Research Article: 2024 Vol: 28 Issue: 3S
Raed Ibrahim Saad, Arab American University, Palestine
Citation Information: Saad, R. I., (2024). The role of independent auditors in studying and assessing the sustainability dimensions of the audited companies. Academy of Accounting and Financial Studies Journal, 28(S3), 1-15.
According to previous research, external auditors in managed organizations are typically conscious of their obligation to review and assess data linked to the economic, environmental, social, and governance components of sustainability. By highlighting various pre-existing research features that can discourage (or at least temporarily) such as a search match, this research expanded on and contributes to prior literature that started to pose the problem of "The role of independent auditors in studying and assessing the sustainability dimensions of the audited companies. This study attempts to clarify the role of the independent auditors in studying and assessing aspects of sustainability information from the perspective of earlier studies. To achieve this goal, a descriptive analytical method was used, and with the help of a group of previous studies that dealt with this topic and the most important findings were discussed. The findings of this study indicate that external auditors at the examined companies are aware of their obligation to review and assess data pertaining to the economic, environmental, social, and governance principles of sustainability. This research highlights various examples from the literature as information sources for external auditors and sustainability performance
External auditor, Examining, Assessing, Sustainability dimensions, Auditor responsible.
The industrial and technological advancements in a variety of spheres of life produced rapid growth rates that aided in meeting the expanding human requirements, but they also had glaringly detrimental impacts on social and environmental spheres. This has led to the rise of the contemporary concept of development, known as sustainable development, which is a style of development that aims to advance societal well-being without endangering the environment and its resources. Government agencies in the industrial sector were also influenced by this modern concept, so their current responsibilities go beyond generating financial and economic returns. Resulting from the manufacture of commodities or the rendering of services, instead, it encompasses safeguarding society and the environment in which it works as there are additional expenses associated with manufacturing goods in addition to those that are reported in the financial statements (Bellantuono, et al., 2016).
Since society has an interest in the organization because it has given it the human and other resources to carry out its work, it is necessary to set up special reports or include information about its sustainability practices in its annual report. As a result, the external auditor's role and responsibilities have expanded beyond simply vouching for the accuracy of the lists and financial statements offered. Instead, it goes further to evaluate the contributions made by the supervised enterprises in the fields of sustainable development, and the role played by the external auditor is thought of as one of the tributaries in the system of emphasis on sustainable development because they verify the citations to verify the reliability and truthfulness of the informational content revealed by the institution through reports on their own sustainability.
They also examine the performance measurement techniques used by companies that are audited, and they create a checklist that will be included in the sustainability report. The introduction of a new viewpoint on their duties and the expansion of their area of expertise to incorporate the dimensions of sustainable development, presents unique challenges for external auditors.
Due to the difficulties faced by sustainable development and the rise of new of stakeholders, local businesses are currently under stress not only about their environmental and social responsibility but also information about sustainable development that takes into account the requirements of all parties. As a result, the audit function has evolved to incorporate social and environmental activities carried out by the economic unit.
As a result, efforts are being made to expand the function and responsibilities of external auditors to audit and assess the aspects of the audited companies' sustainable development. The main objective of this study is to identify the role of a responsible external auditor in examining and evaluating the sustainability dimensions of companies subject to auditing.
The study's primary goal is to establish the external auditor's responsibility for investigating and evaluating the sustainability aspects of the audited companies' disclosure of sustainability reports, which are represented by the environmental, financial, and social aspects.
The importance of the study
The importance of the study stems from its reliance on discussing previous studies that dealt with this topic and the most important findings that it reached, which makes it a reference for future researchers to resort to when dealing with this topic, as well as the scarcity of studies on this topic that gives another importance to this study.
Auditing
The auditing process is described as a process that is structured within a plan that is objective, characterized by the assurance of doing this assignment with complete correctness, and where the people who execute it are qualified professionals, namely Auditors. The auditing process has a number of prerequisites and requirements that must be met by the person performing it; hence, no one else can practice it unless they also meet these requirements (Brydon, 2019).
The Concept and Importance of External Audit
Reporting to the company's members on the financial statements they have reviewed is the auditors' main responsibility. If auditors believe that the company has kept good books of account, the financial statements have been correctly prepared in line with the regulations, and they provide a truthful and fair assessment of the company's affairs and its profit (or loss), they must declare this in their report. When auditors are unable to provide a positive report on any of the aforementioned issues, they may feel that it is essential to "qualify" their audit report and provide an explanation (Vlora & Edona, 2019).
