Corporate Social and Environmental Auditing: Perceived Responsibility or Regulatory Requirement?

Abstract

This paper aims to explore and develop understanding of auditing specifically in the context of social and environmental disclosures by corporate entities. The paper is framed within a theoretical conception and is primarily literature-based. The purpose is to seek an understanding of the basis of financial auditors carrying out social and environmental audit in order to provide a basis for future research work. The study finds that, aside regulatory issues, one major motivating factor for auditors conducting social and environmental audit is as a result of and the relationship between the audit company and the society and/or stakeholder groups of interest. The study establishes that, even though statutory auditors as part of their work have also embraced the reviewing of social and environmental disclosures by management, for now, there are no regulatory standards backing the concept. The study therefore calls on accountancy regulatory bodies on the need for immediate formulation and implementation of standard policy to that effect. The implications of the study relate to the need to improve the insightfulness of social and environmental reporting and the possibility of the accounting literature offering more insights to the social and environmental auditing.

Keywords: Social audit, Environmental audit, Corporate Disclosure.