Implementing Third-Party Assurance in Integrated Reporting: Companies ' Motivation and Auditors' Role

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Third-party
Implementing third-party assurance in
assurance in integrated reporting integrated
reporting
Companies’ motivation and auditors’ role
Christian Rainer Briem
EBS Business School, EBS Universität für Wirtschaft und Recht,
Oestrich-Winkel, Germany, and
Andreas Wald
School of Business and Law, University of Agder, Kristiansand, Norway
Abstract
Downloaded by Universiteit Utrecht At 06:13 08 June 2018 (PT)
Purpose – The purpose of this paper is to examine companies’ reasons for voluntarily obtaining third-party
integrated reporting (IR) assurance and the role of external auditors in the assurance process.
Design/methodology/approach – By conducting 25 in-depth semi-structured interviews, a wide range of
significant actors in the assurance process of integrated reports are addressed. In addition, archive materials
are considered. The authors apply institutional theory, agency theory, and the diffusion of innovations theory
to analyze IR assurance.
Findings – Companies follow coercive pressures by their stakeholders when obtaining external assurance.
They intend to appreciate their non-financial indicators and increase their credibility and reliability. Auditors
play an important role as change agents for the implementation of IR assurance by, e.g., supporting the
correct interpretation of the International Integrated Reporting Council standards and by promoting IR.
Research limitations/implications – First, 25 in-depth interviews can only give a first insight about the
stated questions. Second, this paper only considers auditors and company representatives from Germany.
Third, investors were not questioned about their attitude toward IR assurance.
Practical implications – The results may serve as a basis for the implementation of IR assurance.
Originality/value – This study combines the relatively unexplored research field of IR with three
established theories. Hereby, it exposes companies’ motivation for obtaining external assurance and auditors’
role on the assurance process.
Keywords Germany, Implementation process, Agency theory, Motivation, Theory, Institutional theory,
IIRC, Integrated reporting, Assurance, Isomorphism, Diffusion of innovations theory
Paper type Case study
Introduction
The recent financial crisis and the consequences (e.g. fair value losses) of several fraud
scandals have illustrated the need for more corporate transparency (Wild and Van Staden,
2013; Wulf et al., 2014). As a consequence, there is a demand for the improvement of
corporate governance mechanisms and deeper insights into business processes (Adams
et al., 2011; Cohen et al., 2012). In response, companies have generated non-financial
information that reflects the impact of corporate activities on the social and ecological
environment. To communicate the information to their investors, companies have either
generated stand-alone reports (environmental, social, corporate social responsibility or
sustainability report) or added the information to the annual financial report (Cohen et al.,
2012; Simnett et al., 2009b). However, the different parts of the reports were usually not
integrated in a coherent document which can lead to a fragmentation of important
information. Therefore, the International Integrated Reporting Council (IIRC), founded in
2010, has developed a framework which enables companies to create an integrated and
transparent report based on financial and non-financial indicators. Meanwhile, this report is
supposed to be “[…] a concise communication about how an organization’s strategy, Accounting, Auditing &
Accountability Journal
governance, performance and prospects lead to the creation of value over the short, medium © Emerald Publishing Limited
0951-3574
and long term” (International Integrated Reporting Council (IIRC), 2013, p. 29). DOI 10.1108/AAAJ-03-2016-2447
AAAJ Since the foundation of the IIRC, more than 100 companies worldwide have
participated in a pilot program and have implemented this report format (IIRC, 2013).
Nevertheless, the participation in IIRC’s pilot program has not guaranteed the accuracy of
the disclosed information. Although the IIRC framework and the guidelines of the
Global Reporting Initiative (GRI) aim to enhance transparency of corporate reports, many
reports still lack in quality regarding accuracy, completeness, materiality, and
transparency (Wild and Van Staden, 2013; Wulf et al., 2014)[1]. This quality is at least
partly attributable to the fact that integrated reports are still mostly voluntary and not
assured (Marx and Van Dyk, 2011).
Several studies already examined the benefit of external assurance in accordance with
the disclosure of non-financial information (e.g. Blackwell et al., 1998; Carey et al., 2000;
Chow, 1982). Regarding voluntary reports, such as sustainability or corporate social
responsibility reports, external assurance is an attribute that adds confidence and credibility
in the accuracy and reliability of published information (e.g. Hodge et al., 2009;
Junior et al., 2014; Park and Brorson, 2005; Perego and Kolk, 2012; Pflugrath et al., 2011;
Simnett et al., 2009b). Research found that the external assurance of voluntary reports can
also be valuable for investors (Dhaliwal et al., 2011; Edgley et al., 2010; Wallage, 2000).
The adoption of assurance practices and the quality of sustainability assurance does,
however, vary significantly (Perego and Kolk, 2012; Romero et al., 2014).
In a recent review on the current state of integrated reporting (IR) research, Dumay et al.
(2016, p. 174) found that there “(…) is a lack of research into how organizations apply IR.”
More specifically they state that there are no published articles on IR assurance. The study
at hand tries to fill this gap by analyzing the company’s motivation to assure its integrated
report and the role of auditors within the assurance process (Cheng et al., 2014; Cohen and
Simnett, 2014; Jensen and Berg, 2012; Simnett and Huggins, 2015). In particular, we seek
answer to two related research questions:
RQ1. Why do companies assure voluntarily their integrated reports?
RQ2. What role do auditors play in the IR assurance process?
The two questions are important from both, a theoretical and a practical perspective.
From a theoretical perspective, we combine the literature on IR with institutional
theory (Cohen et al., 2012; DiMaggio and Powell, 1983; Meyer and Rowan, 1977), the
diffusion of innovations theory (Rogers, 2003), and agency theory ( Jensen and
Meckling, 1976) for gaining a better understanding of a company’s willingness to
assure their integrated reports. The broad theoretical basis allows for a thorough
empirical analysis of motives and drivers to assure reports. By doing so, this paper
extends the existing literature on the assurance of voluntary reports (e.g. Deegan et al.,
2006; Hasan et al., 2003; Hodge et al., 2009; Junior et al., 2014; Kolk and Perego, 2010;
Manetti and Becatti, 2009; Park and Brorson, 2005; Perego and Kolk, 2012; Pflugrath et al.,
2011; Simnett et al., 2009b) while focusing on the specific case of IR. Furthermore, we
respond to a call for deeper insights in the auditor’s role within the assurance process
(Cheng et al., 2014; Jensen and Berg, 2012).
From a practical perspective, the question of the companies’ motivation is of high
relevance for accounting companies. Auditors need to understand companies’ intention
toward IR to align their assurance services. Investors need to further understand the role of
accounting firms in assuring non-financial information so that this kind of assurance
process gets legitimized. Moreover, there is a need for further in-depth analysis about the IR
assurance practices of auditors (Simnett and Huggins, 2015). Such findings may contribute
to the recent discussion on IR assurance and illustrate the possible value-add of obtaining
IR assurance. Company representatives can figure out whether the stated arguments for IR
assurance are applicable to their own company.
To gather the relevant information for our study, we conducted in total 25 interviews Third-party
with representatives of auditors and of companies that already publish or are currently in assurance in
the process of implementing IR. The interview material is complemented by the analysis of integrated
published and internal documents.
The paper has the following structure. In the next section, we give an overview of the reporting
assurance literature with the special focus on IR and sustainability reporting (SR). This is
followed by the development of the theoretical framework including institutional theory,
diffusion of innovations theory, and agency theory. Subsequently, we describe the process
of data collection and data analysis. Finally, we present and discuss the empirical results.
Literature review
Non-financial information and IR
The concept of IR originates from prior concepts and developments (Haller and Van Staden,
