A1 Refereed original research article in a scientific journal
Climate Risk Disclosures and Auditor Expertise
Authors: Pham, Ly; Hay, David; Miihkinen, Antti; Myllymäki, Emma-Riikka; Niemi, Lasse; Sihvonen, Jukka
Publisher: Academic Press
Publication year: 2024
Journal: British Accounting Review
Journal name in source: The British Accounting Review
ISSN: 0890-8389
eISSN: 1095-8347
DOI: https://doi.org/10.1016/j.bar.2024.101439(external)
Web address : https://doi.org/10.1016/j.bar.2024.101439(external)
Self-archived copy’s web address: https://research.utu.fi/converis/portal/detail/Publication/457063590(external)
Many jurisdictions are establishing requirements for corporations to disclose climate-related risks, and for those disclosures to be audited. One of the first jurisdictions to do so is Australia, where the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) issued a Joint Bulletin in 2018 stating that both preparers and auditors should consider the impact of climate risks on the company’s financials. Utilising the Australian setting, this paper introduces a new measure of audit partner expertise, namely expertise in climate-related issues, and examines whether it is associated with the client company’s climate risk reporting. We define audit partner expertise in climate-related issues based on their client portfolio composition in terms of greenhouse gas emissions. We find that the likelihood and quality of climate risk disclosures is higher when the audit partner has climate risk expertise, and this finding is driven by clients in industries with material climate risks.
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Funding information in the publication:
Ly Pham also gratefully acknowledges the financial support received from the OP Group Research Foundation, The Ella and Georg Ehrnrooth Foundation, and the HSE Foundation. Antti Miihkinen acknowledges the financial support received from the Niilo Helander Foundation.
