Additional information disclosed on the assurance statements

This study also found that a variety of additional information in the assurance statements relating to: the assurance provider (for example nature of the assurance provider and areas of specialisation), the name of the assurance firm, signing the assurance statement, indicating the place/address of the assurance provider, and dating the assurance statements. Table 5.19 illustrates data relating to these issues as indicted in the assurance statements.

Table 5.19 Additional information provided in the AS/Years 2000-2004 Number of assurance statements provided by Characterisations of

Accountants Consultants Certification N-P Org.

Total Names indicated on assurance statement

The assurance firm 45 31 6 - 82

The assuror - - 1 - 1

Both the assurance firm and assuror - 91 19 1 111

No name appears - 2 - - 2

Total 45 124 26 1 196

Signing the assurance statement

Assurance statement signed 12 65 19 - 96

Assurance statement unsigned 33 59 7 1 100

Total 45 124 26 1 196

Place/address of the assurance firm/assuror

Place/address indicated 40 49 5 - 94

No place/address indicated 5 75 21 1 102

Total 45 124 26 1 196

Additional information describing nature of the assurance provider

Additional information provided 1 45 8 - 54

No additional information provided 44 79 18 1 142

Total 45 124 26 196

Dating the assurance statement

Assurance statement dated 45 84 20 - 149

Assurance statement undated - 40 6 1 47

Total 45 124 26 1 196

In total, 54 assurance statements (27%) have provided some additional information describing the nature of the assurance provider, 45 of these statements were provided by consultants. None of the assurance statements provided by accountants contained this type of information, but one has indicated the nature of the assurance firm and its history in auditing and assurance area.127 Provision of information relating to the assurance provider has taken two different forms: in the context of the assurance

127 _{At the end of their ‘Independent Review Statement’ to Anglo American’s plc Safety, Health and}

Environment Report 2000, KPMG state “KPMG, a partnership established under English Law, is a member of KPMG International, a Swiss association. KPMG is registered to carry on audit work and

statement body or as a separate paragraph usually appearing on the bottom of the assurance statement. Disclosing such additional information about the assurance provider may also enhance the reader’s perception about the competencies of the assurance provider.

Some standards and guidelines (such as FEE 2002; GRI 2002; ISAE3000, 2004) require the assurance statement to indicate some information that does not relate to, or affect, the subject matter being assured (for example date, name and location of the assurance provider).128 It seems that not all of the assurance statements (specifically those provided by the consultants) complied with these requirements. In terms of the name appearing in the assurance statements, almost all the assurance statements (99%) disclosed the name of the assurance firm or (at least) name of one member of the assurance team. Consistent with the traditions of the financial statements audit, all the assurance statements provided by the accountancy firms (45 cases) indicated the name of the assurance firm, but without indicating name of the partner or the senior assurance provider who was responsible for providing the assurance opinion. In terms of signing the assurance statements, the results show that (49%) of the assurance statements have been signed. Additionally, results indicate that 73% of the assurance statements provided by the accountancy firms were not signed.

In respect of providing information relating to the place where the assurance statement was issued, the results indicate that 48% of the assurance statements contained the place/address where the assurance statement was issued. Indicating the place/ address varies between different types of the assurance providers, with 40 (88%) of the assurance statements provided by accountancy firms indicated the place/address where these statements were provided against only 40% and 19% of the assurance statements provided by the consultancy firms and the certification bodies respectively.

The final element to be explored in this section relates to dating the assurance statements. Dating an assurance statement may increase the value of non-financial reported information. Timeliness is one of the key principles of the organisational authorised to carry on investment business by the Institute of Chartered Accountants In England and Wales. The principle place business is… where a list of partners’ names is open to inspection”.

non-financial reporting framework identified by GRI (2002). This principle concerns the time it takes for stand-alone reports to become available. Thus, stand-alone reports “should provide information on a regular schedule that meets user needs and comports with the nature of information itself” (GRI, 2002, p. 30). On the other hand, the IAASB (2006, p. 10) assert that dating an assurance statement is informing the intended users that the assurance provider has “considered the effect on the subject matter information and on the assurance report of events that occurred up to that date”. Results of the current study show that the majority (76%) of the assurance statements were dated. This result is consistent with the findings of O’Dwyer and Owen (2005). Accountants are the only type of assurance providers in which all statements provided were dated, against 77% and 67% of the assurance statements provided by the certification bodies and the consultants respectively.

The current study also considered the gap between the dates of assurance statements and the dates in which the assured stand-alone reports were released. The results indicate that half (51%) of the assured stand-alone reports (97 out of 192) have been released within the same month or the month after the date of the assurance statement129. Details of the dated assurance statements and dates of releasing those assured stand-alone reports are available in Appendix 7).

5.7 Conclusion

This chapter has focused on describing the characteristics of the assurance statements considered in this study. Additionally, characteristics of the reporting companies and the assurance providers for these statements were also investigated. Special attention has been given to investigate aspects related to assurance practice, specifically: type of assurance provider, standards used to govern the assurance exercise, level of assurance pursued, competencies of the assurance provider, expressions of the assurance opinion and fees of the assurance engagements.

128 _{Details of the standards’ minimum requirements that need to be disclosed in the assurance statement} are available in section 2.4.2.