2014). First, investors’ rising need for non-financial information stimulated companies to
publish social indicators in the 1970s, environmental figures in the 1990s, and entire
sustainability reports in the beginning of this millennium (e.g. Bullough and Johnson, 1995;
Cramer et al., 2006; Graafland, 2002; Harte and Owen, 1991). On the other hand, four former
partners of PricewaterhouseCoopers introduced the “Value Reporting” concept in 2001,
where companies rather adapt to the dynamics of globalized markets and focus on its value
creation process (Eccles et al., 2001). Based on both ideas, the IIRC has established a
framework that encourages companies to communicate their strategy, governance,
performance and prospects to create value over the short, medium and long term
(IIRC, 2013). The reasons for the development of this new reporting format have already
been studied (e.g. Adams and Simnett, 2011; Krzus, 2011; Rowbottom and Locke, 2016).
For instance, Adams and Simnett (2011) state three key changes as reasons for the
emergence of IR. First, the evolution in regulation and standards like the harmonization of
standards through IFRS, second, the establishment of combined reporting frameworks, and
third, the growth of reliable metrics for measuring non-financial factors.
The increased information needs of investors have led companies to publish a higher
variety of reports ( financial, sustainability, corporate sustainability, and governance)
which were subsequently combined in a single document. Meanwhile, more companies
have started to implement and publish integrated reports (e.g. Eccles and Serafeim, 2013;
Knauer and Serafeim, 2014; Parrot and Tierney, 2012; Wild and Van Staden, 2013). The
increased popularity of IR is based on several benefits (e.g. Eccles and Serafeim, 2015;
Sierra-García et al., 2013; Steyn, 2014; Zhou et al., 2017). For instance, Steyn (2014)
conducted a study with CEOs, CFOs, and senior executives of South African listed
companies to examine their perceived benefits of IR. Hereby, he determines an improved
corporate reputation, a higher stakeholder engagement and more satisfied investors. Zhou
et al. (2017) explore IR’s benefits from an investors’ point of view and find that analysts’
forecast error significantly reduces if the report is aligned to the IIRC framework.
Moreover, this alignment also lowers the cost of capital. IR is a medium to communicate
the overall performance and strategy of a company by not neglecting relevant
non-financial information (Sierra-García et al., 2013).
There are also more sceptical views on the success and value of IR (Dumay et al., 2016).
Brown and Dillard (2014) criticize IIRC’s proposals for the ignorance of stakeholder
accountability and the limited approach to report sustainability information. Flower (2015)
claims that the IIRC’s framework is of limited importance due to a lack of enforcement.
As there is no unique, mandatory standard, companies are only reluctantly implementing
IR. Moreover, Flower (2015) deplores the neglect of sustainability accounting within IIRC’s
concept. Thus, investors are prioritized over other stakeholders and the IIRC is dominated
by accountancy firms and multinational enterprises. Although IR aims at improving the
AAAJ transparency and materiality of information, several studies showed an inadequacy of the
reported non-financial information and a failure of providing useful information to
stakeholders (e.g. Barone et al., 2013; Milne et al., 2009; Wild, 2008).
IR assurance
There are only very few studies considering the assurance of integrated reports (e.g. Cheng
et al., 2014; Huggins et al., 2015; Simnett and Huggins, 2015; Stubbs and Higgins, 2014). Most
of them are rather conceptual and outline challenges that are associated with the entire
assurance process. Huggins et al. (2015) state practical challenges as whether conventional
standards are applicable to assure an integrated report and technical challenges as how to
assure future-oriented information. Cheng et al. (2014) enrich this discussion by providing
further insights from South Africa. Although companies in South Africa need to publish an
integrated report, its assurance is limited to single sustainability figures, a GRI application
level check, and three accountability principles. Further, they discuss whether IR assurance is
applicable without knowing and understanding the underlying processes. Eccles et al. (2012)
express concerns of accounting firms about the liability of assurance. Stubbs and Higgins
(2014) also question whether the IIRC framework is a suitable criterion to assure integrated
reports. Simnett and Huggins (2015) emphasize assurance companies’ problem of requiring
more sophisticated assurance skills and a rethinking in auditors’ mind-sets when assuring
integrated reports. Although many theoretical concerns exist, Kolk (2008) clarifies an
increasing interest of companies in the external examination of their integrated reports.
Additionally, the IIRC also states the necessity of external assurance to ensure reliability and
credibility of the reports and has, therefore, established a public consultation process and
published a discussion paper on IR assurance (Huggins et al., 2015).
SR assurance
In recent years, the number of companies assuring their sustainability reports (SR) has increased
(FEE, 2004; KPMG and UVA, 2005; KPMG and UVA, 2008; KPMG and UVA, 2011; KPMG and
UVA, 2013; Simnett et al., 2009b). The 2013 KPMG Survey of Corporate Responsibility Reporting
states that 59 percent of the Fortune Global 250 companies have verified their SR by an external
auditor. From 2002 onwards, this rate has continuously increased (2002: 29 percent, 2005: 30
percent, 2008: 40 percent, 2011: 46 percent). Based on this development, research examined the
reasons for the increasing popularity of SR assurance (e.g. Herda and Taylor, 2009; Kolk and
Perego, 2010; Peters and Romi, 2015; Simnett et al., 2009b). Besides increasing the credibility and
reliability of SR, research found reasons such as improving corporate reputation, implementing
useful control mechanism for monitoring internal sustainability figures, improving data
measurement systems, and revising internal reporting (Deegan et al., 2006;
Marx and Van Dyk, 2011; Simnett et al., 2009b). Organizations, such as GRI and KPMG,
recognize a positive impact of independent assurance on the quality of SR (Global Reporting
Initiative, 2002; KPMG and UVA, 2008). Empirical research supports this view (Aw et al., 2009;
Gillet, 2012). In a survey of Australian companies, Aw et al. (2009) confirm that disclosed
information is of higher quality if it is externally verified. Moroney et al. (2012) support this
argument by demonstrating a quality increase of environmental disclosures if the corresponding
report is assured. Peters and Romi (2015) examine the association of sustainability governance
characteristics and SR assurance. They provide evidence that the existence of a corporate
sustainability officer positively affects the likelihood of adopting SR assurance.
The assurance of sustainability information does generally enhance the credibility and
improves the perceived reliability of sustainability reports (Ackers, 2009; Cohen and
Simnett, 2014; Edgley et al., 2010; Hodge et al., 2009; Junior et al., 2014; Perego and Kolk,
2012; Pflugrath et al., 2011). Several studies examined the role of assurance providers for SR
assurance and its impact on the quality of assurance statements (e.g. Aw et al., 2009;
O’Dwyer and Owen, 2005; Perego, 2009; Simnett et al., 2009b). As the practice of assuring Third-party
sustainability reports is a recent phenomenon and not yet regulated, there are several assurance in
different assurance providers in the market (Deegan et al., 2006; Junior et al., 2014; integrated
O’Dwyer and Owen, 2005; Perego, 2009; Romero et al., 2010). Quite a few authors distinguish
assurance providers in accountants and non-accountants (including consultants, reporting
certification bodies, and non-governmental organizations) (e.g. Gomes et al., 2015;
Hodge et al., 2009; Perego, 2009; Perego and Kolk, 2012; Romero et al., 2010) and explore
their implications on assurance practices. For instance, Hodge et al. (2009) expose that
non-accountants, in contrast to accountants, rather focus on completeness, fairness, and a
comprehensive balance in the given statement. According to Perego (2009), accountants
provide a high quality in reporting formats and procedures while non-accountants ensure
good recommendations and opinions. Romero et al. (2010) investigate a positive relationship
between the size of an accounting firm and the quality provided (see also Mock et al., 2007).
Moreover, they emphasize that accountants generally deliver higher quality assurance
statements than non-accountants. In contrast, Aw et al. (2009) did not find any evidence for
different quality standards between accountants and non-accountants. Companies, located

