Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies
This study examines whether auditors are innovating in their audit reports by incorporating material environmental, social, and governance (ESG) issues from companies' sustainability reports into the Key Audit Matters (KAMs) section. Additionally, it assesses whether ESG performance influences...
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| Format: | Article |
| Language: | English |
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Elsevier
2024-10-01
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| Series: | Journal of Innovation & Knowledge |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S2444569X24001136 |
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| author | Viviana Patricia Narváez-Castillo María Antonia García-Benau Laura Sierra-García Nicolás Gambetta |
| author_facet | Viviana Patricia Narváez-Castillo María Antonia García-Benau Laura Sierra-García Nicolás Gambetta |
| author_sort | Viviana Patricia Narváez-Castillo |
| collection | DOAJ |
| description | This study examines whether auditors are innovating in their audit reports by incorporating material environmental, social, and governance (ESG) issues from companies' sustainability reports into the Key Audit Matters (KAMs) section. Additionally, it assesses whether ESG performance influences this inclusion. Content analysis was conducted on the materiality matrices of sustainability reports and KAMs disclosures for 20 Colombian companies listed on the COLCAP index during the period 2019–2021. Using logistic regression analysis, we examined relationships between ESG scores and KAMs disclosure of material ESG issues. The results obtained show that auditors strongly emphasise governance but tend to overlook social and environmental issues within their KAMs. Furthermore, higher governance scores increase the likelihood of ESG consideration in the KAMs, while lower profitability and leverage also lead to greater ESG inclusion in the KAMs. This pioneering study offers an initial analysis of whether material ESG issues arising from sustainability reports also appear in KAMs disclosures, thus addressing a significant literature gap. The study findings suggest that auditors need appropriate guidance and enhanced competencies to perform holistic ESG risk evaluation, as the acceptance of integrated sustainability reporting is gaining momentum globally. |
| format | Article |
| id | doaj-art-acea1d87dcc5421a951186e5baf84bbf |
| institution | Kabale University |
| issn | 2444-569X |
| language | English |
| publishDate | 2024-10-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Innovation & Knowledge |
| spelling | doaj-art-acea1d87dcc5421a951186e5baf84bbf2024-12-08T06:11:31ZengElsevierJournal of Innovation & Knowledge2444-569X2024-10-0194100574Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companiesViviana Patricia Narváez-Castillo0María Antonia García-Benau1Laura Sierra-García2Nicolás Gambetta3Department of Accounting Sciences, University of Cauca, Calle 5 N° 4-70, 190001, Popayán, Colombia; Corresponding author.Accounting Department, University of Valencia, Avda. de Los Naranjos, 46022, Valencia, SpainFinancial Economics and Accounting Department, University of Pablo de Olavide, Carretera de Utrera, Km. 1, 41013, Sevilla, SpainUniversidad ORT Uruguay, Campus Pocitos. Bulevar España 2633, 11300, Montevideo, UruguayThis study examines whether auditors are innovating in their audit reports by incorporating material environmental, social, and governance (ESG) issues from companies' sustainability reports into the Key Audit Matters (KAMs) section. Additionally, it assesses whether ESG performance influences this inclusion. Content analysis was conducted on the materiality matrices of sustainability reports and KAMs disclosures for 20 Colombian companies listed on the COLCAP index during the period 2019–2021. Using logistic regression analysis, we examined relationships between ESG scores and KAMs disclosure of material ESG issues. The results obtained show that auditors strongly emphasise governance but tend to overlook social and environmental issues within their KAMs. Furthermore, higher governance scores increase the likelihood of ESG consideration in the KAMs, while lower profitability and leverage also lead to greater ESG inclusion in the KAMs. This pioneering study offers an initial analysis of whether material ESG issues arising from sustainability reports also appear in KAMs disclosures, thus addressing a significant literature gap. The study findings suggest that auditors need appropriate guidance and enhanced competencies to perform holistic ESG risk evaluation, as the acceptance of integrated sustainability reporting is gaining momentum globally.http://www.sciencedirect.com/science/article/pii/S2444569X24001136M42Q56 |
| spellingShingle | Viviana Patricia Narváez-Castillo María Antonia García-Benau Laura Sierra-García Nicolás Gambetta Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies Journal of Innovation & Knowledge M42 Q56 |
| title | Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies |
| title_full | Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies |
| title_fullStr | Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies |
| title_full_unstemmed | Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies |
| title_short | Are material ESG issues making their way into key audit matters? An analysis of Colombian innovative companies |
| title_sort | are material esg issues making their way into key audit matters an analysis of colombian innovative companies |
| topic | M42 Q56 |
| url | http://www.sciencedirect.com/science/article/pii/S2444569X24001136 |
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