The Role and Effectiveness of Corporate Social Responsibility Assurance in a Mandatory Setting: Professional Accountants’ Perceptions

Abstract

Firms using corporate social responsibility assurance (or CSRA) recruit an external and independent third party to undertake assurance of the corporate social responsibility (CSR) information that they disclose. From a theoretical perspective, CSRA may play a role within two distinct mechanisms: the signaling mechanism, whereby CSRA signals both the quality of the disclosed information and firms’ CSR performance, and the legitimizing mechanism, whereby CSRA is strategically used as a ‘sophisticated’ compliance exercise. Thus, while the signaling theory predicts that CSRA should provide the expected benefits for its intended users, studies based on the legitimacy theory question the effectiveness of CSRA. In an attempt to disentangle which mechanism is dominant, this study investigates how professional accountants, as assurance providers, perceive CSRA and its effectiveness. We use an online questionnaire survey involving a between-subjects experimental design with 104 French professional accountants as participants. The quantitative and qualitative results suggest, in line with legitimacy theory, that CSRA is used more as a compliance exercise than as an effective signal. We advance the idea that in the French setting, in which CSRA is mandatory, it is used by firms to create the illusion of transparency by complying with disclosure requirements. However, we offer an alternative interpretation by arguing that some professional accountants may in fact seek to resist the implementation of mandatory CSRA using a strategy of justification.

Promoting sustainability assurance missions in the European Directive regulatory context

“…This legal status should in fact give legitimacy to this mission and to designated ITOs. Nevertheless, it seems that real questions about the competence of ITO verifiers emerge despite this regulatory context (Martinez et al , 2021). In addition, the issue will be for providers to enter a new market relating to CSR in which, for some, they have very little experience (Chiang and Northcott, 2012).…”

“…Nonetheless, nonbig accountants seem to have difficulty using their financial auditing skills in the nonfinancial realm (Martinez et al , 2021). Thus, the use of experts in environmental and/or social fields is suggested by professional accountants.…”

“…One response to this criticism may be the use of various providers, such as environmental engineers, Human Resource Directors (HRDs) and accounting professionals on the audit team (Dixon et al , 2004; Ienciu and Cioara, 2010). It therefore appears that the lack of experience and the absence of training play an essential role in the negative perception of these actors about their potential intervention (Martinez et al , 2021).…”

“…We therefore assume that the SA market will open up in the coming years to all professional accountants. However, the study by Martinez et al (2021) conducted among all accountants likely to provide SA under the Grenelle law, shows that these actors are skeptical with regard to the effectiveness of SA's mission because they consider that they do not have specific training in the field of CSR and recognize that they are unable to translate their accounting skills into the non-financial field (Chiang and Northcott, 2012). Furthermore, the adoption of the Pacte law (Law n ° 2019-486 of May 22, 2019, OJ of May 23, 2019, article 20), will probably lead to an evolution of the profession towards new missions to which professional accountants will have to respond, such as missions relating to CSR and more particularly SA missions.…”

The choice of incumbent financial auditors to provide sustainability assurance and audit services from a legitimacy perspective

“…In this respect, Simnett et al (2009, p. 952) indicate that “there is little successful cross-selling of these assurance services.” A plausible explanation could be that sustainability assurance has a legitimizing effect. Sustainability assurance has been considered by previous research to be an instrument that companies often use to legitimize their activities and influence stakeholders’ perceptions about the credibility of corporate sustainability behavior and sustainability reports (Simnett et al , 2009; Smith et al , 2011; O’Dwyer et al , 2011; Perego and Kolk, 2012; Boiral et al , 2019a; Hummel et al , 2019; Martinez et al , 2021). Therefore, the choice of an incumbent financial auditor to provide audit and sustainability assurance services may play an important role in the legitimacy of corporate sustainability reporting (Boiral et al , 2019a).…”