In recent years, companies with a strong “green” reputation have gained greater attention from investors and markets. But how does the work of auditors change when they are faced with companies that declare themselves sustainable? Can the use of technology improve their judgment?
The study by Ashish Varma, Daniela Mancini and Shreya Kaushik, published in The International Journal of Digital Accounting Research, explores the role of auditors’ professional skepticism in the accounting audits of companies with a strong environmental reputation. Through an experimental analysis and interviews with professionals in the sector, the research shows that auditors tend to be more skeptical towards “green” companies, examining their sustainability statements more carefully. Furthermore, the use of advanced technologies helps improve the effectiveness and efficiency of accounting audits, but can also introduce new complexities in the audit process.
How does the judgment of auditors change when they are faced with companies with a strong sustainability reputation? Is technology an ally or a challenge for the audit of “green” companies? Learn more about these questions by reading the full article on our website!

Article title

“Professional Skepticism for Green Reputation Clients: A Mixed Method Study of Technology-Enabled Audits”
Authors

Ashish Varma (IMT Ghaziabad, India), Daniela Mancini (University of Teramo, Italy), Shreya Kaushik (IMT Ghaziabad, India)
Magazine

The International Journal of Digital Accounting Research, Vol. 23, 2023, pp. 137-179

ISSN: 2340-5058
DOI: 10.4192/1577-8517-v23_6

Abstract (testo originale)
The research investigated auditor’s Professional Skepticism (PS) mindset while auditing the “integrated financial statement” of green reputation clients in a technology-enabled audit environment. The study tries to understand the difference in thought and action of auditors based on the perception of their client as sustainability responsible or not. Subsequently, the study offers meaningful insights about the nuances that uphold this distinction. This research comprises two studies using the mixed method procedure as per Creswell and Clark (2017). The first study is a 2 x 2 between-subject experiment. The second study uses the Theories in Use (TiU) methodology by analyzing qualitative interviews of practicing auditors in an emerging market setting. The findings of study 1 (comprising the experiment) highlight that auditors are more professionally skeptical while auditing clients with a green reputation. Study 2 (utilizing qualitative interviews) points out that technology assists the PS mindset by enhancing the audit effectiveness and audit efficiency of green client audits. The study offers an in-depth understanding of the level of auditor’s PS mindset toward clients with a green reputation and therefore demystifies the inherent forces at play during such a phenomenon. Although the setting of the study is an emerging market, the study offers transferable findings to improve the overall understanding of auditors’ mindsets. The study has implications for multiple actors engaged in the audit process, viz., auditors, audit firms, regulators of the audit profession, audit committees, academia, and policymakers.
Keywords: Integrated financial statement, green reputation, professional skepticism, non-financial reporting, audit.