Evolution of external auditors’ role following the introduction of international sustainability standards: evidence from interviews

Abstract

This study aims to investigate the external auditors’ role evolution following the emergence of the new sustainability standards, International Financial Reporting Standard (IFRS) S1 and S2. This research highlights the ongoing changes in the auditor’s role and the main challenges faced by auditors in complying with the new requirements introduced by these standards. To uncover external auditors’ role changes following the announcement of the new sustainability standards, this study relies on qualitative data extracted from 25 in-depth semi-structured interviews with Canadian professionals, including external auditors. The emergence of the new standards appears to require major involvement from external auditors through interaction with and learning from other environmental, social and governance (ESG) professionals during the integrated reporting process. This study shows an expanded potential demand for audit firms’ services following implementation of the new sustainability standards. The new standards imply greater accountability for external auditors, especially when involved in ESG information assurance and certification. External auditors will also provide support to other professionals when preparing sustainability reports. This expected evolution requires auditors to upgrade their knowledge and skills and strengthen collaboration with other professionals. This study extends prior literature on external auditors’ role in the ESG disclosure process. It provides insight into auditors’ role changes in response to the pressure induced by the new IFRS sustainability standards.