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SUMMARY
This article discusses initial experiences with a new assurance service: the verification of sustainability reports providing assertions regarding financial, environmental, and social issues. For illustration purposes, references to the verification of The Shell Report 2000 are made. Because of the new content and format of sustainability reports, established standards for reporting and verification are not yet available. Therefore, applying specifically developed criteria is inevitable.
In this article, examples and characteristics of criteria that are needed to evaluate management assertions regarding sustainability are described. Furthermore, verification procedures that can be used and the content and design of a conclusion on a sustainabilty audit are described. It can be concluded that the verification of sustainability reports is a very challenging assurance service for financial auditors. Academics should be challenged as well, because of the need for further research in this area.
Keywords: assurance; sustainable development; environmental reporting.
In the current turbulent audit environment financial market regulators like the U.S. Securities and Exchange Commission (SEC), the World Bank,' the International Organization of Securities Commissions (IOSCO), as well as national governmental bodies, seem to be concerned that auditors are becoming less interested in financial statement audits with the prospects for growth more pronounced in other assurance areas. Therefore, regulators may try to keep auditors exclusively in the "financial statement audit box" to circumvent concerns about auditor independence and an erosion of the effectiveness of financial audits (see Figure 1).
In the long term, this is not a very attractive prospect for the audit profession, particularly if traditional financial statements lose their share within the "information for decision-making" market. Major developments in information technology and globalization are important drivers of market needs. It is within such an environment that the AICPA Special Committee on Assurance Services (1997) (hereafter SCAS 1997) advised that financial auditors try to break out of the traditional box. In this setting, searching for, developing, and getting experience with new assurance services is critical for the survival of the auditing profession.
According to the SCAS, the opportunities are multiplicative as the three-dimensional space expands, as illustrated in Figure 1, into new services, new customers, and new technologies. Whereas the cube reflecting the current financial statement audit is "protected," the space opened up by expanding...