Biased Evidence Processing by Multidisciplinary Greenhouse Gas Assurance Teams

Abstract

SUMMARY We investigate how auditors respond to the discipline-specific expertise of team members in undertaking greenhouse gas (GHG) assurance. Assurors conduct these engagements using multidisciplinary teams containing varying technical expertise, with some possessing financial audit-related expertise (“traditional auditors”) and others possessing science- or combined science/financial-related expertise. In an experiment in which traditional auditor participants respond to a simulated multidisciplinary team, we find that participants inappropriately rely on an explanation for an unexpected analytical procedures fluctuation from a senior-level assuror with GHG science-related expertise, irrespective of whether the situation requires that expertise. We also examine whether the review process might provide a solution to this inappropriate reliance, and report nuanced results. That is, we find that while inappropriate reliance on the senior-level assuror with science-related expertise is reduced by having a manager-level reviewer with financial audit-related expertise, inappropriate reliance is even greater when the manager-level reviewer possesses GHG science-related or combined science/financial expertise.

Integrated Reporting and Assurance of Sustainability Information: An Experimental Study on Professional Investors’ Information Processing

“…However, the tendency to attribute increased credibility to assured sustainability information in the weighting stage is not risk-free, because it diverts the problem of uncertain quality of the sustainability content to a third party (i.e., the auditor). Given that the procedure for sustainability-related assurance and its content are still in the development stage, this third party may not be familiar with the topic (see also Kim, Green, & Johnstone, 2016); therefore, the quality of the assurance itself is not always certain (Gürtürk & Hahn, 2016;Junior, Best, & Cotter, 2014). Nevertheless, from a managerial perspective, our results support the notion that companies should seek assurance for their sustainability information to enhance the perceived sustainability performance and achieve a higher investment willingness.…”

Research on extended external reporting assurance: Trends, themes, and opportunities

“…Two studies examine GHG assurance. Kim et al (2016) examines how auditors respond to the discipline‐specific expertise of other team members in undertaking GHG assurance. Assurance of GHG information typically involves multidisciplinary teams that combine financial and science expertise.…”

“…Kim et al. (2016) provide initial evidence of biased processing by multidisciplinary GHG assurance teams. Further research on biases that arise in multidisciplinary teams and conditions that could alleviate these biases are warranted.…”

“…Kim et al. (2016) show that financial statement auditors incorrectly rely on an explanation for an unpredicted analytical procedure fluctuation from a senior‐level assurer with GHG science‐related expertise, regardless of whether the situation requires such expertise. While the review process is able to alleviate this over‐reliance, this only occurs when the review is done by a manager with financial expertise.…”

An examination of assurance practices on Turkish companies greenhouse gas emissions disclosures

“…Besides IAASB and ISO, academicians have been searching for a better framework regarding to accuracy of reports and disclosures as well. Many researches indicate that assurance can be determined under the source credibility theory (Kim and Green, 2015;Koonce, 1993). Source credibility theory explains how a decision evaluates the bias from the information that comes from providers.…”