An objective auditor evaluates financial documents as part of the external audit process to determine whether it is fair and in compliance with the requirements of accounting standards or international accounting standards (Zabria et al., 2016). Depending on the facility's needs, several parties are in charge of the audit process. As per the state rules to which that establishment belongs, governmental supervisory bodies like the Audit Bureau, the Ministry of Finance, or other governmental financial responsible authorities are responsible for audits in government institutions. Licensed auditing offices are responsible for audits in corporate companies. Audits of private sector businesses are conducted according to the nation in which they are located (Sarbah, 2015).
Employers spend a lot of time keeping track of financial information for their business. Accounting is the primary technique used for monitoring, analyzing, and reviewing financial data. Business managers can analyze accounting procedures and financial data through external assessments. Public accounting companies typically conduct these inquiries. Accountants examine business owners, assess the accounting process, and validate accounting information (Katwesigye, 2013).
For entrepreneurs, external evaluations bring a variety of benefits, including the following:
a) The authority of external audits Independent auditors offer an unbiased perspective in the accounting process because business managers frequently lack a basic understanding of accounting rules.
b) To the greatest extent possible and in accordance with accounting rules, they have an accounting data. Professional accountants may review this information and provide feedback on the accuracy and applicability of the accounting information to business owners (Emmanuel, 2015).
c) External audits can assist entrepreneurs in identifying errors in their accounting process. Chief executives may be prevented from making the best judgments by accounting for data inaccuracy. Business owners may find it difficult to analyze financial data that contains errors and to look for trends (Leauanae & Rasmussen, 2002).
d) External auditing minimizes legal and tax issues, and financial managers provide business owners with information on legal and tax issues related to accounting data. Legal problems arise when business owners provide false accounting reports, and organizations are frequently held accountable for failing to disclose a company's finances accurately (Al-Jawher, 2011).
e) Independent audits will help organizations understand the importance of accounting data by educating business owners.
Dimensions of External Audit
The value of external auditing to the organization
As a result of the fact that many users rely on the audit project outcomes reported in the auditor's report when making choices and formulating policies, audit quality is significant. As a result, audit quality is a necessity for all stakeholders profiting from the audit process, and its significance differs from one party to the other depending on each party's line of work.
The efficiency of the company's policies for external auditors
The technique of guiding the efforts of the helpers responsible for enforcing and attaining the goals of the audit, while estimating the cost of execution and attainment of these goals is how supervision in the auditing industry is defined. The follow-up and supervision method entails providing assistant’s guidance and persistently recognizing significant issues.
The issue of ways to improve the efficiency of external audits
Independence of the auditor among the most significant subjects discussed in scientific work and professional writing, particularly in relation to the perceptions gap and dangers to the auditor's independence, and to offer users of financial statement's confidence in the information contained in those reports, one of their top concerns is independence. In light of this, it may be claimed that independence is the foundation upon which an audit profession is practiced.
Accuracy of accounting data
Data quality is an important concern for all businesses. Information about the reporting unit is beneficial to current and prospective stockholders, lenders, and other parties, taking into account the vital role that this information plays in the financial report of the company's performance. The method of identifying, assessing, and communicating economic information to make reasonable choices is referred to as "economic information identification, measurement, and communication." to help present, and potential investors rationalize their investment choices today and in the future by enabling them to accurately assess the company's financial state and operational results (Bukenya Moses, 2014).
Sustainability
Sustainability denotes that a higher education institution's essential operations are (at a minimum) morally righteous, economically feasible, and sustainable for future generations. A truly sustainable higher education institution places a strong emphasis on these ideas in its coursework and research, enabling its students to become productive members of an inclusive and socially equitable society. The organization would operate as a sustainable community, model ethical food and energy use, treat all of its individuals in relation, and promote these ideals in the neighborhood (Aisyah & Basuki, 2017).