129 _{To come into this result, dates of the assurance statements have been matched with dates of} releasing those assured stand-alone reports where the dated-statements are included. Dates of releasing (only for assured reports) were obtained from the web site of the corporateRegister.com, as it is the only updated and comprehensive database (to the best of the researcher’s knowledge) in which such information are available. The results indicate that 39 stand-alone reports have been released within the same month in which the assurance statements were issued, whereas, 58 reports were released on the next month of the date indicated in the assurance statements.

The results revealed that almost 65% of the companies listed in FTSE100 during the period of the study have produced stand-alone reports with 56% of these reports containing an assurance statement. The total number of the assurance statements collected was 196 statements. Three main types of assurance providers have been engaged to carry out the assurance assignments. In contrast with the global and European trends (see for example, Kamp-Roelands, 2002; Wilson, 2003; CPA Australia, 2004; Deegan et al., 2006), the UK top 100 companies are inclined to commission consultancy firms (with 63% of the statement provided) to perform assurance on their stand-alone reports. Accountants (all of which were from ‘the Big Four’) and certification bodies had provided 23% and 13% of the assurance statements identified in this study respectively.

Consistent with previous literature (namely Kamp-Roelands, 2002; O’Dwyer and Owen, 2005; Deegan et al., 2006) different variations in the assurance disclosure have been identified within the UK assurance practices. For example, verification and assurance are the most favoured terms used by assurance providers as titles of their statements with the latter being preferred during years 2003 and 2004 with many other terms used during the period of study. The term ‘true and fair’ which is commonly used in the financial audit domain to express the audit opinion was missing in the assurance of stand-alone reports (see also O’Dwyer and Owen, 2005). Furthermore, there is a notable variation in the terms used to express the assurance opinion between the different types of the assurance providers with a preference for accurate, fair and balanced, and consistent being evident for assurance providers as a whole. Standards and guidelines used to govern the assurance engagement such as AA1000AS, GRI, and ISAE3000 are the most standards used by the UK assurance providers to perform their assurance engagements. These findings however, consistent with the earlier impression that the UK assurance practices would suffer the same concerns recognised in other reporting domains which were identified in the previous literature (see for example, Kamp-Roelands, 2002; Wilson, 2003; O’Dwyer and Owen, 2005; Deegan et al., 2006). Table 5.20 illustrates the key findings of the descriptive analysis results revealed in this chapter as well as the key questions addressed in each section of the chapter.

Table 5.20 Key findings of the descriptive analysis of the study

Research Question Key Findings

Who produce the assured stand-alone reports in the context of FTSE100 companies?

- In average, overall 65% of the listed companies - Most ‘stand-alone assured’ reporters: banks (14.8%), mining (9.7%), and oil & gas (8.7)

What is the incidence of the assurance practice?

- Over 56% of the stand-alone reports were assured – 196 assurance statements collected

What are the types of assured stand-

alone reports? - Environmental (20%), - Social & environmental (19.4%), and

- Corporate responsibility (14.8%)

Who provides the assurance

statements? - Consultancy firms (63%), - Accountancy firms (23%), and

- Certification bodies (13%)

What are the major characteristics of the assurance statements provided?

Name/title given:

- Verification (43.4%), - Assurance (32.1), and - Independent review (8.2%)

- Addressee:

- The reporting company/management (17.9%), - The board of directors (7.1%)

- Level of assurance:

- Reasonable-level (11.2%), - Limited-level (5.1%), and - Other levels (2%)

- Standards used in assurance process:

- More than one standard (15.3%), - AA1000AS (10.7%), and - ISAEs (9.2%), and

- Emerging best practice (7.7%)

In the next chapter, attention is turned to addressing results of data analysis which relating to: dimensions of the assurance process, the content analysis of the assurance statements, and the statistical tests.

Chapter Six

Results of the Content Analysis and the Statistical Tests

6.1 Introduction

This chapter of the thesis presents the results of data analysis linked to the dimensions of the assurance process, the content analysis undertaken and the results of various tests for association between elements.130 The following research questions are addressed: (i) to what extent do assurance statements disclose information about dimensions of the assurance practice? (ii) how much space is devoted to various aspects of assurance on the face of the assurance statements and how have contents of these statements developed over the period studied? and (iii) to what extent are contents of assurance statements associated with: type of the stand-alone report, size of the market capital of the reporting company, sector/industry, standards, type of the assurance provider and level of assurance?

The chapter consists of three parts. The first part considers the results of analysing the information disclosed in the assurance statements related to dimensions of: (i) independence of the assurance provider; (ii) methodology used in the assurance process; (iii) engagement with stakeholders disclosures; and (iv) result of assurance (as captured by opinion/conclusion given, findings, and recommendations expressed within the assurance statement). The second part of the chapter describes the results of the content analysis, where the structure of the assurance statements was recorded and the space devoted to each element of the assurance statement was captured. Finally, the chapter outlines the results of the statistical analysis which sought to investigate the relationships (if any) that exist between the contents of the assurance statements and (i) characteristics of the reporting company (such as, sector and size of the market capital); (ii) type of the stand-alone report produced; (iii) type of the assurance provider; (iv) type of the standards used in the assurance process; and (v) level of assurance.

130 _{The set of data being analysed in this chapter is drawn from the information collected from the} assurance statements by using those dimensions and sub-dimensions included within the second and the third part of the instrument of the study (see Appendix 1).