Manetti1 Fourth Annual Forum on Business Ethics and CSR in a Global Economy Milan, 14 September 2007 Assurance services for sustainability reports: standards and empirical evidence Giacomo Manetti, PhD University of Florence (Italy) Department of Business Administration

Manetti2 The diffusion of CSR reporting and assurance worldwide Corporate responsibility (CR) reports with external assurance statements, Global Fortune 250 and Top 100 in 16 countries (2002, 2005)

Manetti3 The proliferation of assurance standards 1.Worldwide: ISAE 3000 issued by IAASB in Accountability 1000 issued by ISEA in Australia: Standard AS/NZS 5911 issued by Standards Australia in Sweden: FAR SRS issued by National Professional Accountants in Germany: ED AsS 821 issued by Institut der Wirtschaftsprüfer in The Netherlands: ED 3410 Issued by Professional Auditors (NIVRA) in France: Informal guidance on sustainability assurance issued by Commissaire aux Comptes in Italy: Guidelines for the assurance services of social reports issued by Dottori Commercialisti in 2006

Manetti4 ISAE 3000 (IAASB): essential elements Who choses the audit procedure? Level of assurance Type of verifications Evaluation of audit risk? Form of the final report Auditor and team of interdisciplinary experts Reasonable or limited Control tests and substantial tests Yes Positive ( reasonable assurance ) or negative ( limited assurance )

Manetti5 Famous faces Rating agencies Opinion leaders Social evaluators Other instruments Experts Panel Interdisciplinary team The auditor bears undivided responsibility for the entire engagement and alone signs the assurance report Integrative approaches and techniques Auditors, being first and foremost qualified accountants, will not always be competent to conduct verifications on sustainability reports

Manetti6 Empirical evidence from GRI reporters Method and Sample: 15 assurance statements (G3) Objectives:  application ISAE3000 standard  other applied standards characteristics Findings: - Level of reliability: limited - Interdisciplinary team: few references - Types: analytical procedures, testing on a sample basis, interviews - Audit risk: no reference - Form: structure and conclusions - Other standards A+: 10 B+: 5 - ISAE3000: 8 - AA1000: 2 - Other: 5

Manetti7 Criticism regarding future assurance standards the determination of the level (or levels) of assurance the role and responsibilities of external experts the relation with financial auditing, with particular reference to fraud compliance with national law and regulations the relevance and materiality of the information given and the involvement of external stakeholders in the verification process

Manetti8 Three possible answers diminishing the credibility gap that today characterizes sustainability reporting, achieving more punctual verification of relevant questions such as the independence of the auditor, the link with financial reporting, the materiality of the information given, and legal compliance opening assurance services to the professionalism of external experts specialized in matters other than accounting and auditing, so as to render the controls carried out more pervasive reducing the expectation gap that currently characterizes assurance services by standardizing the content and form of final reports, clearly identifying the responsibilities of the various parties in the interdisciplinary team and, above all, explaining levels of assurance (reasonable, limited or no assurance) on the work done

Manetti9 Thank you for your attention… Giacomo Manetti, PhD University of Florence (Italy) Department of Business Administration