Even while the idea of sustainability is losing its usefulness as a standalone term, it seems to be doing something when followed by a defining modifier like "ecological," "agricultural," or "economic." Members of numerous professions have attempted to define this term from the perspective of their individual fields. Sustainability demands that current economic activities not disproportionately burden future generations, according to "economic sustainability and the protection of biodiversity resources." Environmental resources will only be valued by economists as a portion of natural and man-made capital, and their preservation will depend on a thorough financial study. However, an ecologist will work to preserve the physical minimum of ecological services. Economic sustainability should analyze how to achieve environmental asset protection standards while reducing social impacts, but not to establish what those standards should be (Krechovska & Prochazkova, 2014).
The theoretical foundation for examining the components of sustainable development
An external audit is a systematic procedure that involves instilling trust and trustworthiness in the financial statements prepared by the economic unit by a skilled, alternative group to assert his or her technical and impartial opinion and display this viewpoint in the shape of a report. To interact with the findings of the relevant parties. The main goal of the audit function is to present the unit's results in a sound economical manner, emphasizing key areas of concern.
Business enterprises are under increasing pressure to release information about sustainable development, which takes into account social aspects such as human rights, health in the workplace, and growth, in addition to their environmental or social performance as a result of the changes that took place in the world during the latter half of the 20th century and the Beginning of the 21st century. In addition to environmental concerns, there are industrial and other social services. Efforts are currently being made to develop the process of assessing the effectiveness of institutions in terms of fulfilling sustainable development goals (Schaffhauser & Ossmann, 2017).
Sustainable and Auditing
The term "sustainability reporting" relates to how businesses address major financial and non-financial concerns or operations, such as environmental, social, and economic difficulties, as well as the possible effects of advantages and threats on the company's performance in the future. Corporate social reports, corporate responsibility reports, and social and community analyses are some of the different titles of sustainability reports.
It should be highlighted that the old financial reporting method is no longer effective at accurately portraying all a company's activities, including non-financial ones. By proactively disclosing sustainability information, businesses have adapted to the demand for more sustainable reporting of the company's economic, environmental, and social performance. According to the International Assessment on Environmental Reporting, there has been a rise in sustainability reporting as a result of growing awareness of its significance for both stakeholders and businesses.
According to academic literature, corporate theory and sustainability accounting auditing are compatible. The corporation is a social entity with obligations to all segments of the community, encompassing investors, workers, lenders, clients, and governmental and corporate organizations, as well as human roles and social responsibilities. The management function includes making wise use of financial and social assets to guarantee the life and continuity of the company (Alatoom & Abu Zerr, 2016).
The Dimensions of Sustainable and Auditing
The realization of the idea of sustainability, coupled with attention to environmentally friendly resources and social resources, has resulted in a recent concentration on scientific and practical issues that are almost exclusively restricted to the thoroughness of this concept and its facets. It is managed to be used without giving full consideration to the economic aspects, as well as the norms and principles that support them and are important for sustainability and the creation of sustainability plans.
It is crucial to note that the external audit has a significant part to play in monitoring environmental and social resources in local and global businesses of all kinds, whether they are joint stock or industrial (Bebbington, et al., 2014).
Each environmental, social, and economic necessity is mentioned under this type of accounting as a reactive, systematic approach that should be analyzed as a profit and, as a result, results in actual expenses that are shown on the expenses list of every organization. Qualified external auditors generate specialized annual accounts for disclosing the profitability of sustainability in the first place, and accounting and institutional sustainability behavior in the second place, in the assessment of the financial viability of companies' expenses.
Consequently, the significance of the role of external accounts in creating sustainability reports becomes clear. In addition, they play a crucial role in communicating the status and viability of sustainability in the business where the accounting audit is being conducted, considering that every expense has a positive impact on the environment, economy, and society. This led the study to recognize the function of external auditors in revealing behavior and the viability of sustainability through reports generated by industrial companies (Seck, 2015).
Ecological, social, and financial factors comprise the three key components of the external audit procedure for sustainability reports. Depending on this, each dimension has a primary auditing existence and goal that the external auditor aims to accomplish. The International Organization for Standardization for the Principles of Social Responsibility asserted that every dimension is detailed because it includes seven major factors that are properly considered when auditing sustainability reports: organizational governance, human rights, work practices, environment, fair staffing, consumers' concerns, and communications. Consequently, auditing comprises the following steps:
Ecological auditing
Auditing is required to examine the expenses and income from the variables connected to the environmental problem.
Social auditing
This auditing is based on an examination of the social factors that affect the organization's relationships with key customers, including a look at the distribution chain, customer protection, employee behavior, and benefits to society.
