Practice of Non-Financial Reports Assurance Services in the Polish Audit Market—The Range, Limits and Prospects for the Future

Abstract

In recent years, many companies have been issuing non-financial information which is used by a wide range of stakeholders in their decision-making processes. Considering the fact that such reports play an important role in financial markets, the information they provide should be submitted to verification by an external, independent body. Our study, carried out in 2020, showed that only 2.3% of audit firms in Poland offer auditing non-financial report services. This was the starting point for our further investigations, the results of which will be presented in this article. The aim of the article is to identify the factors that limit or stimulate the performance of auditing in Poland with respect to non-financial data, and to determine the scope of operations carried out by audit firms which provide this service. The article comprises literature perusal and results of empirical studies among audit firms in Poland. Several important findings have emerged, including the fact that there are few companies in the Polish auditing market rendering the service of auditing non-financial reports, which are leaders in this field. The factor that most significantly limits the performance of non-financial report auditing is the low demand for such a service, which arises from the fact that verification and assurance of non-financial data are not obligatory for all reporting undertakings. Given that the number of CRS reports is increasing every year, it seems necessary to make full audits in order to confirm the reliability of non-financial information provided by reporting companies. Otherwise, stakeholders interested in these reports might be exposed to a risk of making inadequate decisions.

A Model of Risk Information Disclosures in Non-Financial Corporate Reports of Socially Responsible Energy Companies in Poland

“…TPE is the only company whose reports contain elements and non-financial data mentioned in Samelak's model [58]. All IRs have been externally verified, which enhances report reliability for Stakeholders [79][80][81][82][83][84][85][86][87][88].…”

Risk Information in Non-Financial Disclosure

“…Risk disclosure is considered increasingly significant to improve transparency and reinforce the market discipline (Abraham and Shrives 2014;Ahmed et al 2004;Beretta and Bozzolan 2004;Cabedo and Tirado 2004;Linsley and Lawrence 2007;Linsley and Shrives 2006;Linsley et al 2008;Schrand and Elliott 1998). Additionally, as is underlined by Bartoszewicz and Rutkowska-Ziarko (2021), "the concept of sustainable development, which has become widespread in the past years, as well as the changing environment and business model, have popularised the trend among socially responsible companies to disclose non-financial information". As a consequence, non-financial disclosure should also refer to risk concerning the social and environmental engagement of companies.…”

Research on extended external reporting assurance: An update on recent developments

“…Refer to www. abdc.au.edu.7 We urge readers to refer to these discussions and reviews, because they are complementary to ours: Bakarich et al (2020), De Villiers et al (2022,Yan et al (2022), and Zhou (2022).8Fan et al (2021) attempt to address selection bias by implementing the Heckman two-stage model.9 Since 2008, the Shenzhen and Shanghai stock exchanges have required specific companies to publish a CSR report with their annual report.10 The IIRC Framework defines "integrated thinking" as "the active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects" (IIRC, 2021, p. 53).11Bartoszewicz and Rutkowska-Ziarko (2021) provide survey evidence on the factors affecting the implementation of sustainability assurance in Poland based on 12 survey responses. Given the small sample size, we refrain from commenting on the inferences.12 Donkor et al (2021) state that their proxy of accruals-based earnings management is the aggregate of three accruals-based earnings management proxies frequently used in the literature.…”

“…1111Bartoszewicz and Rutkowska‐Ziarko (2021) provide survey evidence on the factors affecting the implementation of sustainability assurance in Poland based on 12 survey responses. Given the small sample size, we refrain from commenting on the inferences.…”