From methods to ideologies: closing the assurance expectations gap in social and ethical accounting, auditing and reporting

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Authors: Tracey Swift and Nicole Dando
Date: Winter 2002
Publisher: Greenleaf Publishing
Document Type: Article
Length: 5,140 words

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In the face of major corporate collapses, the audit and assurance function becomes a focus for greater regulation and standardisation, particularly with reference to financial processes. Similarly, in terms of social and ethical accounting functions, greater credibility and assurance is required of public communications purporting to demonstrate responsibility to stakeholders. Criticisms of the financial audit function also have currency in terms of the social and ethical accounting. In this paper the authors examine the development the AA 1000 standard and the latest assurance guiding principles, using the assurance expectations gap as a framework for analysis. They find that, in the interests of true accountability and commitment to stakeholder interests, social and ethical assurance providers must go beyond normative auditing practice and comment on features of performance that would not normally be commented on in financial accounts.


HIGHLY PUBLICISED CORPORATE COLLAPSES, ENRON AND WORLDCOM BEING cases in point, generally result in greater calls for standardisation and regulation as the limits of existing audit functions (usually financial) are exposed. Perhaps not surprisingly, such scandals throughout corporate history have been accompanied by a long-running debate over the precise responsibilities of auditors with respect to detection and duty to disclose material fraud.

Traditionally, audit practice has evolved through four overlapping generations (detailed inspection or sampling, systems auditing, risk-based auditing and strategic systems auditing; Davis 1995; see also Bell et al. 1997). Social and ethical auditing--a central mechanism in demonstrating organisational transparency, building democracy and accountability--have been accused of failing society in a major way (Gray 2000). Growing disquiet exists about the quality (or lack thereof) of the assurance provided in social accounts and reports in terms of auditor independence, the quality of completeness, the nature of the opinion and the extent to which stakeholders might rely on corporate social accounts (Gray 2000; Owen and Swift 2001; Owen et al. 2000).

In 1999, the Institute of Social and Ethical AccountAbility launched the AA 1000 framework for social and ethical accounting, auditing and reporting (ISEA 1999). AA 1000 adopted a fourth-generation strategic systems approach to social auditing. Three years on, and informed by well-founded Critiques and practitioner experience of using the framework, AA 1000 is being revised, through AA 1000. (1) AA 1000 S also seeks to address the traditionally inherent tensions in assurance provision: namely, the gap concerning the responsibilities of auditors, their commitment to the public interest, the timeliness and relevance of auditor communications and the degree of independence that assurance providers can maintain from corporate management.

In the interests of achieving true organisational accountability, AA 1000 S seeks to go beyond normative audit practice. Based on the premise that the implementation of standards provides opportunities for profound organisational change, AA 1000 S assumes a stance that assurance of social accounts should incorporate the identification of innovation and capacity to deliver on values-based aspirations of socially responsible companies.

In this paper, drawing on the extant social and financial audit literature, we examine the extent to which AA 1000 S can effectively close the assurance...

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Gale Document Number: GALE|A95765174