Financial auditing
Auditing includes looking over and examining the finances of the foundation's earnings and returns from its inputs, outputs, and operations (Andon, et al., 2015).
Ecological, Financial, and social sustainability are the three pillars of sustainable development. According to the social dimension of sustainable development, advancement cannot be considered sustainable if it is not fair or if it does not adequately address the needs of the vast majority of people on Earth.
Sustainable social development is a comprehensive process of enhancing human potential in the areas of: eradicating poverty; providing people with gainful employment; fostering social integration; ensuring universal access to effective health care and education; preventing crime and other undesirable social phenomena; democratizing all facets of social life; and altering consumer preferences and needs. Acquiring information that would make it possible to recognize, preserve, and expand the advantages of a healthy environment is what environmental protection,—the ecological dimension,—means.
The aforementioned aspects of sustainable development (economic, social, and ecological) demonstrate the fundamental tenets of this concept: first, people have the right to live (have) a productive and healthy existence in balance with nature; second, nations have the legitimate power to use natural resources in accordance with their concept of development, but in a way that does not harm the environment of other countries; and third, to solve these issues, we need to utilize natural resources in a sustainable way.
Sustainable development, ecological dangers, social risks, ecological economy, poverty, and social exclusion are related terms (Krstic, 2019).
SDG Audits' Difficulties and Opportunities
SDG audits present various potential and challenges for Supreme Audit Institution. Institutional, technological, political, communication, and collaborative concerns are the categories used to group these opportunities and obstacles. These build on actual experience from other ongoing SDG projects by Supreme Audit Institution. We stress those of SDG auditing even though they mirror the general possibilities and problems faced by Supreme Audit Institutions (Van Zyl et al. 2009). The appropriateness, acceptability, and legitimacy of SAIs' performance of SDG audits will depend on how they respond to these issues and seize their possibilities (Montero A, 2012).
Institutional
Generally speaking, SAIs have comparable difficulties to other public organizations, especially in developing nations. They frequently lack the tools, people, infrastructure, and resources needed to complete their tasks. These restrictions have an impact on the caliber and volume of audits you generate, and they might be made worse by SDG audits given their uniqueness and high level of technical skill. For instance, a team of six auditors worked for 12 to 18 months at the Commissioner for the Environment and Sustainable Development in Canada to complete an SDG readiness study (Montero A, 2013).
The audit teams in many SAIs only have two auditors, and they frequently do not have a sole focus on SDG audits. Another institutional difficulty is that SAI leadership and personnel have a poor understanding of the SDGs. This indicates how little the general public and institutions of government are aware of the goals of sustainable development.
Although SAI workers who work on environmental audits are frequently more knowledgeable about sustainable development concepts, they struggle to convince their SAIs of the importance of SDG audits (Vinkhuyzen et al., 2018).
Since SAIs has historically been structured and their audits carried out in a manner that mirrors the silo organization of government, they also confront the issue of working on SDG audits in a more integrated manner. For SDG audits, SAIs may encounter unique institutional hurdles depending on their organizational structures, interactions with the executive, legislative, and other oversight institutions, and terms of reference. For instance, SAIs with a collective structure, like other governmental agencies, could have a harder time generating the internal support required to pursue SDG audits. Additionally, SAIs that prioritizes compliance might not have the staff necessary to audit SDG performance (INTOSAI, 2018).
Technical
Technical auditing of the SDGs deviates from standard auditing procedures. SDG audits have brought about additional technical difficulties. Auditors must be able to examine complicated governance concerns, evaluate institutional processes, take into account the connections between various institutions, sectors, and policies, and assess inclusiveness, public participation, data systems, and indicators. If SAIs wish to guarantee proper timing and significance of the SDG audits, they must endeavor to stay up with methodological and technical developments and their technical reaction should be rather quick (Rajaguguk, et al., 2017).
Comparatively to auditing more focused programs and/or particular government organizations, the expansive reach of the 2030 Agenda presents issues for SAIs when scoping SDG audits. The issues posed by the scale disparity between auditing specific SDG projects and auditing "the big picture" of how governments set up to implement the SDGs are known to SAIs. The abilities and skills necessary to understand governance and policy concerns and evaluate the integrated methods mandated by the SDGs provide additional obstacles (United Nations, 2015).