in shareholder-oriented countries and having a low level of litigation, rather choose large
accounting firms for assuring their sustainability reports (Kolk and Perego, 2010).
Furthermore, Simnett et al. (2009b) find a high assurance rate of professional accountants
for companies located in stakeholder-oriented countries. Concluding, Hodge et al. (2009)
underline a higher perceived reliability of sustainability reports if they are assured by
accountants instead of non-accountants. Additionally, choosing an assurance provider of
the accounting profession has a positive impact on user confidence in sustainability
information (Hodge et al., 2009).
Due to the fact that assurance of sustainability reports is still voluntary and no coherent
standard for assuring these reports exist, research has explored the available standards and
their impact on assurance practices (e.g. Deegan et al., 2006; Iansen-Rogers and Oelschlaegel,
2005; Simnett, 2012). There are currently two predominant standards that are used for SR
assurance ( Junior et al., 2014; Manetti and Becatti, 2009; Martinov-Bennie et al., 2012; Marx
and Van Dyk, 2011; Simnett, 2012). First, AccountAbility released in 2003 the AA1000
Assurance Standards (AA1000AS) and subsequently, the International Audit Assurance
Standards Board published the International Standard on Assurance Engagements
(ISAE3000). Based on Deegan et al. (2006), Mock et al. (2007), Perego (2009), and Simnett
(2012), accountants rather use the ISAE3000 and non-accountants tend to apply the
AA1000AS standard for assuring SR. Iansen-Rogers and Oelschlaegel (2005) conclude that
the combination of these two standards leads to a better result than using both standards
separately. Thus, they are not in conflict but rather complementary (Gillet, 2012;
Gomes et al., 2015). In a study of KPMG, the researchers recognized a different assurance
statement when both standards were used separately (KPMG and UVA, 2005). While using
the AA1000AS results in a very “strengths and weaknesses” focused statement, choosing
the ISAE3000 rather highlights the limitations of corporate reporting.
Theoretical framework
Institutional isomorphism
New-institutionalism addresses the question of homogenization processes in organizations
(DiMaggio and Powell, 1983; Meyer and Rowan, 1977). DiMaggio and Powell (1983) use the
concept of isomorphism to explain why organizational structures and processes homogenize
after a while. Hereby, corporate decision makers are getting aligned to their environment
and adopt organizational practices intentionally or unintentionally for receiving legitimacy.
Institutionalism assumes a strong impact of the institutional environment on the
development of formal structures. Institutional isomorphism results from three
AAAJ mechanisms: coercive isomorphism, mimetic isomorphism, and normative isomorphism.
Although the three mechanisms are not always distinct, they usually result from different
premises and lead to different consequences. Coercive isomorphism results from external
pressures that are set up directly or indirectly by organizations on which the company is
dependent or by cultural expectations that are deeply ingrained in society’s notions. Mimetic
isomorphism especially occurs in situation of high uncertainty. Companies intend to copy
other organizational structures or strategies if they do have unclear strategic goals
themselves or if the direct environment encourages uncertainty. In such situations, imitating
other organizations becomes a legitimate way to proceed. Normative isomorphism results
from professional groups (e.g. committee groups, consultants, and industry associations)
proclaiming similar approaches and attitudes to induce institutional change. DiMaggio and
Powell (1983) distinguish between two groups of professionals. First, universities and
professional training institutions educate and develop corporate decision makers in a
consistent and predefined way. Second, professional networks within an organization help
to diffuse changes in organizational behavior. Such networks consist of individuals that
exert similar positions and postulate an analog view of corporate’s orientation. The basic
idea of normative pressures is that decision makers with the same educational background
are thinking in the same or at least similar way and, therefore, have a similar approach to
problem solving.
To date, there is no research that examines companies’ attitude toward the assurance of
integrated reports by considering neo-institutional theory. However, several studies have
applied this theory to other areas of accounting (e.g. Kondra and Hurst, 2009; Lasmin, 2011;
Munir et al., 2011; Salomon and Wu, 2012). For instance, Lasmin (2011) conducted a study to
find out which factors influence countries’ decisions to adopt IFRS. Chen and Bouvain (2009)
and Fortanier et al. (2011) used institutional theory as a framework for studying the
convergence of CSR-reporting in several countries. Martínez-Ferrero and García-Sánchez
(2017) studied coercive, normative and mimetic pressures as determinates of the voluntary
assurance of SR reports. Their database includes context factors such as the legal
framework or the national culture in different countries. They show that national differences
of these factors affect the relative strength of coercive, normative and mimetic pressures. At
large, normative pressures are the strongest determinants of voluntary SR assurance
followed by coercive and mimetic pressures. Gürtürk and Hahn (2016) analyze the content of
SR assurance statements applying institutional theory. They find a slowly evolving
homogeneity of assurance statements due to mimetic and normative pressures. Vaz et al.
(2016) analyze country specific determinates of the use of IR from an institutional theory
perspective and find evidence for the influence of factors such as the national culture or the
regulatory framework.
Diffusion of innovations theory

