This report explains the CSR and sustainability reporting, differences and similarities between them, history and future development of sustainability reporting, and guidelines for auditors.
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Running head:THE EXPANDING ROLE OF THE AUDITOR THE EXPANDING ROLE OF THE AUDITOR Name of the Student: Name of the University: Author Note
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1THE EXPANDING ROLE OF THE AUDITOR Executive Summery The objective of this report is to explain the CSR and sustainability reporting along with the differences and similarity between them. This also provides a brief history as well as the future development of the sustainability reporting. Further, this report analyse the companies those need to present the non-financial report in the basis of the relevant standards or framework.ThisreportalsorecommendtheInternationalFrameworkforAssurance Engagementstotheauditorstoperformthestructuringandcompletingassurance engagements. Lastly, the paper concludes that the reporting the non-financial activity of the firm and their impact in the external environment of the firm.
2THE EXPANDING ROLE OF THE AUDITOR Table of Contents Introduction................................................................................................................................3 Discussion..................................................................................................................................3 Corporate Social Responsibility.............................................................................................3 Sustainability Reporting.........................................................................................................4 Differences between CSR and Sustainability reporting.........................................................4 Similarities between CSR and Sustainability reporting.........................................................5 History of Sustainability reporting and assurance.................................................................6 Companies Undertaking.........................................................................................................6 Future development of Sustainability reporting and assurance.............................................6 Frameworks for preparing report...........................................................................................7 Auditor’s guideline.................................................................................................................7 Conclusion..................................................................................................................................8 References..................................................................................................................................9
3THE EXPANDING ROLE OF THE AUDITOR Introduction The report titled “THE EXPANDING ROLE OF THE AUDITOR” is prepared in the basis of the current state of Corporate Social Responsibility and Sustainability. This report define and explain the Corporate Social Responsibility and sustainability report along with the differences and similarity between CSR and sustainability reporting. Further, this report analyse the history of the sustainability reporting and assurance. This also shows the current details in that companies undertake such reporting and level reporting that is assured. This also analyse the future development of sustainability reporting and assurance. This explain the guideline, standard and frameworks used for the preparation of the financial report. Lastly, this report explain the guidelines and procedures to the auditors for structuring and completing assurance engagements. The all answer of the report in based on the Australia,the EuropeanUnion and UnitedStatesof American.The attendeesof the upcoming regional conference on ‘New direction in Accounting’ are the main objective of this report. Discussion Corporate Social Responsibility The Corporate Social Responsibility (CSR) is a self-regulating business rule and models that helps the company to be socially accountable towards its stakeholders, it self and the society. The CSR includes the overall impact of the company’s operation in the all aspect of social environment including the economic, environmental and social (Crowther & Seifi, 2018). To perform the CSR means the performance of the company positively affecting its surroundings like society, economic and environment not in the negative way. This very broad term can take many forms depending on the performance of the company and industry. The main objective of the CSR is to benefits the all aspect of the society by performing the
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4THE EXPANDING ROLE OF THE AUDITOR company operation (Unit, 2015). This also help to create the strong bond between employee and employer. This also help to boost the morale of both employee and the corporation, which connect them to the world around them. Sustainability Reporting The report published by the company or firm, to show the impact of their daily operation in environment, economic and society, is known as sustainability report. This reportalsoshowsthevaluesandgovernancemodeldevelopedandfollowedbythe organisationincludingthelinkbetweenitsstrategiesandcommitmenttowardsthe sustainable global economy (Grayson & Hodges, 2017). This help the organisation to analyse, understand and communicate their environmental, economic, governance and social performance. Further, this helps the firm to set goal and manage change more effectively in the basis of the above analysis. This is the most important way to communicating the sustainability performance of the firm and their impact that is positive or negative. This report is also known as triple bottom line reporting, non financial reporting, CSR and more like. In recent development this report is merged with the financial report and renamed as integrated reporting. Differences between CSR and Sustainability reporting The CSR and sustainability reporting is interchangeable but still there are several differences. Those differences can be understand by help of the following points:- CSR is antiquated while Sustainability is futuristic:-It is very to identify that Sustainability talks about the future, forward thinking plans and improve targets by reducing the waste, innovating the brand development (Ioannou & Serafeim, 2017). While, the CSR talks about the deed that have done in the past performance of the organisation.
5THE EXPANDING ROLE OF THE AUDITOR CSR is for now while Sustainability is for long term: -The CSR projects are more concern with the present need of the community but they forgets to address the related issues. On other hand, the Sustainability of the business focuses on the long term objectives of the social responsibilities. CSR is therefore more of present condition with the limited strategic focus. CSR does not align with business while Sustainability does: -Many businesses performs their CSR by identifying the issue of the community and by providing solution to the identified issues. This strategy is not appropriate for the many business as it increase the risk of initiative. While, the Sustainability is more initiative as they are more integrated into their core business. CSR is external while Sustainability is both internal and external: -The CSR is more external as the CSR aim more at external stakeholders. This CSR project targets thespecificdemographicsandgroupofthepeople(Cho,2015).While,the Sustainability focuses on the internal stakeholders of the company as well as the way of conducting the company’s actual business. Similarities between CSR and Sustainability reporting As discussed above, there are several difference between the CSR and Sustainability. However, there are some similarity between the CSR and Sustainability as they both are inter changing concept. The objective of the both the concept is that the firms or companies or industries day-to-day operation must be positively affect the external environment of it. Here, the external environment includes the social, economic and environmental perspective of the society (Maas, Schaltegger & Crutzen, 2016). The both concept try to solve the issues identified by the company in their external environment by performing the most appropriate dailyoperationin theirfirms. Theboth arehelpfulto thecompanyfor analyse the performance of business and help to set the future business goals.