Last but not least, many SAIs view the 2030 Agenda's significant emphasis on equity as a difficulty because it is seen as having an inherent political component. However, audit institutions' experience with SDG 1 on ending poverty, SDG 5 on gender equality, and other social sectors shows that there is no inherent barrier preventing SAIs from taking into account issues with a high equity component (UNDESA, 2017).
The focus must change from auditing the economy, effectiveness, and performance of individual programs or agencies to looking at results and then the plethora of agencies, programs, and policies operating towards those results in order to audit the SDGs with an integrated whole-of-government approach. Then, based on the results, external auditors can look into pertinent issues like how the government manages achievement across a variety of policy tools (for example, contracts, funds, and tax policies) and the related systemic risks, or how data and evidence are used to motivate actions that produce the desired results (GAO, 2016).
It may be helpful for SAIs to make the distinction between broad, whole-of-government level institutional and policy arrangements and issue-specific, SDG target-level institutional and policy arrangements when examining how governments have thought about the integration of goals. In addition to addressing concerns of segmentation, duplication, and overlap, audits that take into account interconnections between policies and programs should also pay attention to any gaps, omissions, or "blind spots" in the associated programs and institutions that are pertinent to a given topic (TCU, 2017).
Latin American SAIs taking part in this innovative strategy for auditing SDGs has been implemented by SAIs taking part in the coordinated audit of Target 2.4. Auditors have admitted that they find it difficult to adapt to the new ideas and the change from evaluating a single business to auditing many entities while taking into account their interrelationships. For instance, SAIs in the Pacific region have dealt with these issues by devoting more time and money to the creation of audit plans, adding more review points to the audit process, and improving on-site assistance for SAIs (PASAI, 2018).
Political
In general, SAIs has three political difficulties when auditing SDGs. First, SAIs frequently views SDG audits as potentially challenging for SAI independence since they are more prone to politicization than other audits. The enforcement of audit recommendations is the subject of the second difficulty. The third is the potential perception that SDGs are primarily a supra-national issue (State Audit Office of Hungary, 2012).
The evidence provided above demonstrates that SAIs have successfully carried out these audits with positive impression and without jeopardizing their independence and reputation, despite the fact that SDG audits may increase SAIs' visibility and, in some cases, place them at the center of the political debate (for example, if SDG audits reveal different results than those documented by the executive) (SAI Jamaica, 2018).
Additionally, the results of the Open Budget Survey 2017 demonstrate that SAIs around the world have a high level of independence (the heads of 82 of the 115 SAIs survey conducted were assigned in a way that guaranteed their independence, and 92 cannot be eliminated solely by the executive branch), even though they still need to increase their managerial and financial autonomy to strengthen their accountability role (IBP, 2018).
It has implications for SDG audits as SAIs typically struggle to implement audit recommendations. Only 44% of nations' legislatures or the SAI reported publicly on the executive's execution of audit recommendations in 2015. (IDI, 2017). Parliaments are in charge of making sure that audit recommendations are followed up on by governments in many nations. However, the Inter-Parliamentary Union's 2017 survey of 150 legislatures revealed that just 66 out of 100 parliaments had established mechanisms for reviewing audit reports (IPU, 2017). This undercuts the potential value of SDG audits in enhancing national-level SDG implementation.
Communication
For audits of development-related concerns, including those covered by the SDGs, enhancing audit communication becomes especially important. Improved SDG audit communication is essential to highlighting the work SAIs do, increasing awareness of SDG audits among all stakeholders, and maximizing their influence on SDG implementation. The timely and effective dissemination of SDG audit results is one communication problem (Janouskova et al., 2019).
SDG audits have the potential to aggravate the transparency gap in relation to audit reports. The publication of the audit findings may be delayed or impeded if SAIs believes SDG audits to be more risky. To use the channels that the follow-up and review procedure opens, however, dissemination of high-quality SDG audit reports is necessary (Schmidt, et al., 2013).
Another universal difficulty that applies to SDG audits is converting the technical language of audits into language that is understandable to the average person. To address different audiences and make the reports more approachable, a variety of tools can be employed (Barkemeyer, et al., 2018). The SAI of Costa Rica performs an annual assessment on the accuracy and value of its audit reports in order to pinpoint areas that need improvement. According to the findings, the SAI changed the audit reports' phrasing to make them more appealing to youthful legislators (Lindenfeld, et al., 2012).