Rogers’ diffusion of innovations theory is among the most popular approaches for studying
the diffusion of innovation in a social system (Becker et al., 2015). According to Rogers, the
diffusion of innovations is communicated with specific channels, over a period of time, by
members of a social system and executed over a five-step approach (Rogers, 2003). These
five steps are: knowledge, persuasion, decision, implementation, and confirmation phase. In
the beginning of the adoption process, decision makers are getting in touch with the
innovation. Within the second phase, persuasion, individuals form a favorable or negative
opinion about this innovation. Following, by weighting the advantages and disadvantages
of applying this innovation, decision makers either support or refuse it. The implementation
of the innovation can be supported or even fully realized by change agents who are often
external consultants. This will be the focus in our research when analyzing the role of
auditors as assurance providers.
To the best of our knowledge, the diffusion of IR assurance was not yet analyzed from a Third-party
diffusion of innovations theory perspective. However, there are a few studies considering this assurance in
theory regarding accounting innovations (e.g. Ezzamel et al., 2014; Johnson, 2015; Becker et al., integrated
2015). By applying Rogers’ theory, Johnson (2015) has focused on the awareness and
implementation of innovative sustainability management tools in small- and medium-sized reporting
enterprises. In this context, this theory is used to identify managerial and organizational
characteristics and to classify the single companies. Ezzamel et al. (2014) focus on the adaption
of resource accounting and budgeting in the UK and apply Rogers’ theory.
Agency theory
Information asymmetry is an important challenge in corporate reporting (Gelb, 2000; Steinle
et al., 2014). Although today companies are more regulated and need to publish more
detailed information, there is still a huge information asymmetry between management and
investors. The recent trends toward IR’s, higher focus on the connectivity of information
and the value creation process of companies, may further help to overcome the lack in
transparency (IIRC, 2013; Wild and Van Staden, 2013; Wulf et al., 2014). Agency theory
states that company’s published information may be used as a mechanism for supervising
executive’s actions ( Jensen and Meckling, 1976). Hereby, the theory especially focusses on
the relationship between principals and agents. In general, the agent has an information
advantage even though he is engaged by the principal. By enforcing regulations and
governance mechanisms, the principal tries to reduce the information asymmetry.
Frías-Aceituno et al. (2014) have considered agency theory in terms of the integrated
sustainability and financial report. By relying on this new reporting format, they confirm
that company’s size and competitive landscape are positively correlated to the amount of
published information (Birt et al., 2006; Hayes and Lundholm, 1996).
The following empirical investigation will be guided by the two research questions and be
theoretically informed by the diffusion of innovations theory, institutional theory and agency
theory. Table I shows the link between the research questions and the theoretical framework.
Data and method

Research design and sample
IR and IR assurance are rather recent phenomenon and the number of firms that voluntarily
seek assurance of their integrated report is still low. Correspondingly, research on IR
assurance is still scarce (Simnett and Huggins, 2015) and a deeper understanding of the
phenomenon of IR assurance is needed before future research can embark on quantitative,
confirmatory studies that are based on large samples. We, therefore, chose a qualitative
approach to explore the company’s motivation to obtain IR assurance and the auditors role
in the entire assurance process (Eisenhardt, 1989; Mayring, 2014).
Theoretical framework
Research questions Diffusion of innovations theory Institutional theory Agency theory
1. Why do companies Weighting of advantages and Coercive, mimetic, Reduction of

assure voluntarily their disadvantages in decision phase normative pressures information
integrated reports? asymmetry
2. What role do auditors Role as change agents promoting and Exert coercive and/or Increase in Table I.
play in the IR assurance supporting IR assurance (mainly normative pressures transparency by Theoretical framework
process? decision and implementation phase) external and research
assurance questions
AAAJ For identifying auditors and practitioners who are intensively dealing with IR, we set three
criteria for selecting target companies: first, the company must either provide IR assurance
or obtain IR assurance. Second, the company must be a member of any kind of German IR
community (e.g. IIRC pilot program, German IIRC Roundtable; Arbeitskreis Integrated
Reporting of the Schmalenbach-Gesellschaft). Third, finally, the target company must have
more than two years of experience in IR. Applying these selection criteria, identifying
eligible companies was challenging. While 555 companies were listed in Germany in 2015
(World Bank, 2015) it is not clear how many companies truly have published an integrated
report. As no unique definition for IR exists, companies can proclaim to publish integrated
reports even though they do not. PricewaterhouseCoopers yearly analyses the German IR
market and found that today there are only six companies that publish a report based on the
recommendations of the IIRC. Thus, these six companies are regarded as the population size
of German IR companies. The reports of these six companies are also assured by auditors
(Pricewaterhouse Coopers, 2016). This ratio is different for the larger number (119) of firms
publishing SR reports in Germany of which only about 50 percent seek assurance
(IÖW, 2016). The six companies have also participated in the IIRC pilot program that aimed
to guide companies to successfully implement the IR concept. While we approached all six
companies, only five of them wanted to participate in our study. Within this study, we
interviewed in total 18 company representatives of five German pilot program participants.
Even though they worked for different departments (e.g. accounting, corporate reporting,
investor relations, sustainability), all of them were involved either in the implementation
process of the integrated report or in the daily reporting business. The companies in
our sample operate in different industries: chemicals, energy, finance, software engineering,
and transportation.
Additionally, we interviewed in total seven representatives of accounting firms of which
six individuals were working for the big four accounting firms. As is the case for many
countries, the German market is largely dominated by the big four accounting firms.
Looking at the total turnover of the 25 biggest accounting firms in Germany, the big four
account for 79.6 percent (Lünendonk, 2016). Not all the smaller firms are offering IR
assurance yet. For avoiding a potential “big-four bias” we included a smaller consulting firm
that is specialized in accounting and control in our sample. Although this company does not
assure integrated reports, it provides guidance on the implementation of integrated reports.
Tables II and III provide further details of the interviewed companies and the respondents.
Data collection
We applied data triangulation and used several methods to collect data. To ensure construct
validity and internal validity, we considered archive materials and interviews
(Merriam, 2002; Yin, 2003). The archive materials included annual reports, company
publications and studies, internal documents, and websites.
We got in touch with our interview partners in three different ways. First, the author’s
institute is in continuous exchange with some of the company representatives. The small
German IR network facilitates a deep and straightforward exchange about new
developments in the IR community. When these individuals heard about our study they
were interested in participating. Second, further companies were addressed by one of the
institute’s partners. This partner has an extensive network in the accounting community
and rendered assistance in approaching additional interview partners. Third, the authors
directly contacted the remaining German IIRC pilot program companies and employees of
the accounting profession.
In conducting the interviews, we proceeded in two steps. When talking to the companies
who are obtaining assurance, we first interviewed our initial contact person. Subsequently,
this contact arranged further interviews with additional colleagues dealing with IR.
Company detail Company 1 Company 2 Company 3 Company 4 Company 5
Third-party
assurance in
Industry Information Transportation Energy and Services Chemicals/ integrated
technology thermal petrochemical
engineering technology reporting
Legal structure Public limited Limited (Ltd) Public Public limited Public limited
company (PLC) limited company company
company (PLC) (PLC)
(PLC)
Sales (in mio. €) 17,560 1,200 24,107 2,043 70,449
Investors International International International International International
Size (nb. of employees) 74,406 7,861 19,989 3,911 112,435
Respondent details
Number of interviews 5 5 2 4 2
Number of accounting 2 3 1 1 2
respondents
Functional Corporate Corporate Audit, Consolidation, Strategic

