Date of Publication: July 1, 2005

Author: Brian Ballou, Dan L. Heitger, Richard T.

Summary:

Publicly-owned organizations throughout the world have begun to realize that they serve a diverse, well-informed set of stakeholders that have a variety of concerns involving enterprise risk management, financial performance, and preservation of social and physical environments surrounding the organization. To address these concerns, many organizations now issue reports containing quantitative and qualitative information that convey organizations’ abilities to address these stakeholders’ demands. While organizations refer to these reports differently, a commonly used term is corporate sustainability reporting. These reports are most often prepared to conform to varying extent to reporting criteria developed by the Global Reporting Initiative (GRI), an independent organization working in cooperation with the United Nations. Although these reports contain reported information with the GRI criteria in mind, a major concern with such reports is their potential to misrepresent nonfinancial information to stakeholders. As a result, this concern presents a largely untapped auditing opportunity (most reports are not audited) because of the great need to provide attestation for this increasingly popular and large set of publicly disclosed information. While the current set of GRI guidelines presents challenges for auditors, the rate at which they are being adopted by companies worldwide creates an assurance market opportunity that likely will be pursued by organizations willing to provide such assurance. In this article, we discuss this opportunity and its associated challenges, including efforts being undertaken to improve the reporting criteria such that public accounting firms should be in a better position to capitalize on the opportunity.

Link to Full Reading:

http://www.sba.muohio.edu/balloubj/images/Ballou%20Heitger%20CSR%2024Jul05.pdf