6THE EXPANDING ROLE OF THE AUDITOR History of Sustainability reporting and assurance The Sustainability reporting was initially known as the environmental reporting. The first environmental report was published in 1980 by a chemical industry that had a bad image in the society. Then a group of small and medium business reported the environment report with very advanced environment management system. The tobacco industry firstly adopted this reporting system than the other industries to attract the new investors. The main development in Sustainability report is observed in the last twenty years (Herremans, Nazari & Mahmoudian, 2016). Now, the many companies is publishing the Sustainability report and there is wide array of rating and standards. There are various reason behind the publication of the Sustainability report but main reason is to show the transparency in the accountability of the company towards the each aspect of the society. Companies Undertaking Now a days, almost every company publishes the non-financial report along with their financial report. Specially, the listed companies and the multination companies undertakes the reporting of CSR and Sustainability reporting. The level of the report is also up to the mark and as required by the related standards (Mio, 2016). This reporting show the transparency in the social responsibility of the company and company’s action towards it. This also help the company to attract the investors and well as the other stakeholders. Future development of Sustainability reporting and assurance The following are the some important future trends in the Sustainability reporting and assurance:- Climate change: -This is not a matter if business can act on climate change but, how fast they deliver change (Michelon, Patten & Romi, 2018). The objective of the company is to provide solution while being the part of the solution.
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7THE EXPANDING ROLE OF THE AUDITOR Human rights: -The expectation of corporate reporting in human rights are growing. The key human right issues need to settle as the investors and rating agencies are always seeking for this type of information. Wealth inequality: -There is various issues related to the inequality including share value captured by the workers and small-scale producers (Bellucci & Manetti, 2018). The gender inequality is also the part of it. Therefore, in future this can be also observed in the non-financial report of the firm. Data and Technology: -When we talk about the non-financial reporting, the data and technology always comes with both as opportunity and threats. As it is use full to report the data in more accurate way but have the issues regarding the confidential data of the company. Frameworks for preparing report As per the European Union standards, the large public interest companies should disclose social and environmental information in their annual report (Maroun, 2017). This is also applicable for such companies, which have more than 500 employee and profit of minimum 20 million or the turnover of at least of 40 million. The regulation further describe that the non-financial report of the company must include the policies, outcome and risk related to employee activities, anti-corruption, human rights, diversity, environmental matters and social activity among board of directors. Auditor’s guideline The auditor can use the international framework for assurance engagements for structuring and completing assurance engagements. This framework permits to perform the two type of assurance engagements. Those are reasonable assurance engagement and limited assurance engagement (Knechel, & Salterio, 2016). The objective of the reasonable assurance engagement is to reduce the risk of the assurance engagement in basis of the positive form of
8THE EXPANDING ROLE OF THE AUDITOR expressionofthepractitioner’sconclusion.While,theobjectiveoflimitedassurance engagement is to reduce the risk up to the level of acceptance in basis of the negative form of expression of the practitioner’s conclusion. Conclusion This paper concludes that the CSR is a self-regulating business rule and models that helps the company to be socially accountable towards its stakeholders, it self and the society. While, the sustainability report shows the impact of their daily operation in external environment of the firm. The both are interchanging, although they have some differences as well as the similarity. The sustainability report is developed in many years but the main development in this report is took places in the last twenty years. There is also many trends in the future development of sustainability. All they big public interest company need to publish their non-financial report as per the related standards. Lastly, the concludes there are sever intuitions like International Framework for Assurance Engagements, which provides the guidelines to the auditors to perform the structuring and completing assurance engagements.
9THE EXPANDING ROLE OF THE AUDITOR References Bellucci, M., & Manetti, G. (2018).Stakeholder engagement and sustainability reporting. Routledge. Cho, C. H., Laine, M., Roberts, R. W., & Rodrigue, M. (2015). Organized hypocrisy, organizational façades, and sustainability reporting.Accounting, Organizations and Society,40, 78-94. Crowther, D., & Seifi, S. (Eds.). (2018).Redefining Corporate Social Responsibility. Emerald Group Publishing. Grayson, D., & Hodges, A. (2017).Corporate social opportunity!: Seven steps to make corporate social responsibility work for your business. Routledge. Herremans, I. M., Nazari, J. A., & Mahmoudian, F. (2016). Stakeholder relationships, engagement, and sustainability reporting.Journal of Business Ethics,138(3), 417- 435. Ioannou, I., & Serafeim, G. (2017). The consequences of mandatory corporate sustainability reporting.Harvard Business School research working paper, (11-100). Knechel, W. R., & Salterio, S. E. (2016).Auditing: Assurance and risk. Routledge. Maas,K.,Schaltegger,S.,&Crutzen,N.(2016).Integratingcorporatesustainability assessment,managementaccounting,control,andreporting.JournalofCleaner Production,136, 237-248. Maroun, W. (2017). Assuring the integrated report: Insights and recommendations from auditors and preparers.The British Accounting Review,49(3), 329-346.
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10THE EXPANDING ROLE OF THE AUDITOR Michelon, G., Patten, D. M., & Romi, A. M. (2018). Creating legitimacy for sustainability assurance practices: Evidence from sustainability restatements.European Accounting Review, 1-28. Mio, C. (Ed.). (2016).Integrated reporting: A new accounting disclosure. Springer. Unit, B. (2015). Corporate social responsibility.