background of planning, planning, group accounting, accounting, planning,
respondents inventory controlling, corporate valuation corporate
management, financial reporting controlling,
accounting, reporting sustainability
financial relations
reporting
Number of 2 1 – 1 –
communication
respondents
Functional Investor Corporate – Investor –
background of relations, communications, relations,
respondents controlling, public relations stakeholder
sourcing and management
vendor
management
Number of 1 1 1 1
sustainability
respondents
Functional Press, Strategy, Corporate Sustainability
background of sustainability sustainability social management
respondents responsibility
Number of human – – – 1 –
resources respondents
Functional – – – –
background of
respondents
Experience of 4 4 6 3 2
respondents working
in the respective Table II.
function (average Overview of the
number of years) sample firms
By questioning the auditors, we first conducted an interview with the consultancy colleague,
followed by the colleague from the accounting profession. The single interviews lasted from
30 to 90 minutes. Of the 25 interviews, 20 were conducted at the interview partner’s office
and the remaining five were undertaken by telephone. The interview guideline was always
sent to the interview partner in advance. By conducting semi-structured interviews, the
interview guidelines rather served as a guiding instrument of which, depending on each
AAAJ Company detail Company 6 Company 7 Company 8 Company 9 Company 10
Industry Accounting, Accounting, Accounting, Accounting, Consulting

assurance, assurance, assurance, assurance,
consulting consulting consulting consulting
Legal structure Swiss Limited (Ltd) depending on depending on Partnership
cooperative country country
Sales (in mio. €) 24,440 35,200 28,700 35,400 120
Size (nb. of employees) 173,965 225,400 212,400 208,109 600
Respondent details
Number of interviews 2 2 1 1 1
Number of accounting 1 1 1 –
respondents
Table III. Number of assurance 1 1 1 – –
Overview of the respondents
accounting, assurance, Number of consulting – – – – 1
consulting firms respondents
case, the researchers have deviated. Such a semi-structured guided questionnaire implies
freedom and flexibility while keeping the concrete research questions in mind (Yin, 2003).
We developed two different interview guidelines. First, we generated a guideline for the
companies (see Appendix 2). Besides the motivation to assure an integrated report we also
asked our interview partners about the development toward IR and the consequences of the
adaption of IR and IR assurance for internal processes. The interview guidelines were
further adapted to the company context of the respective interview partner. Here, we also
asked for the intention to obtain voluntarily IR assurance and on its consequences for the
organization and internal processes. Second, in developing the interview guideline for
the accounting firms we had to select different questions. This guideline focused on the
tasks and duties of accounting firms in the IR assurance process and the creation of IR
standards (see Appendix 3). The role of single auditors and their intention toward IR were
hereby of peculiar interest.
The interview guidelines served as stimuli for the discussion with the respondents but
they do not represent a complete list of standardized questions. In the case of interviewees
not fully covering all aspects of a topic we asked further questions. In all the interviews, we
took field notes for highlighting special topics (Patton, 2002). With participant’s approval,
the interviews were recorded and subsequently transcribed. On request, company
representatives could review the transcripts and add further comments.
Data analysis
The data analysis was guided by the theoretical framework and the research questions
following a standard procedure in qualitative content analysis (Mayring, 2014). After
collecting all transcripts, we started to review and analyze the information. We analyzed
and coded each transcript separately to ensure a holistic and objective view on the data.
Hereby, we applied a three-step approach to reduce information, present data, and draw
implications (Huberman and Miles, 1994; O’Dwyer, 2004; O’Dwyer et al., 2011). By reading
the transcripts, several key issues were identified that helped to answer the research
questions. For each issue, an individual coding scheme was used whereby the authors
especially watched out for contradictions among the single transcripts (Patton, 2002).
We started with open coding of the raw data and extracted first-order categories. In a
second step, we went through the entire interview material and re-examined the initial codes
by identifying relationships among the open codes. This axial-coding procedure resulted in
second-order themes which we related to the different research questions (Glaser 1992; Third-party
Strauss and Corbin, 1990). Thus, we combined a more inductive (open coding) with a more assurance in
deductive (axial coding) approach (Mayring, 2014). integrated
Figure 1 provides an example for the coding procedure. It starts with a quote from an
interview with an accounting company. The first-order code assigns this quote to the reporting
category “published information shall be validated and reliable.” Axial-coding as the next
step assigns this category to the second-order theme “motivation to voluntary third-party
assurance” which corresponds to the research question: “Why to companies assure
voluntarily their integrated reports?” Table IV summarizes the most important first- and
second-order categories.
Results and discussion

Motivation to assure voluntarily integrated reports
Based on Park and Brorson (2005) and Junior et al. (2014), we asked the assurance provider
and assurance receiver why an IR assurance process is conducted. This question was
answered by both groups similarly. Overall, the interview partners named three reasons for
the voluntary assurance of an integrated report: appreciation of non-financial information,
published information shall be validated and reliable, and initiator for internal processes.
This finding is in line with research on SR assurance. Herda and Taylor (2009), Kolk and
Perego (2010), and Simnett et al. (2009b) have demonstrated that the assurance of
sustainability information increases the credibility and reliability of information. Company
representatives experience this perception in their daily business. They believe that
Open coding Axial coding

Sample quote First-order categories Second-order categories
“[…] I think it is mainly the

acceptance or the integrated Published information Motivation for
report, this is in the focus […].” shall be validated and voluntary third-party
(Respondent Y, Assurance reliable assurance Figure 1.
company 10) Coding example
First-order categories Second-order categories
Appreciation of non-financial information Motivation voluntary third-party

assurance
Published information shall be validated and reliable
Builds trust of investors
Establishes credibility
Initiator for internal processes
Establishing one single report and connectivity of information Role of auditors in IR assurance
Integrated thinking, combining financial and non-financial
information
No standard procedure, depends on customer
Value creation process over short, medium, long-term
Integrative role of auditors for client firms
Stimulus for IR implementation process
Training of employees required Impact on internal processes
Increased coordination efforts Table IV.
Adaptation of information systems First- and second-
Synchronization of several standards (IFRS, GRI, etc.) is expensive order categories
AAAJ investors are gaining trust in company’s non-financial information since these were assured
externally. Overall, they considered the appreciation of non-financial information necessary
for staying credible toward their investors. With respect to the company representatives,
such an appreciation can only be reached by obtaining external assurance:
First of all, if you publish an integrated report, then you want to clarify that financial and non-
financial information has an equivalent meaning. To appreciate the value of non-financial
information, companies consider the assurance of such information, as they do for financial
information. (Respondent C, company 1)
Besides the appreciation of non-financial information, company representatives also said
that the validation of such information was an important element in company’s publication
procedure. Based on their assurance experiences of financial information, they perceive
external assurance as a further support for data quality. This finding relates to the studies
of Marx and Van Dyk (2011) on SR assurance in South Africa and Aw et al. (2009) in
Australia. By obtaining assurance, the company can always refer to the auditor in case of
any inconsistencies in the accuracy of information:

