Campus
Life
Sustainability Sustainability
Diversity
& Inclusion
Diversity
& Inclusion
Stories Stories
The HEC
Foundation
The HEC
Foundation
Summer School
Youth Programs Youth Programs
Summer programs Summer programs
Online Programs Online Programs
Faculty & Research
Overview Overview
Faculty Directory Faculty Directory
Departments Departments
Centers Centers
Chairs Chairs
Grants Grants
Knowledge@HEC Knowledge@HEC
Master’s programs
Master in
Management
Master in
Management
Master's
Programs
Master's
Programs
Double Degree
Programs
Double Degree
Programs
Bachelor
Programs
Bachelor
Programs
Summer
Programs
Summer
Programs
Exchange
students
Exchange
students
Student
Life
Student
Life
Our
Difference
Our
Difference
Bachelor Programs
Overview Overview
Course content Course content
Admissions Admissions
Fees and Financing Fees and Financing
MBA Programs
MBA MBA
Executive MBA Executive MBA
TRIUM EMBA TRIUM EMBA
PhD Program
Overview Overview
HEC Difference HEC Difference
Program details Program details
Research areas Research areas
HEC Community HEC Community
Placement Placement
Job Market Job Market
Admissions Admissions
Financing Financing
Executive Education
Home Home
About us About us
Management topics Management topics
Open Programs Open Programs
Custom Programs Custom Programs
Events/News Events/News
Contacts Contacts
HEC Online
Overview Overview
Degree Program Degree Program
Executive certificates Executive certificates
MOOCs MOOCs
Summer Programs Summer Programs
Youth programs Youth programs
Article

Auditors Offering Both CSR Assurance and Financial Auditing Could be Best Option

Accounting
Published on:

With shareholders and stakeholders becoming more and more concerned with firms’ corporate social responsibility (CSR), audit firms now provide CSR assurance services for sustainability reports. As such, firms wonder whether it is more beneficial to use a financial audit firm that also provides CSR assurance, or to hire a different CSR assurance provider than the financial auditor. Researchers explain why the first option is the best option for firms.

financial audit design

Image Credits: ©Golden Sikorka on Adobe Stock

What has changed with how listed firms* report to their stakeholders?

Today, firms are responsible for an array of activities such as preventing environmental externalities, producing safe and healthy products, ensuring the human development of their employees, contributing to government spending by paying taxes, and finding suppliers that respect regulations and ethical principles; in other words, firms are responsible for more than just maximizing shareholder value. 

Therefore, shareholders and stakeholders are more and more concerned with firms’ corporate social responsibility (CSR) and demand information about CSR performance. Because of this demand for non-financial information, more and more firms issue CSR reports**, on top of traditional financial reports. Assurance providers frequently examine these reports to verify their content and enhance their credibility. Audit firms such as the Big 4 accounting firms (E&Y, KPMG, PwC and Deloitte) and CSR assurance specialists (for instance, Lloyd’s, Veritas, DNV) now provide CSR assurance*** services for sustainability reports.

CSR infographic design @Atakan AdobeStock
©Atakan on AdobeStock

What is the problem?

The key question we have investigated is: Should firms that issue assured CSR reports use the financial audit firm that audits their financial statements to provide CSR assurance for CSR reports? Alternatively, should firms hire a different CSR assurance provider than their financial auditor?

What researchers say

We analyzed more than 28,000 cases from 55 countries and found that audit firms that also provides CSR assurance to their client:

  • Obtain more information about CSR risks for a company that is relevant to financial statements, because financial audit teams benefit from information about the CSR risks obtained by CSR assurance teams
  • Deliver better audit quality, with fewer errors in assessing ongoing concern risk
  • Have clients that integrate CSR risks into their financial statements by booking provisions for environmental and litigation risks
  • Are not more expensive for the client than a combination of an audit firm and a different CSR assurance provider

 

 

 


* A listed firm is a company whose stock trades on a stock exchange.
** According to the Global Reporting Initiative, a CSR report is a "sustainability report is a report published by a company or organization about the economic, environmental and social impacts caused by its everyday activities."
*** A CSR assurance is a process which examines the veracity and completeness of a CSR report.
 

Those video and interview are based on the research paper by Lorenzo Dal Maso (ESSEC Business School), Gerald J. Lobo (University of Houston), Francesco Mazzi (Università degli Studi di Firenze – University of Florence) and Luc Paugam (HEC Paris and HEC Paris S&O Center), “Implications of the Joint Provision of CSR Assurance and Financial Audit for Auditors' Assessment of Going Concern Risk”, forthcoming in Contemporary Accounting Research

Related content on Accounting

Accounting

Is the Global Harmonization of Sustainability Reporting Possible?

By Hervé Stolowy, Luc Paugam

Accounting

What Influences Pharmaceutical Companies to Disclose Clinical Trial Results... Or Not?

By Vedran Capkun, Yin Wang

Helene Loning - HEC Paris
Hélène Löning
Associate Professor and Academic Director
Accounting

Cryptocurrency Affair Reflects Complex Interplay between Off-Chain Practices and Blockchain Accounting

By Dane Pflueger

station F HEC - vignette

HEC Paris Incubator at the Station F, Paris

Entrepreneurship and Startups

Lean Startup: Why Do So Many New Startups Follow the Same Development Philosophy?

By Sebastian Becker