This dissertation was written as part of the MSc in International Accounting,
Auditing and Financial Management at the International Hellenic University.
Prior studies show the importance of
corporate social responsibility (CSR) for the
society and provide steps that have been taken t
o disclose such information, while
there
is a paucity in the literature regarding the audit implications. This study examines the
impact of CSR on the determination of the Audit Fees, using a large sample of publicly
traded European firms for the period 2012
-
2016. We find a strong positive association
between CSR and Audit Fees, meaning that highly rated companies for CSR activities
pay more audit fees. But this association becomes negative for companies which are
located in countries where there is a well
-
structured framework for sustainability
reporting. We interpret this finding as suggesting that auditing for environmental, social
and governance issues is a complex procedure that requires increased audit effort, taking
into consideration that the reports will be longer and despite the financial assurance, an
auditor has to provide sustainability assurance as well. Also, the recently introduced
concept of CSR and
the absence of a common legal framework for CSR disclosure, even
among European countries, make the audit role more demanding. Taken together, our
research linked CSR with Audit Fees and suggest that establishing firms’ nonfinancial
disclosures may lead to
harmonization of accounting policies, enhancing the
transparency. Last but not least, the need for awareness and further accounting education
on CSR policies should be highlighted, as a measure to eliminate economic scandals and
restrict Audit Fees
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