If companies publish any kind of information they want to ensure that this information is
absolutely correct. For them, it would be embarrassing and can become costly if they published any
flawed information. (Respondent F, company 2)
Finally, interview partners also mentioned that the assurance of non-financial information
supports and initiates internal processes. For instance, when one company examined the
impact of non-financial information on financial information, it was supported by the
experience of the auditor. Additionally, the auditor must critically scrutinize the procedure
and any changes in the reporting process. Thus, it is always an important hint and
challenge for the correctness of applied procedures and reported information:
Moreover, the assurance of information in general always supports internal processes. When
companies implement something for the first or second time, the employees are always pleased if an
auditor verifies the validity and robustness of the implemented processes. (Respondent T, company
6 – assurance)
Our interviews revealed that IR assurance affects internal processes in companies in several
ways. First, it increases the information and coordination requirements between different
parts of the organization. Coordination becomes more time consuming but it can also
increase the quality of reports and information exchange between departments:
To implement IR successfully, it is important to involve and integrate representatives from all
relevant departments […]. (Respondent J, company 2)
IR promotes networking of internal departments in daily cooperation. Since the introduction of this
new reporting format, employees that have previously never networked suddenly communicate.
(Respondent L, company 3)
Second, the increased coordination efforts often require an adaptation of information
systems which can be expensive if the legacy system is not flexible enough. Conventional
IT-systems may not allow for integrating and processing non-financial indicators into the
existing data warehouse. Third, for IR assurance the synchronization of several accounting
standards can be a challenge as employees may not be knowledgeable about different
standards and further training is needed:
A change in corporate reporting always means that colleagues need to adapt their skills and get
further trainings. For instance, in the financial sector the HBG or IFRS are common standards, in
sustainability the GRI is the leading standard, and in integrated reporting we do have now the
IR-framework. My colleagues and I have to get used to it. (Respondent B, company 1)
Most of the impacts of IR assurance on internal processes lead to additional costs. When Third-party
asking the auditors why some of their clients do not assure their integrated reports, high assurance in
assurance costs were also mentioned as the main reason. This finding confirms an earlier integrated
study on voluntary SR assurance (Park and Brorson, 2005) where high costs were among
the reasons preventing firms from seeking assurance. reporting
Another reason for not seeking assurance is unpleasant assurance results. One interviewee
provided an example of a firm that reported very positive financial results due to continued
growth. This corresponded to a significant increase in business travel and a more negative
carbon footprint. The assurance revealed these inconsistencies between financial and
non-financial results and pointed to potential problems related to the firms’ growth strategy.
Moreover, some clients were not convinced that IR is a sustainable trend in corporate
reporting and thus an investment in such a new assurance procedure would not be
worthwhile. One interview partner stated that based on her experience, Germans are
laggards who only follow a new development when it is regulated and mandatory. All
companies consider IR as a burdening change in corporate reporting as similar information
is already included in the management report:

Implementing integrated reporting always means an additional effort that generates additional costs.
Moreover, assuring such information can always result in negative audit results. The assurance
process exerts much pressure on an organization, which is not welcomed by all employees. Especially
in such a transition phase, where clear rules and procedures are not given, support may quickly and
suddenly shrink if the required effort increases. (Respondent I, company 2)
In line with institutional theory, we find that companies’ motives for obtaining IR assurance rely
on coercive pressures. External validation, reliability, and the appreciation of non-financial
information were the main motives for companies to apply IR assurance. Validation and
reliability are essential to fulfill the requirements of organizations on which the company is
dependent (e.g. institutional investors, rating agencies), and the appreciation of non-financial
information is required by society. All interviewed firms stated that NGOs, investors, and
customers are the main stakeholder groups promoting assurance. Due to the companies’
dependency on their stakeholders, coercive isomorphism is the key driver for companies’
intention toward the engagement of accounting firms for obtaining IR assurance. The two other
pressures, mimetic and normative, seem to play only a minor role. These results differ from
Martínez-Ferrero and García-Sánchez’s (2017) study on voluntary SR assurance. They found
normative pressures being more important than coercive pressures. However, their study is
based on secondary data including several countries not allowing for a direct comparison of the
results. Our results do not give a hint for mimetic pressures or normative pressures. Although
accounting firms try to offer further services and enlarge their business portfolio, the empirical
material does not allow for drawing any conclusions about normative pressures.
From the perspective of agency theory, a company’s intention to appreciate non-financial
information is a further hint toward the reduction of information asymmetry. Similar to
findings on voluntary SR assurance (Simnett et al., 2009a), non-financial information
generates significant value for investors because they give some indication of the real
situation and non-transparent procedures within a company. This development shows
company’s (agent) willingness to get more transparent toward the stakeholder (principal)
and contributes to the reduction of agency costs.
Auditor’s role in providing IR assurance

