Dominic S. B. Soh

Internal Auditors’ Perceptions of Their Role in Environmental, Social and Governance Assurance and Consulting

Purpose - – The purpose of this paper is to investigate the nature and extent of internal audit functions’ (IAFs) involvement in environmental, social and governance assurance (ESG) and consulting in Australia. To identify emerging priorities, and the profession’s capacity to respond to these, the paper also explores internal audit practitioners’ perceptions of the current and future importance of these issues and the adequacy of their skills and expertise in meeting the challenges associated with their involvement in these areas. Design/methodology/approach - – Data were collected from 100 Chief Audit Executives and internal audit service provider partners through a survey. Findings - – Governance issues are a key area of focus for respondents’ assurance and consulting efforts, followed by social and environmental issues, respectively. While governance issues are perceived to be of greatest current importance to IAFs, environmental issues are most commonly expected to increase in importance over the next five years, and are reported to be in greatest need of further development of IAFs’ skills and expertise. Research limitations/implications - – As the corporate landscape and expectations around transparency and accountability increase, the internal audit profession needs to address the current perceived skills gap in their ability to provide assurance and consulting on ESG issues to ensure their continued relevance and ability to meet stakeholders’ needs and expectations in providing effective integrated assurance and in contributing to internal improvements. Originality/value - – This paper provides initial empirical evidence of the nature and extent of internal audit’s involvement in ESG assurance and consulting.

An investigation into the roles, characteristics, expectations and evaluation practices of audit committees

Purpose - – This paper aims to investigate how the roles, characteristics, expectations and evaluation practices of audit committees have adapted to regulatory change and what practices are most conducive to effective audit committees. Design/methodology/approach - – This paper uses semi-structured interviews with audit committee chairs and chief audit executives. Findings - – While new regulation is a primary driver of changes in the roles of audit committees, the audit committee’s role has evolved beyond regulatory requirements. Audit committees are taking a more active role in organisational governance and performance in key areas such as risk management. However, while audit committees have a clear concept of what characteristics committee members require, conceptual frameworks and mechanisms for evaluating the performance of committees and their members remain underdeveloped. Research limitations/implications - – The responses of audit committees in Australia to broader regulatory trends suggest that more research is required into how audit committees function in practice, and into developing new frameworks for evaluating the committees’ performance. This paper provides an in-depth exploration of key areas of audit committee performance, and identifies aspects that might be further investigated. Practical implications - – The paper identifies key attributes of effective audit committees and especially the characteristics of audit committee members. The paper also identifies a need to improve – and in many cases create – performance evaluation frameworks and mechanisms. Given the international regulatory trend towards greater reliance on audit committees to improve governance, more policy attention is required on developing guidelines and assessment processes that evaluate whether audit committees are fulfilling their legislative mandate in practice. Originality/value - – The paper contributes to the relatively new and more specific discussion on reviewing and evaluating the performance of the board and its subcommittees.

The Development of Integrated Reporting and the Role of the Accounting and Auditing Profession

A recent significant development in environmental, social and governance (ESG) reporting is the release of the International Integrated Reporting ( ) Framework by the International Integrated Reporting Council (IIRC) in December 2013. While there is widespread acknowledgement of the need to improve corporate reporting, a content analysis of the submissions to the IIRC’s discussion paper, consultation draft and exposure documents present varied views of the accounting and auditing profession in respect of how Integrated Reporting IR might effectively apply its principles of reporting connectivity and relationships within organisations. This chapter examines IR and the participation of the accounting and auditing profession during its development, outlining key aspects of the International Framework. It draws on the profession’s responses to discuss challenges for the accounting and auditing profession in maintaining its relevance in the evolving corporate reporting landscape. It concludes that the initial aims and promise of the International Framework have been somewhat diluted during the development process; the application of integrated thinking is crucial in achieving IR’s potential, but there are significant challenges facing the profession particularly in respect to building its capacity and cultivating integrated thinking.