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4.2 - Alternative Credibility-Enhancing Approaches: ASX Corporate Governance Recommendation 4.3 and ASA 720

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posted on 2025-01-07, 02:21 authored by Dale Fu, Pei Jia LumPei Jia Lum
4.2 - Alternative Credibility-Enhancing Approaches: ASX Corporate Governance Recommendation 4.3 and ASA 720

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Pagination

31-34

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  • No

Language

Eng

Research statement

Background This report, from Section 4.2 of AUASB Research Report 10, presented at the Deakin-AUASB Sustainability Assurance Research Workshop, examines the credibility of unaudited information as sustainability disclosures become integral to corporate reporting. ASX Corporate Governance Recommendation 4.3 (Rec 4.3) and ASA 720 are two key approaches to enhance reliability—Rec 4.3 emphasizes internal controls, board reviews, and external assurance, while ASA 720 requires auditors to assess unaudited information for material inconsistencies. These mechanisms highlight gaps between voluntary practices and the need for standardized sustainability assurance. Contribution This research highlights gaps in the application of credibility-enhancing approaches. Lum et al. (2023) identify inconsistencies in the adoption of internal controls, board reviews, and assurance under Rec 4.3, while Fu and Simnett (2023) uncover challenges in integrating "other information" into audit processes under ASA 720. By analyzing these mechanisms, this report provides insights into aligning corporate and audit practices with emerging standards like ISSA 5000, advancing cost-effective and credible sustainability reporting. Significance This work informs the AUASB’s efforts to enhance assurance under ISSA 5000. Its findings offer practical recommendations for improving corporate disclosures and audit clarity, addressing key gaps in sustainability reporting. This report serves as a vital resource for advancing credibility in unaudited information and shaping assurance practices at national and global levels.

Publication classification

A6 Research report/technical paper

Publisher

Deakin-AUASB Sustainability Assurance Research Workshop

Place of publication

Geelong, Vic.

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