Besides the companies’ motivation to assure an integrated report, we study the auditor’s role
in providing IR assurance. We especially consider its role as a change agent in implementing
IR assurance. The respondents were interviewed about their IR definition, their internal IR
application, practical experiences, and procedures when assuring an integrated report.
AAAJ The auditors recognize a certain vagueness in terms of the IR definition. Overall, the
respondents support the IIRC definition (IIRC, 2013, p. 29) and define an integrated report as
“a concise communication about how an organization’s strategy, governance, performance
and prospects lead to the creation of value over the short, medium and long term.” However,
in daily business their clients rather define IR as a simple combination of two approaches,
the conventional financial and SR. Companies integrate sustainability indicators in the
management report and adapt its structure so that the entire management report appears
integrated. Due to the fact, that there is still no regulated or binding definition, the auditors
follow the definition of their clients. In the long-run, the auditors are bent on leading
companies to adapt IIRC’s definition:
In practice, it is believed that a combination of sustainability and financial reporting results in an
integrated report. As a consultant or auditor we are directed to the definition of our clients. Overall,
we cannot pronounce a general definition. As a company, we are trying to consider the official
definition named in the IIRC Framework. (Respondent W, Company 8 – assurance)
There is no exact point in time since auditors in Germany are concerned with IR. Some
auditors consider this new reporting approach since the Danish pharmaceutical firm Novo
Nordisk published its first integrated report in 2004. In Germany, the chemical company
BASF was one of the first companies that discussed the combination and integration of
financial and non-financial indicators. Since 2007, BASF officially publishes a report that
combines financial and sustainability figures. Subsequently, several auditors have started
to consider this new reporting format. When the IIRC was founded in 2010, the “big four”
accounting firms started to participate actively in IR committees and set up studies to show
their IR expertise. These accounting firms today are offering consultancy and conceptual
solutions for IR.
Company publications, internal documents and our interviews revealed that there are
different ways on how auditors support and promote IR. For instance, they organize events
where IR and its guidelines are discussed, give lectures on the concept and its benefits,
conduct practice-oriented studies, assure clients’ reports, or engage in committee work
where the future development of IR is debated. By using all these activities accounting firms
try to generate revenue, gain a competitive advantage and to make IR more popular.
Meanwhile, auditors have made several practical experiences with IR. They do not see
currently any company in Germany that fulfills all requirements of the IIRC framework.
Of the six companies that participate in the IIRC pilot program, there is only one that has
tried to implement the request of connecting financial and non-financial information.
Moreover, our interviewees believe that German non-financial reports in general often lack
in terms of transparency or materiality. However, the respondents see a slow but steady
development of corporate reports toward a full accordance with the IIRC framework:
One lessons learned from the last couple of years is that companies are faced to a long journey to
fulfill all requirements of the IIRC framework. To do so, companies need not only to implement this
report, they also have to adapt their corporate strategy and business model. (Respondent X,
Company 9 – assurance)
To date, there is no uniform procedure to assure an integrated report. The vague legal
situation and the inconsistent definition of the report itself are reasons for the different
assurance procedures. All companies agree on getting an overview of the presented report,
meaning its structure, thematic priorities, and significance of non-financial information.
The companies, however, differ in the elaboration of the last aspect. Some auditors simply
consider the quantity of given non-financial information, others also challenge the quality,
composition, and derivation of such information. The accounting firms also differ between
limited and reasonable assurance. Limited assurance means that the assured report is in
accordance with the respective standard or framework. In contrast, reasonable assurance Third-party
confirms that the given figures are correct. Due to the missing legal foundation of the IIRC assurance in
framework, most auditors only issue limited assurance certificates. integrated
One respondent noted that the derivation and the logical integration of non-financial
information into the conventional report are the biggest problems for companies when reporting
implementing IR. This observation was supported by a respondent of one of the companies
pointing out that the integration of qualitative and quantitative data can be very challenging:
First we need to increase the robustness of our data. Then we have to describe causal relationships
only qualitatively and afterwards quantitatively. To date we have already described the first
qualitative relationships. In quantifying the non-financial data, however, we have serious problems.
(Respondent T, Company 6 – assurance)
Another company had resolved this problem and quantified non-financial indicators in a
way that allowed them to calculate the impact of a one percent increase of any non-financial
indicator (e.g. employee satisfaction or CO2 emission) on their operating income. Auditors
need the methodological and technical knowledge to fully understand the entire procedure
to issue an attestation.
Additionally, one interview partner referred to the voluntariness of IR assurance.
Therefore, the scope and profundity of the attestation is dependent on company goals.
In this context, the assurance certificate simply confirms the correctness of the given
information. But this certificate does not describe how the information was confirmed and
which single standards were used as a benchmark. For this service, auditors offer a separate
written confirmation. Overall, the entire audit procedure becomes more complex and time
consuming. Several audit experts from different subject areas (e.g. financial, sustainability)
are involved in the process and need to work together when financial and non-financial
indicators are integrated. Moreover, the much more diverse topics increase the number of
necessary counterparts in client companies. Besides employees from the finance and
controlling department, auditors must talk to sustainability, strategy, and human resource
experts when assuring an integrated report:
Basically, there is no standard approach for the assurance of integrated reports. Depending on our
customer needs the scope and the quality of our assurance service differs. (Respondent S, Company
6 – assurance)
These results do have several implications for the cooperation of companies and auditors in
implementing IR assurance. Regarding the diffusion of innovations theory (Rogers, 2003),
auditors as change agents have a significant role in supporting companies in the decision and
implementation phase of innovations. In this case, companies highly rely on auditor’s
expertise. So far, accounting firms do not agree on a consistent IR definition. They often follow
the definition of their clients (which means a simple combination of financial and non-financial
information) and only a small number of auditors proclaim the official IIRC definition. In our
interviews, one accounting firm explicitly called for the adoption of the IIRC definition. The
assurance of integrated reports that are based on a commonly, worldwide accepted standard
would create more legitimacy for firms publishing integrated reports. Given the small number
of firms currently seeking external assurance of their integrated reports, it seems too early to
tell if there will be a future convergence of IR assurance formats. For SR assurance, Gürtürk
and Hahn (2016) recently found evidence for a slowly increasing homogeneity of assurance
statements. Conducting a content analysis of SR assurance reports, they attribute this
development to mimetic and normative pressures on the accounting firms. A similar
development may lead to a convergence of IR assurance in the future.
At this stage, accounting firms have different attitudes toward IR and IR assurance.
While some auditors see IR assurance as an innovative approach, others are not convinced
AAAJ by the long-term success and enforcement of this reporting format. Thus, the auditors also
engage differently in the conceptualization and its diffusion. Basically, all auditors inform
their clients about the chances and challenges that are associated with IR. However, the
number of publications, official events, and the engagement of single assurance providers
differs significantly. This leads to a different awareness of accounting firms as being a
change agent in IR.
In addition, accounting firms also have an impact on the degree of IR conversion. The more
auditors advertise the new reporting format, the more companies are getting aware of its
benefits and the more companies are willing to apply it. Among our interview partners there is
only one company that has started to adopt a full technical application of IR. Hereby, the
knowledge and practical experience of auditors is essential for being a support in the
implementation phase. If accounting firms do not dispose of full methodological and technical
knowledge in transforming conventional reporting toward IR, they will only be perceived as
initiators but not as change agents guiding the entire implementation process. This
particularly applies to the question of how to integrate financial and non-financial information.
By providing a standardized assurance process, accounting firms increase their

legitimation for being an independent and sincere authority. One of our interviewees
suggested that auditors should separate their IR product portfolio in limited and reasonable
assurance. These two services underline that accounting firms have already thought about
the challenges of assuring an IR. Since integrated reports are future oriented, auditors are
facing the problem of assuring non-predictable circumstances. According to our
respondents, this is the reason why most auditors currently only declare limited
assurance. They are not able and not allowed to assure non-predictable information.
In the light of our theoretical framework, accounting firms do have an important role as
change agents in the implementation of IR assurance standards. Although they are not
always responsible for the implementation itself, auditors give important stimuli for such a
process. Our interviews revealed that companies highly rely on the opinion of the big four
accounting companies when implementing IR and obtaining IR assurance. However, other
institutions such as universities or NGOs are further actors that are exerting coercive
pressures. As mentioned by one of our interviewees, accounting firms are well connected to
regulators, relevant institutions, and working committees. Usually, they participate in all
kind of councils, engage in the development of new accounting standards and try to
influence new policies via lobbying. For instance, the spending for lobbying in the USA of
PricewaterhouseCoopers was more than 2.8 million Dollars in 2015 (Center for Responsive
Politics, 2016). Auditors also support the IR initiative and comment regularly IIRC’s new
guidelines and principles. Institutions such as the IIRC rely on auditor’s skills and
knowledge and get inspired by their practical and theoretical experience with all kind of
assurance issues. By considering the entire network, accounting firms are important players
that may further reduce the information asymmetry between stakeholders (principal) and
company representatives (agent) and may help to strengthen stakeholder’s trust in
manager’s actions.
Conclusion
This paper presents first empirical evidence of companies’ motivation toward voluntary
third-party assurance of integrated reports and the role of accounting firms in the overall IR
assurance process in the German context. While research has already considered SR
assurance, no study has so far examined the relation between IR and assurance (Cheng et al.,
2014; Cohen et al., 2012; Jensen and Berg, 2012; Simnett and Huggins, 2015). We contribute to
the literature by presenting a study on a topic where Dumay et al. (2016) recently stated a
lack of IR research: more generally, we provide insights into how organizations apply IR and
more specifically, we study IR assurance.
We questioned company representatives why they obtain voluntarily IR assurance and Third-party
asked auditors about their attitude toward IR assurance, their role in promoting and assurance in
supporting assurance and the outlook of IR assurance. Moreover, we conducted interviews integrated
with assurance providers about the IR assurance process. Hereby, we especially focused on
the auditor’s role in the IR assurance process, the IR assurance procedure, and relevant factors reporting
associated with IR assurance standards. Our results clarify that both accounting firms and
regulators in Germany are still far from applying a standardized IR assurance process.
Our study contributes to the growing IR literature by providing a theory-based analysis
of the current state of IR assurance. The empirical results can be explained in the light of the
three theories of our theoretical framework. By applying the theory of institutional
isomorphism, we found clear evidence for coercive pressures. Companies are facing coercive
pressures in their direct environment. Our findings can also be explained by the diffusion of
innovations theory when emphasizing auditors’ role as a change agent in implementing this
new reporting format. Moreover, the results underline the meaning of the IR assurance
process to gain more transparency in corporate reporting and to overcome information
asymmetry, related to agency theory, between investors and company representatives.

