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.
Highlights
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, for example environmental and social actions they pursue
As the conducted survey demonstrated, a mere 18 out of 774 audit firms in Poland perform verification of non-financial reports, which stands for 2.3% of these entities
Our study shows that audit firms verify up to four reports annually, which proves that such services are an additional business activity carried out by audit firms, which are mostly occupied by auditing financial statements (Table 5)
Summary
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, for example environmental and social actions they pursue. The information in this regard is addressed to a wide audience, who will use it to make business decisions. For individuals to rely on non-financial information disclosures and to make—with a high level of confidence—the types of decisions (e.g., investing) that these disclosures are meant to inform about, it is important that these data are credible. It is crucial to confirm their credibility through external verification by an independent, external party
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