ABSTRACT The global transition from voluntary to mandatory sustainability reporting has heightened the demand for credible, comparable and decision‐useful sustainability information. In this context, assurance plays a crucial role in reinforcing trust and accountability. Responding to widespread regulatory and market expectations, the International Auditing and Assurance Standards Board (IAASB) developed International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements , the first comprehensive, profession‐agnostic international standard dedicated to sustainability assurance. In this Perspectives article invited by the Editor‐in Chief, we analyse the rationale, development process and implications of ISSA 5000 within the broader evolution of sustainability reporting and assurance. It examines how the IAASB, in coordination with the International Standards Board of Accountants (IESBA), expedited the standard‐setting process to deliver a globally applicable framework aligned with the public interest. Drawing on extensive stakeholder consultation, the article explores how ISSA 5000 addresses fundamental challenges (materiality, ethical requirements, assurance levels and the use of experts) while balancing conceptual robustness with practical applicability. The study further investigates the emerging challenges of adoption and implementation across jurisdictions, particularly in relation to the European Union's (EU) Corporate Sustainability Reporting Directive (CSRD) and parallel developments in other regulatory regimes. By formalizing a unified assurance framework, ISSA 5000 marks a pivotal step in institutionalizing sustainability assurance as a distinct professional field. The article concludes by outlining future research opportunities on assurance quality, cross‐jurisdictional convergence, practitioner adaptation and the evolving role of technology in shaping assurance practice.

ABSTRACT There is limited empirical evidence on the impact of audit quality on earnings quality in social enterprises, especially among microfinance institutions (MFIs). To address this research gap, we frame our analysis using agency theory and examine a sample of 5284 MFIs from 115 emerging countries between 2007 and 2014. We define earnings quality as the extent to which reported earnings are less affected by earnings management. Our findings suggest that Big 4 auditors enhance earnings quality in MFIs. However, we also observe that MFIs are more likely to misreport during economic downturns and that Big 4 auditors are less effective in curbing this discretionary behaviour under such conditions.

No abstract is available for this article.

ABSTRACT This study examines how auditing IoT data impacts client confidentiality and the role of professional competency development in mitigating associated risks. Using survey data from 242 external auditors, structural equation modelling reveals that while IoT auditing increases confidentiality risks due to heightened data exposure, professional competency development significantly mitigates these threats. Well‐trained auditors enhance security, ensuring more effective data management. However, reliance on self‐reported data introduces potential bias, and a cross‐sectional design limits causal interpretations. Future research should explore objective breach records and internal auditors' confidentiality strategies. Practically, firms must implement advanced training programmes, regulators should update auditing standards and clients should engage auditors proficient in IoT security. This study extends Organizational Information Processing Theory, shifting the focus from IoT's efficiency benefits to its confidentiality challenges. The findings provide crucial insights for firms and regulators seeking to balance technological advancements with robust confidentiality safeguards.

ABSTRACT This study explores the alignment between auditors' critical audit matters (CAMs) and the issues raised in SEC comment letters. CAMs highlight areas involving significant auditor judgement, whereas SEC comment letters address concerns related to compliance and the quality of financial disclosure. When deficiencies are identified, the SEC issues comment letters requesting clarification or additional information, a resolution process that reflects investor priorities. We find that SEC comment letters are more likely to reference the same financial statement note numbers referenced in CAMs. Additionally, we document strong associations between the accounting topics addressed in SEC comment letters and those disclosed in CAM reports. Furthermore, firms exhibiting higher uncertainty sentiment in CAMs are more likely to receive SEC comment letters on related issues. Our results support the informational validity and credibility of CAMs, suggesting that these reports highlight salient financial reporting issues that are relevant to investors.

ABSTRACT This study explores the impact of technology on the auditing profession (specifically focusing on the main opportunities offered and challenges perceived from technology) by exploring the comments received from various stakeholder groups on the International Auditing and Assurance Standards Board's (IAASB) request for input on their document considering the use of technology in audit. We employ a hybrid methodology that combines qualitative thematic analysis with sentiment analysis to yield deeper insights into stakeholder perspectives. Therefore, our analysis goes beyond the identification of themes and emphasizes regional differences, perspective‐wise insights and overall sentiments of stakeholder groups, which remain overlooked in earlier studies. As such, our findings provide actionable insights to help regulators address obstacles hindering effective integration of technology in auditing practices. The findings show an overall negative sentiment in the tone of the stakeholders, indicating a dominance of concern over optimism regarding the use of technology in audit. Findings also suggest current skill gaps, data handling concerns and the need for regulatory clarity as the central challenges that must be addressed as a priority by the regulators. Additionally, our findings also show a strong consensus in the views of different stakeholders, advocating for a uniform global approach to address key challenges.

ABSTRACT Green innovation is a vital strategy for firms to achieve sustainable development goals and a key component of national sustainable development agendas. Green innovation is influenced by the corporate governance mechanism. Internal audit, as a mandatory system, plays a critical role in improving corporate governance and, as a result, is crucial for enhancing corporate green innovation. This study collects and analyses data on internal audit practices from Chinese listed companies between 2007 and 2022 to examine how internal audit influences corporate green innovation. The results show that (1) internal audit significantly enhances green innovation, with findings remaining robust after various robustness and endogeneity tests. (2) Mechanism analysis indicates that internal audit enhances firms' green innovation by strengthening executives' environmental background, increasing firms' risk‐taking capacity and curbing financialization. These three mechanisms, respectively, reflect firms' strategic choices, risk assessment and resource allocation. (3) Heterogeneity analysis shows that internal audits have a stronger impact on green innovation in firms with high internal control quality, nonstate‐owned enterprises, high‐tech firms and those with greater analyst attention. This study contributes to the theoretical understanding of the role of internal audit in green innovation and provides insights for Chinese regulators to assess, guide and improve internal audit practices in promoting sustainability.

ABSTRACT This study examines whether CEO inside debt is associated with the quality of internal control audit opinions (ICOPs), focusing on both actual and suspected failures to issue adverse ICOPs when warranted. Motivated by recent findings that CEO inside debt may lower demand for accounting conservatism and increase audit risk, we address the growing concern over clean ICOPs issued to firms that merit adverse opinions. We find that CEO inside debt reduces the likelihood of adverse ICOPs for firms without concurrent misstatements; however, this effect vanishes when a misstatement is present. Auditors are more likely to issue adverse ICOPs to misstated firms with high CEO inside debt, ruling out an increase in Type II audit errors. Further, CEO inside debt is positively associated with adverse ICOPs in firms with high predicted misstatement risk. These findings hold when considering inside debt holdings of non‐CEOs and top management teams. Our results have implications for audit committees and regulators, suggesting that executive compensation structure—particularly inside debt—can enhance audit quality and reduce ICOP audit failures.

ABSTRACT The COVID‐19 US national emergency declaration on March 13, 2020, called for social distancing, triggered a national lockdown, made travel and in‐office work impractical and accelerated the use of remote auditing. We use the emergency declaration as a marker event to compare audit fees, audit report lag and audit quality in the year before and after the declaration. Our findings suggest a decrease in audit fees and audit report lag and an increase in audit quality in four of our five audit quality proxies (with no change in the fifth proxy) in the post‐declaration year. Collectively, our findings suggest that remote auditing enabled auditors to overcome the constraints imposed by the pandemic's social distancing and to ‘do more with less’ by potentially increasing the efficiency, timeliness and overall effectiveness of public company audits. Our findings are of potential interest to investors, regulators and audit firms in view of the current accountant shortage and the importance of maintaining the professional pipeline via work policies that meet the needs and preferences of an evolving work force.