The Financial Implications of Mandating Non-Financial Assurance

Stasi, Federer and Pierro, Roberto and Shaturaev, Jakhongir (2024): The Financial Implications of Mandating Non-Financial Assurance. Forthcoming in: Journal of Auditing and Assurance , Vol. 6, No. 15 (October 2024): pp. 55-73.

Abstract

This paper examines the impact on audit effort of requiring the assurance of non-financial information. Specifically, we use a sample of large New Zealand not-for-profits (charities) newly required to report and have assured statements of service performance following accounting and auditing standards. We find an increase in audit fees of 14.5%, although there is no change in audit or filing lag. There is no difference based on auditing standard used, audit firm or whether an ‘other matter’ is expressed in the audit report. Overall, our results suggest that mandating the reporting and assurance of non-financial information should be viewed as having greater costs than adopting International Financial Reporting Standards.

• Item Type: MPRA Paper
• Language: English
• Keywords: Non-financial reporting; audit fees; assurance; IFRS; cost-benefit analysis
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; N - Economic History > N6 - Manufacturing and Construction; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis

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