Do auditors understand the implications of ESG issues for their audits? Evidence from financially material negative ESG incidents

IF 0.3 Q4 ECONOMICS
Daniel Aobdia, Aaron Yoon
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引用次数: 0

Abstract

We exploit a unique dataset to examine how auditors integrate financially material environmental, social, and governance (ESG) issues into their audits, particularly following the introduction of the Sustainability Accounting Standards Board (SASB) and the 2013 Committee of Sponsoring Organizations (COSO) frameworks, which highlighted the link between ESG and clients’ internal control over financial reporting (ICFR). We find that auditors exhibit excessive optimism when evaluating ICFR effectiveness in the presence of material ESG incidents. Auditors often fail to detect material weaknesses in ICFR when clients experience negative ESG incidents, which leads clients to restate their financial statements. These results are driven by the post-SASB and the 2013 COSO period and are the strongest when ESG incidents are illegal and occur well before the fiscal year-end. Overall, audit firms do not seem to fully understand the implications of material ESG issues from an ICFR standpoint and make assessments that are incorrect.
审计师是否了解ESG问题对其审计的影响?来自财务重大负面ESG事件的证据
我们利用一个独特的数据集来研究审计师如何将财务上重要的环境、社会和治理(ESG)问题整合到他们的审计中,特别是在引入可持续会计准则委员会(SASB)和2013年赞助组织委员会(COSO)框架之后,这些框架强调了ESG与客户财务报告内部控制(ICFR)之间的联系。我们发现,在存在重大ESG事件的情况下,审计师在评估ICFR有效性时表现出过度乐观。当客户遭遇负面的ESG事件时,审计师往往无法发现ICFR的重大缺陷,从而导致客户重述其财务报表。这些结果是由sasb之后和2013年COSO时期推动的,当ESG事件是非法的,并且发生在财政年底之前时,这些结果是最强的。总的来说,从ICFR的角度来看,审计公司似乎没有完全理解重大ESG问题的影响,并且做出了不正确的评估。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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