Collaboration
Collaboration with external stakeholders has always been a problem for SAIs. Concerns continue to exist regarding the dangers of involving stakeholders in SAI independence. Due to the enormous number of parties involved in any given problem, the multiplicity of viewpoints and demands, and the varying degrees of perceived legitimacy of different parties, some SAIs find stakeholder management to be daunting (Bibby 2014).
SAIs can, however, gain from interacting with stakeholders in order to enhance SDG audits and their effectiveness. One particular issue with SDG audits is that in order to uncover chances for better implementation, they necessitate a greater stakeholder engagement throughout the audit cycle and a more cooperative relationship with governmental institutions.
SAIs must look beyond conventional methods of gathering data and consulting with a larger group of stakeholders in order to better understand the roles and responsibilities of various stakeholder( ICA, 2013),.
While SAIs interacts with the external auditors as a source of documentary data, they frequently encounter difficulties when utilizing non-state stakeholders as sources of audit evidence. Many SAIs have also encountered difficulties getting the audited in government to cooperate and respond in a timely manner. A lot of SAIs doing SDG audits is also new to working with stakeholders (OAG, 2018).
Although the first round of SDG audits revealed some significant triumphs, they also revealed very real problems. Some of these issues (such as those pertaining to SAIs' independence, mandates, communication plans, or the adoption of their recommendations) are general to SAIs, while others are particularly particular to the SDGs' setting (for example, the need to build appropriate skills within SAIs). The backdrop of the nation will determine how SAIs can overcome these obstacles in the short and medium term. Strategies to advance might include actions suggested by SAIs themselves (such as improved results communication) or by others (such as closer collaboration with other institutions on issues of mutual interest) (Montero A. 2012).
The researcher used the analytical descriptive approach by addressing previous studies that dealt with the subject of the study and the most important findings to identify the role of the external auditor responsible for examining and assessing the sustainability dimensions of the audited companies.
In this part, the researcher reviewed the previous studies, which are considered rare in this topic, which gives the current study great importance to future researchers, but there are studies that discussed the issue of sustainability and external auditing and did not highlight the responsibility of the external auditor in evaluating and examining the dimensions of sustainability in companies Only one study will be mentioned.
Hasan (2016) did the study assessed and evaluated sustainability reports as a new challenge in the field of external auditing. According to this study, it is not possible to define rigid standards for an external audit to verify sustainability reporting. According to Barman's (2016) research, there are issues and obstacles that arise from the expansion of small- and medium-sized businesses that necessitate immediate attention, and sustainable utilization, which have an impact on the environment. These issues and difficulties reduce the spatial bases of various micro- and macro-economic ecological systems.
Airoot (2015) conducted a study, the findings of which suggested that commercial banks limit the information they disclose in their sustainability reports to the economic and social dimensions, while neglecting and undermining the environmental factors and their impact on market value. According to a study by Bashatwah (2014), there is a significant impact of uncovering the social impacts on stability ranking; there is no major effect of revealing the environmental dimension; and there is a significant impact of disclosing all three dimensions, with varying effects.
From the perspective of auditors working in Iraqi organizations and audit organizations, this study sought to define the duty of the external auditor in reviewing and evaluating the elements of sustainability information. To do this, a questionnaire was administered to a randomly selected sample group, which included auditors employed by Iraqi businesses and auditing firms. The findings of the study demonstrate that Iraq's external auditors are conscious of their obligation to review and assess data pertaining to the economic, environmental, social, and governmental aspects of sustainability, as well as their application of GRI standards (GRI).
Matar & Elswety's (2012) investigation focuses on how accounting and the presumption of business sustainability are related. Which postulates that the typical phase of the economic life cycle is corporate sustainability? It comes to the conclusion that it is impossible to assess a company's economic performance without also considering its social and political impacts on the environment. Finally, it was revealed that even taking into account the foregoing effects, there is still a gulf between the aspirations of the community and the actual activities carried out by the organization that must to be bridged.
The purpose of the Abu Zerr & Afaf (2012) study is to demonstrate the significance of the internal auditing function in sustainability. This explains how internal auditing in particular and public sector businesses in general are tied to sustainability. The study's findings identified companies that were making an effort to draw decision-makers' attention to non-financial metrics. The crucial function of internal auditing in enhancing sustainability was determined. According to the statement internal auditing can enhance management by teaching managers accepted sustainability norms and rules.
