Manetti 1

Fourth Annual Forum on Business Ethics and CSR in a Global Economy

Milan, 14 September 2007

Assurance services for sustainability reports:standards and empirical evidence

Giacomo Manetti, PhDUniversity of Florence (Italy)Department of Business AdministrationE-mail: giacomo.manetti@unifi.it

Manetti 2

The diffusion of CSR reporting and assurance worldwide

Corporate responsibility (CR) reports with external assurance statements, Global Fortune 250 and Top 100 in 16 countries (2002, 2005)

Manetti 3

The proliferation of assurance standards

1. Worldwide: ISAE 3000 issued by IAASB in 20042. Accountability 1000 issued by ISEA in 20033. Australia: Standard AS/NZS 5911 issued by Standards Australia

in 20054. Sweden: FAR SRS issued by National Professional Accountants

in 20045. Germany: ED AsS 821 issued by Institut der Wirtschaftsprüfer in

20056. The Netherlands: ED 3410 Issued by Professional Auditors

(NIVRA) in 20057. France: Informal guidance on sustainability assurance issued by

Commissaire aux Comptes in 20048. Italy: Guidelines for the assurance services of social reports

issued by Dottori Commercialisti in 2006

Manetti 4

ISAE 3000 (IAASB): essential elements

Who choses the audit procedure?

Level of assurance

Type of verifications

Evaluation of audit

risk?

Form of the final report

Auditor and team of interdisciplinary

experts

Reasonable or limited

Control tests and

substantial tests

Yes Positive (reasonable assurance) or

negative (limited assurance)

Manetti 5

Famous faces

Rating agencies

Opinion leaders

Social evaluators

Other instrumentsExperts Panel

Interdisciplinary team

The auditor bears undivided responsibility for the entire engagement and alone signs the assurance report

Integrative approaches and techniquesAuditors, being first and foremost qualified accountants, will not always be competent to conduct verifications on sustainability reports

Manetti 6

Empirical evidence from GRI reporters

Method and Sample:

15 assurance statements (G3)

Objectives: application ISAE3000 standard other applied standards characteristics

Findings:- Level of reliability: limited- Interdisciplinary team: few references- Types: analytical procedures, testing on a sample basis, interviews- Audit risk: no reference- Form: structure and conclusions- Other standards

A+: 10

B+: 5

- ISAE3000: 8- AA1000: 2- Other: 5

Manetti 7

Criticism regarding future assurance standards

• the determination of the level (or levels) of assurance• the role and responsibilities of external experts• the relation with financial auditing, with particular

reference to fraud• compliance with national law and regulations• the relevance and materiality of the information given

and the involvement of external stakeholders in the verification process

Manetti 8

Three possible answers• diminishing the credibility gap that today characterizes

sustainability reporting, achieving more punctual verification of relevant questions such as the independence of the auditor, the link with financial reporting, the materiality of the information given, and legal compliance

• opening assurance services to the professionalism of external experts specialized in matters other than accounting and auditing, so as to render the controls carried out more pervasive

• reducing the expectation gap that currently characterizes assurance services by standardizing the content and form of final reports, clearly identifying the responsibilities of the various parties in the interdisciplinary team and, above all, explaining levels of assurance (reasonable, limited or no assurance) on the work done

Manetti 9

Thank you for your attention…

Giacomo Manetti, PhDE-mail: giacomo.manetti@unifi.itUniversity of Florence (Italy)Department of Business Administration