Conceptualizing Audit Fatigue in the Context of Sustainable Supply Chains

Abstract

Organizations rely heavily on audits and compliance related activities to prove their competency, credibility, and firm performance. Sustainability audits encompass entire supply chains and are very complex due to, firstly, the global nature of supply chains and, secondly, the expansive scope of sustainability, which may include financial, manufacturing, social, and environmental audits. Adding to this dilemma is the absence of a consensus on standards related to sustainability, resulting in differences, variations, and multiple interpretations. While the frequency, complexity, and scope of audits has increased, unfortunately so has the incident of audit fraud, which has seen increasing media coverage in recent times, often implicating major multinationals and their supply chains. We posit that this trend of increasing audit activity is causing “audit fatigue”, which, in turn, may influence the audit outcome, i.e., either audit fraud or a clean audit. This study proposes that audit fatigue is a genuine issue faced by organizations and needs to be conceptualized.

Exploring assessment practices of companies actively engaged with circular economy

“…by the ISO/TC 323 (ISO, n.d.), will not remove all barriers to CE assessment. This highlights the continued importance of acknowledging existing barriers to assessment within sustainability research; future CE assessment approaches must consider them in order to increase the accessibility of sustainability assessment in general, as opposed to amplifying assessment fatigue (Khalid et al, 2020). Our study also reveals the limited assessment capacities of SMEs, as already established in previous studies (Johnson & Schaltegger, 2016), and stresses the benefits of CE assessment with the hopes that SMEs and micro companies can be informed and supported to allocate resources for this endeavour.…”

“…insufficient drivers, complexity of available tools) (Johnson & Schaltegger, 2016; Lozano, 2007). The identification of barriers enables the development of corresponding capabilities, allowing companies to not only overcome these barriers, but to go further than only compliance (Hart, 1995; Khan et al, 2020). In addition, the identification of barriers supports the revision of assessment approaches themselves to improve their applicability and relevance to companies.…”

“…Translating the concept of CE into corporate strategies is obstructed by various technical and non‐technical barriers, ranging from high start‐up costs to the complexity of current supply chains (Jaeger & Upadhyay, 2020). Companies need to develop and apply dynamic capabilities to overcome such barriers and enable the implementation of CE practices (Khan et al, 2020). One of such capabilities, which has not yet received considerable attention in academic literature and is the focus of this article, is that of assessing CE practices and their sustainability impacts (Roos Lindgreen et al, 2020).…”

Who shares wins? Understanding barriers to information sharing in managing supply chain risk

“…Lower down the supply chain; however, these tiers often do not have the resources to implement software to manage their operations more efficiently (Wang-Mlynek and Foerstl, 2020). Supplier fatigue from audit and assurance requests from firms higher up the supply chain can impact information sharing due to cost and time resources (Khalid et al, 2020). There can also be an unwillingness from supply chain actors to share information as there are concerns that they can subsequently be outsourcedessentially "cutting out the middleman" (Shang et al, 2016).…”

“…As KPMG and Deloitte suggest, solving the supplier assurance problem requires collecting large amounts of data on each supplier (Deloitte, 2018;KPMG, 2021). Once the requisite data have been collected, analysis and interpretation can be extensive and exhausting, thus exacerbating the challenge (Khalid et al, 2020). Often in lower tiers of the supply chain the nature of frequently changing buyer relationships and a lack of compliance to codes of practice add further to supplier fatigue (Tachizawa and Yew Wong, 2014).…”