In previous studies, such as those conducted by Hasan (2016), the aim was to assess and evaluate sustainability reports as a fresh challenge in the field of external auditing. The current study differs from the previous study in that it examines the role of independent auditors in studying and assessing the sustainability dimensions of the audited companies. It is the first study that examined this field in Palestine.
Asaads' Study (2021) supported the results of the current study, which demonstrated that Iraq's external auditors are conscious of their obligation to review and assess data pertaining to the economic, environmental, social, and governmental aspects of sustainability as well as their application of GRI standards (GRI).
The current study is one of the few local studies to examine the role of independent auditors in studying and assessing the sustainability dimensions of the audited companies.
The current study dealt with three dimensions of sustainability (environmental, social, and economic) and the role of the external auditor in their evaluation in the company, which gives this study a comprehensive approach to the subject, while most previous studies considered only a few of these aspects.
The current study benefited from previous studies in several aspects, which can be summarized as follows:
a) Benefiting from the theoretical framework in formulating the subject of the study in relation to the role of independent auditors in studying and assessing the sustainability dimensions of audited companies.
b) See how the study method and procedures are conducted and take what is appropriate to the current study.
c) Learn about the research tools and how to prepare and build them, and present them to the arbitrators to ensure their validity.
d) Benefiting from the statistical methods used in the study.
e) Studying the results, recommendations and proposals, and benefiting from them in comparing its results with the results of the current study.
The study's conclusions show that the companies under investigation's external auditors are responsible and committed to review and evaluate information related to sustainability's economic, environmental, social, and governance aspects.
The present study approaches the topic of sustainability accounting from another logical standpoint, in which the definitions of reporting, external auditing, sustainability, and accounting affairs are merged, despite the fact that several of the studies cited above focused on the viability and significance of sustainability accounting and its effect on the environmental and social environment. External auditing, a crucial component of sustainability reporting, is also discussed in this study.
In all academic discussions, we attempt to be truthful, honestly describe the information, findings, techniques, and status of publications. We do not make up, falsify, or describe data incorrectly. We do not mislead peers, research sponsors, or the general public.
The author did not receive funding (institutional, private, and/or corporate financial support) for the work reported in this paper.
The external auditor's role and responsibilities have expanded beyond simply vouching for the accuracy of the lists and financial statements offered. Since society has an interest in the organization because it has given it the human and other resources to carry out its work, it is necessary to set up special reports. The role of an external auditor is not only to verify the accuracy and veracity of the information provided by audited companies. Instead, it further evaluates the contributions of supervised enterprises in the fields of sustainable development. The role evolved to incorporate the social and environmental activities carried out by the economic unit.
The accuracy and compliance with the accounting rules of a company's financial statements are the auditors' responsibility. Auditors may consider it necessary to "qualify" their audit report and offer an explanation if they are unable to provide a favorable assessment on any of the aforementioned points. Accounting is the main method used for tracking, analyzing, and examining financial data. Through objective evaluations, business owners can analyze their accounting practices and financial information. As business managers frequently lack a fundamental understanding of accounting standards, independent auditors provide an objective viewpoint in the accounting process.
The term "sustainability reporting" relates to how businesses address major financial and non-financial concerns or operations. The old financial reporting method is no longer effective in accurately portraying a company's activities. There has been a rise in sustainability reporting due to growing awareness of its significance for both stakeholders and businesses.
External audits play a significant role in monitoring environmental and social resources in local and global businesses, whether they are joint stock or industrial. Auditing comprises three components: ecological, social, and financial. Each dimension has a primary auditing existence and the goal that the external auditor aims to accomplish. External accounts play a crucial role in communicating the status and viability of sustainability in businesses where accounting audits are being conducted.
This study recommends external auditor to understand the value of sustainability reporting and how it can be used to highlight businesses' economic, social, and environmental actions as well as their effects on the environment. It informs auditors that there is a need for them to follow the developments in standards and data on sustainability and their usage.
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Received: 05-Feb -2024, Manuscript No. AAFSJ-24-14466; Editor assigned: 07-Feb -2024, Pre QC No. AAFSJ-24-14466(PQ); Reviewed: 20-Feb -2024, QC No. AAFSJ-24-14466; Revised: 23-Feb -2024, Manuscript No. AAFSJ-24-14466(R); Published: 29-Feb -2024