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Assurance on Integrated Reporting: A Critical Perspective

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Integrated Reporting

Part of the book series: CSR, Sustainability, Ethics & Governance ((CSEG))

Abstract

This research investigates how non-financial information is assured in the context of the Integrated Reporting <IR> Framework. In particular, we try to understand, through the lens of the legitimacy theory, whether the assurance process is a tool that enhances user trust.

A study, based on semi-structured interviews with a group of experts, is presented. The respondents are practitioners, academics and investors directly involved in <IR> assurance debates.

Consistent with legitimacy theory, most practitioners agree assurance adds value to the reporting process. However, other academics and investors are skeptical about whether assurance reduces agent-principle gaps. Their main concerns regard the difficulty in assuring qualitative information, and the discretion <IR> grants to management in the reporting process.

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Notes

  1. 1.

    As the IIRC expresses in its Mission: “The IIRC’s mission is to establish integrated reporting and thinking within mainstream business practice as the norm in the public and private sectors.” http://integratedreporting.org/the-iirc-2/

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Acknowledgement

We would like to thank Dale Tweedie from Macquarie University for his help, guidance and insightful suggestions.

Author information

Authors and Affiliations

  1. University of Roma TRE, Rome, Italy

    Paola Demartini

  2. Macquarie University, Sydney, NSW, Australia

    John Dumay

  3. Università Politecnica delle Marche, Ancona, Italy

    Miriam Corrado

Authors
  1. Miriam Corrado
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  2. Paola Demartini
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  3. John Dumay
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Corresponding author

Correspondence to Paola Demartini .

Editor information

Editors and Affiliations

  1. Guildhall Faculty of Business and Law, London Metropolitan University, London, UK

    Samuel O. Idowu

  2. Department of Economics, Society and Politics, University of Urbino Carlo Bo, Urbino, Italy

    Mara Del Baldo

Appendix 1: Questionnaires

Appendix 1: Questionnaires

1.1 Practitioner and Academic Perspective

Introduction questions:

  1. 1.

    Interviewee’s background on years of experience and his role in current position

  2. 2.

    Interviewee’s experience in Integrated Reporting and sustainability field.

  1. 1.

    Understand the role of assurance in IR context and non-financial disclosure

    1. (a)

      What role does assurance play in non-financial reporting?

    2. (b)

      Who are considered principal users of assurance on non-financial reporting? How can assurance impact on their decision?

    3. (c)

      Some studies suggest that companies only use assurance to enhance their reputation and legitimacy. Can you provide your view/opinion? What are the impacts on companies that adopt assurance on non-financial and voluntary reporting?

    4. (d)

      Companies in <IR> report supposedly disclose their value-creation story adopting a more strategic-focus and forward-looking approach. Which consequences could this approach have for assurance practice? How auditors and consultants themselves determine most appropriate audit methodologies in relation to narrative and forward-looking information?

    5. (e)

      How these approaches ensure reliable and useful information for investors’ decision making processes?

  2. 2.

    Materiality and reliability of information provided in IR and SR

    1. (a)

      What material information IR should provide compared to Financial and Sustainability Reporting?

    2. (b)

      Who should be the principal addressee of assurance process for non-financial reporting and <IR>?

    3. (c)

      Which are the current practises in non-financial reporting about stakeholders’ (included investors) engagement?

    4. (d)

      The IR differs from other traditional reports for its conciseness. Which consequences does conciseness have in relation to providing complete information to capital providers? Are they considered sufficient for investment decisions?

  3. 3.

    Assurance standards for non-financial information

    1. (a)

      Which audit standards are used for non-financial information in Sustainability Reporting? Do you see these as sufficient to ensure the reliability of information and enhance the trust of report users?

    2. (b)

      Is there a need for new audit standards for IR? If so, what should these standard include?

    3. (c)

      Who should the standards be applicable to?

Conclusion

  1. 1.

    What do you see as the key challenges in the IR assurance moving forward? How can they be resolved?

  2. 2.

    Any issues you think we should have covered but haven’t?

1.2 Investor Perspective

  1. 1.

    Role of non-financial reporting in investors’ decision-making process and role of assurance

    1. (a)

      What are investors’ primary sources of corporate disclosures for non-financial information?

    2. (b)

      Some studies suggest that companies only use assurance in SR and IR to enhance their reputation and legitimacy. Can you provide your view/opinion?

    3. (c)

      How much faith and confidence do they put in non-financial reporting?

    4. (d)

      Companies in <IR> report supposedly adopt a “storytelling” and a forward-looking approach. Which consequences could this approach have for investors’ decision making processes?

    5. (e)

      How could assurance of non-financial disclosure affect investor’s decisions?

  2. 2.

    Materiality and reliability of information provided in IR and SR

    1. (a)

      From investors’ perspective, what information is material to IR compared to Sustainability and Financial Reporting?

    2. (b)

      How important is it to include investors in IR materiality process?

    3. (c)

      As part of IIRC Investors Network, which are the expectation of your company in being included in this network? What are the purposes of the network? The IR differs from other traditional reports in requiring conciseness. What is investors’ view of whether concise integrated reports can provide useful and complete information?

  3. 3.

    Assurance standards for non-financial information

    1. (a)

      What are investors’ perceptions of the current assurance methodologies and standards in non-financial disclosure? Are these sufficient to guarantee reliable information?

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Corrado, M., Demartini, P., Dumay, J. (2019). Assurance on Integrated Reporting: A Critical Perspective. In: Idowu, S.O., Del Baldo, M. (eds) Integrated Reporting. CSR, Sustainability, Ethics & Governance. Springer, Cham. https://doi.org/10.1007/978-3-030-01719-4_11

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