The results of our study can also be helpful for practitioners. We provide knowledge on the
companies’ reasons for obtaining IR assurance and illustrate the auditors’ role in implementing
and conducting IR assurance. This knowledge can serve as decision support for executives
whether to implement IR assurance and to consult auditor’s expertise. In addition, this study may
serve as a basis for the implementation of IR assurance. For accounting firms, this study also
demonstrates the increasing potential and interest of auditors in this innovative reporting format.
Although the study provides important insights on the motivation for IR assurance and the
role of accounting firms, there are several limitations that must be considered and may be eluded
by further studies. First, the qualitative study design allowed for a small sample size only which
limits the generalizability of the results. By interviewing 25 experts from industry and the
accounting profession, we could only gain first insights on the companies’ intention toward IR
assurance. This database can be enlarged when different countries are considered. Due to the
limited number of companies publishing integrated reports in Germany, further studies should
include companies from countries where IR is more common to allow for international
comparisons. Countries differ not only in their legal framework and regarding the publication of
non-financial information but also in cultural values that may influence the attitude toward
assurance (Kolk and Perego, 2010; Martínez-Ferrero and García-Sánchez, 2017). Thus, the
motivation to publish IR reports and to assure the reports may also differ across countries.
The selection of interview partners involves another potential limitation. Although we
carefully selected our respondents, we cannot fully rule out that results may be biased
through their individual preferences and perception. Moreover, we did not consider the
investors’ point of view. Although investors are supposed to be the end-user of integrated
reports, there are only a limited number of studies that question them (e.g. Atkins and
Maroun, 2015; Rensburg and Botha, 2014). Instead, most studies rather focus on the report
provider or auditor. We, therefore, call for further research putting more emphasis on
investors’ requirements and expectations for IR assurance. Investors could be asked
whether their requirements in terms of transparency are fulfilled by the current IR practice.
On this basis, future research could analyze if an involvement of investors in the IR
assurance process can improve the quality and transparency of the integrated reports.
Note
1. The earlier GRI sustainability reporting framework takes on a broader, stakeholder-oriented
perspective. The more recent IIRC framework is more focused on investors and value creation
within companies (see de Villiers et al., 2014 and Rowbottom and Locke, 2016 for a more detailed
comparison of GRI and IIRC).
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Appendix 1
Interview partner Company Functional area
A 1 Accounting
B 1 Accounting
C 1 Communication
D 1 Communication
E 1 Sustainability
F 2 Sustainability
G 2 Communication
H 2 Accounting
I 2 Accounting
J 2 Accounting
K 3 Accounting
L 3 Sustainability
M 4 Sustainability
N 4 Accounting
O 4 Communication
P 4 Human resources
Q 5 Accounting
R 5 Accounting
S 6 Audit/assurance
T 6 Consultancy
U 7 Audit/assurance
V 7 Consultancy
W 8 Audit/assurance
X 9 Consultancy Table AI.
Y 10 Consultancy Interviewees
AAAJ Appendix 2. Interview guideline for participating companies
(1) Background information
• Personal details of respondent ( function, job description, and affiliation).
• Recent, past and future report forms.
• Integrated reporting involvement.
• Relevance of the IR framework.
• Responsibilities of external reporting.
(2) Motivation for implementing integrated reporting
• Reasons for publishing an integrated report.
• Relevance of stakeholders for publishing an integrated report.
• Dependency of integrated reporting and corporate reputation.
• Value added for whom?
• Necessity to motivate further companies to publish an integrated report.

(3) Implications for internal processes when implementing an integrated report
• Procedure for the implementation process.
• Challenges within the implementation process.
• Structural adjustment within the implementation process.
• Insights of other companies as a basis for implementing an integrated report.
• Trigger for implementing integrated reporting.
• Integrated reporting as trigger for a change in the business model.
• Integrated thinking cross-functional teams for creating the report.
• Capacity for creating an integrated report.
• Application of materiality analysis.
• Data generation process as a basis for an integrated report.
• Content of an integrated report.
• Collection process of the IR capitals.
• Interdependency of capitals.
• Methodology for analyzing the interdependency of capitals.
• Non-financial indicators: collection, analysis, reporting.
• Media applied to report information internally.
• Impact of integrated reporting on strategic decision processes.
• Impact of integrated reporting on corporate planning.
• Integrated reporting as basis for incentive systems.
• Impact of integrated reporting on corporate culture.
• Impact of integrated reporting on sustainability, accounting, communication, human
resource department and procedures.
(4) External assurance of the integrated report
• Motivation for obtaining external assurance.
• Company that assures the report.
• Standards for the assurance process. Third-party
• Implications of assuring the report. assurance in
• IIRC framework as assurance standard. integrated
reporting
Appendix 3. Interview guideline for accounting/assurance/consulting companies
(1) Integrated reporting as an opportunity for assurance companies
• Definition of IR.
• How long do you already deal with IR.
• How do you deal with IR (e.g. studies, presentation, speeches, projects, clients).
• IIRC framework: suitability, content, quality, practical implications, key principles, elements.
• Role of assurors in creating new (IR) standards.
• Impact of stakeholders on the creation of (IR) standards.
• Materiality analysis/matrix.
• Regulation in reporting.
(2) Integrated reporting in Germany
• Companies goals, reasons, motivation in publishing an IR.
• Differences between large and medium sized companies.
• Chances and risk in publishing an IR.
• IR as an innovation or evolution.
(3) Integrated reporting and German mid-sized companies
• Motivation of mid-sized companies.
• Chances and risks for mid-sized companies.
(4) Assurance of integrated reports
• Practical experiences of assuring integrated reports.
• Procedure in assuring integrated reports.
• Potential for future development of IR assurance in Germany.
• Impact of IIRC framework on companies.
• Impact of stakeholders in the assurance process.
• Principle of “Connectivity of information.”
(5) Perspective of integrated reporting
• Future development of IR in Germany.
• Future development of IR in general.
• Success factors for a future positive development of IR.
Corresponding author
Christian Rainer Briem can be contacted at: christianbriem@gmx.de
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different quality standards between accountants and non-accountants. Companies, located

Diffusion of innovations theory

Data and method

1. Why do companies Weighting of advantages and Coercive, mimetic, Reduction of

Functional Corporate Corporate Audit, Consolidation, Strategic

Industry Accounting, Accounting, Accounting, Accounting, Consulting

consulting firms respondents

Results and discussion

Open coding Axial coding

“[…] I think it is mainly the

First-order categories Second-order categories

Appreciation of non-financial information Motivation voluntary third-party

any inconsistencies in the accuracy of information:

is already included in the management report:

Auditor’s role in providing IR assurance

By providing a standardized assurance process, accounting firms increase their

asymmetry, related to agency theory, between investors and company representatives.

Interview partner Company Functional area

• Necessity to motivate further companies to publish an integrated report.

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