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    Impact of Assurance and Assurer’s Professional Affiliation o...
    research summary posted December 3, 2014 by Jennifer M Mueller-Phillips, tagged 12.0 Accountants’ Reports and Reporting, 12.07 Attestation Services, 15.0 International Matters, 15.05 Sustainability Services 
    Impact of Assurance and Assurer’s Professional Affiliation on Financial Analysts’ Assessment of Credibility of Corporate Social Responsibility Information
    Practical Implications:

    The findings of this study provide evidence on the benefits of assurance of CSR reports in enhancing credibility. Practice indicates that around the world about 50% of organisations have their stand-alone CSR reports independently assured, and that about 50% of these are assured by members of the accounting profession. This research shows that financial analysts in the U.K., U.S. and Australia will perceive an enhanced credibility of these reports when they are independently assured. However, the evidence also indicates that such benefits are context-specific. Assurance will add more credibility to CSR reports for companies that are facing more significant CSR issues. With regards choice of assurance provider, financial analysts in Australia and U.K. perceive improved credibility associated with independent assurance whether or not the assurer came from the accounting profession. In the U.S. it was only assurance from professional accountants that leads to significantly higher perceived CSR report credibility. This will have implications for organisations in their decision to assure and choice of assurance provider. From the assurance firm’s perspective, in countries where CSR assurance is commonly provided by both accounting profession and other providers outside of the profession, accounting firms may wish to more clearly articulate the benefits of their assurance services compared with those from other assurance providers.

    For more information on this study, please contact Roger Simnett.


    Pflugrath, G., P. Roebuck, and R. Simnett. 2011. Impact of assurance and assurer's professional affiliation on financial analysts' assessment of credibility of corporate social responsibility information. Auditing: A Journal of Practice & Theory 30 (3): 239-254.

    corporate social responsibility; assurance; benefits of assurance; credibility
    Purpose of the Study:

    Globally, the increasing trend of Corporate Social Responsibility (CSR) reporting has led to the growing importance of assurance of nonfinancial reports. While archival research provides insights into the international CSR assurance market as well as the choice of assurance provider, it remains unknown whether assurance impacts financial analysts’ perception of the credibility of CSR information, and if it does, whether the impact differs depending on the assurance providers’ professional affiliation. To provide evidence on the issue, this study uses an experimental design to examine whether assurance of CSR information and the type of assurer (professional accountant or sustainability expert) impact financial analysts’ perception of CSR information credibility. The study motivates its predictions with the documented benefits of assurance in enhancing credibility and the likely benefits of professional accountants’ assurance due to service providers’ expertise and reputation. Additionally, the study examines whether the perception differs for analysts from different countries and whether the results are consistent for CSR-reporting companies across different industries. 

    Design/Method/ Approach:

    The study uses an experimental design. The participants are financial analysts from Australia, U.K. and U.S. In the experiment, the participants are presented with a set of two CSR reports (one from a mining company and the other from a retailer). Whether the reports are assured and, if they are assured, the type of assurance provider, is manipulated across different treatments. The participants are asked to indicate their perception of the credibility of the CSR information after reading the reports, and if appropriate , the assurance report on CSR information. The research instrument was administered as either in hard copy or an electronic version. The experimental data from the hard copies of the research instrument were collected in the last quarter of 2007, while the data from the online instruments were obtained in the second quarter of 2008. 


    The study finds that:

    • Financial analysts consider assured CSR information to be more credible than CSR information that is not assured. 
    • When CSR information is assured, financial analysts perceive CSR information assured by a professional accountant to be more credible than CSR information assured by a sustainability expert. 
    • Assured CSR information from the mining company is perceived by financial analysts to be more credible than the assured information from the retailing company. 
    • Assurance from professional accountants leads to significantly higher perceived information credibility from the U.S. financial analysts. However, Australian and U.K. financial analysts were found to value assurance highly regardless of the type of assurer.
    • Assurance of CSR information, type of assurer, and the industry of CSR reporting company have little impact on investment-type decisions made by financial analysts.  
    Accountants' Reporting, International Matters
    Attestation Services, Sustainability ServicesTraining & General Experience