Firms seek independent assurance from accountants on their Corporate Social Responsibility (CSR) disclosures for various reasons, including to enhance the credibility of such disclosures or to enhance the reliability of management's CSR report. However, there are multiple levels of assurance available for CSR disclosures. The forthcoming clarified U.S. attestation standards re-frame the two levels of assurance on non-financial information as reasonable (higher) and limited (lower). While not currently addressed by U.S. standards, accountants also issue hybrid reports with both reasonable and limited assurance on CSR disclosures. I conduct an experiment to identify differences in nonprofessional investors' perceptions of CSR disclosures when reasonable, limited, or hybrid assurances are provided and manipulate firm CSR performance as a possible moderator for the influence of assurance. Findings indicate that nonprofessional investors find CSR disclosures on greenhouse gas emissions to be credible, and the degree of credibility does not vary significantly based on the firm's performance in controlling emissions or on the level of assurance provided by an accountant. However, nonprofessional investors do differ in their perceptions of the overall reliability of representations made in management's CSR report. While management's CSR report supported by hybrid assurance is generally perceived to be as reliable as when only limited or only reasonable assurance is provided, the perceived reliability differs between limited and reasonable assurance. Supplemental analyses reveal an interaction such that management's CSR report is perceived as more reliable with limited assurance rather than with reasonable or no assurance for firms with better performance at controlling greenhouse gas emissions; this association reverses for firms with worse performance. This interaction may be due, in part, to language in limited assurance reports that makes it clear higher assurance was available but not pursued by management. Results address a gap in the literature for hybrid assurance and show that nonprofessional investors find management's CSR report with hybrid assurance to generally be as credible and reliable as when either limited or reasonable assurance is provided. Further, results offer insight into the interactive effects of firm performance and level of assurance on nonprofessional investors' perceptions of the reliability of management's CSR report. / Ph. D.

As required by the Corporate Sustainability Reporting Directive (CSRD) of the European Union, this thesis thoroughly examines the transition in corporate sustainability reporting from limited to reasonable assurance. The directive is being implemented at a crucial time as companies are progressively incorporating environmental, social and governance (ESG) factors into their core operating and reporting practices. The CSRD is intended to improve sustainability disclosures’ comparability, credibility and reliability. It is a legislative response to a larger movement for more corporate accountability and transparency. The study uses a qualitative technique using semi-structured interviews with professionals from leading audit firms. The purpose of these interviews is to provide many aspects of the transition with a particular emphasis on how businesses and audit firms are modifying their operations to comply with the stricter requirements of the CSRD. The study identifies the main factors behind this shift such as increased stakeholder demands for transparency and a changing regulatory environment that makes it necessary to reevaluate current assurance practices.  The study’s important conclusion is that putting reasonable assurance requirements into practice is difficult. Companies must create advanced data management systems that can handle the CSRD’s requirements for an increasing volume of information. In addition to ensuring data accuracy, these systems need to make it easier to analyse and report on the data in a way that complies with the new assurance standards.  Additionally, the shift needs a major improvement in auditor competencies. It is necessary for auditors to have a better understanding of both traditional financial auditing and the specific challenges presented by sustainability reporting. This includes having a thorough understanding of ESG factors and how they affect risk profiles and corporate performance. Hence, the CSRD acts as a catalyst for a significant shift in auditors’ professional development and training, emphasising the necessity to combine sustainability with financial auditing skills.  Strong internal controls are also important, as the research shows. Establishing and maintaining strict internal mechanisms is necessary for businesses to ensure the reliability of their sustainability reports. This involves a thorough review and a redesign of internal processes in order to meet the higher standards of reasonable assurance. These controls are essential for reducing the risks associated with sustainability reporting such errors or misrepresentations which can have a big influence on stakeholder trust and regulatory compliance.  This change has significant implications for society at large. Companies may give stakeholders more reliable and detailed disclosures about their sustainable practices by shifting toward reasonable assurance. This can have a big impact on investment choices and build stakeholder confidence. This shift promotes a more transparent and sustainable corporate environment by supporting the incorporation of ESG factors into core business strategies and by strengthening the credibility of sustainability reports.

This thesis deals with the internal control concept according to the COSO Integrated Framework for Internal Controls. Internal control definition, objectives and components are reviewed and commented. The emphasis is put on the auditor's understanding the entity's internal control and his responsibility to identify and assess the risk of material misstatement in the financial statements.