Evaluation of the Internal Auditor Roles in Environmental, Social, Governance Activities

Authors

  • Rifqi Dhia Ramadhan University of Indonesia
  • Lufti Julian Faculty of Economic and Business, University of Indonesia

DOI:

https://doi.org/10.26905/afr.v6i2.10142

Keywords:

Competency, Environmental, Internal Auditor, and Governance

Abstract

The purpose of this study is to describe the role and competence adequacy of internal auditors in ESG activities and evaluate these activities with Standards, Practical Guidance, Laws, Regulations, and Best Practices. The research method is a descriptive case study with a qualitative approach. The results and conclusions of this study are that the implementation of the internal auditor function for ESG activities has not been fully implemented and it needs to be an increase. Nonetheless, almost all respondent are optimistic that the role of internal auditors regarding ESG activities at XYZ Bank will be needed in the future.

DOI: https://doi.org/10.26905/afr.v6i2.10142

References

Atkins, B. (2022, January 18). ESG: Environmental, social, greenwashing? Forbes. https://www.forbes.com/sites/betsyatkins/2022/01/17/esg-environmental-social greenwashing/?sh=5cae0c004e31

Badara, M. S. (2013). Impact of the Effective Inter-nal Control System on the Internal Audit Effectiveness at Local Government Level. Journal of Social and Development Sciences, 4(1), 16–23. https://doi.org/10.22610/jsds.v4i1.731

Baldi, F., & Pandimiglio, A. (2022). The role of ESG scoring and greenwashing risk in explaining the yields of green bonds: A conceptual framework and an econometric analysis. Global Finance Journal, 52. https://doi.org/10.1016/j.gfj.2022.100711

Bonrath, A., Eulerich, M., & Lopez-Kasper, V. (2022). Internal Auditor’s Role in ESG Disclosure and Assurance: An Analysis of Practical Insights. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4070755

Bouâ€Raad, G. (2000). Internal auditors and a val-ueâ€added approach: the new business re-gime. Managerial Auditing Journal, 15(4), 182–187. https://doi.org/10.1108/02686900010322461

Creswell, J. W., & Poth, C. N. (2018). Qualitative inquiry & research design: Choosing among five approaches (Fourth edition.). In SAGE.

Deegan, C., Cooper, B. J., & Shelly, M. (2006). An investigation of TBL report assurance state-ments: UK and European evidence. Manage-rial Auditing Journal, 21(4), 329–371. https://doi.org/10.1108/02686900610661388

DeSimone, S., D’Onza, G., & Sarens, G. (2021). Correlates of internal audit function in-volvement in sustainability audits. Journal of Management and Governance, 25(2), 561–591. https://doi.org/10.1007/s10997-020-09511-3

Engelbrecht, L., Yasseen, Y., & Omarjee, I. (2018). The role of the internal audit function in in-tegrated reporting: a developing economy perspective. Meditari Accountancy Research, 26(4), 657–674. https://doi.org/10.1108/MEDAR-10-2017-0226

Feng, Z., & Wu, Z. (2021). ESG Disclosure, REIT Debt Financing and Firm Value. The Journal of Real Estate Finance and Economics, 1–35. https://doi.org/10.1007/s11146-021-09857-x

IIA. (2017). International Professional Practices Framework. IIA.

IIA. (2021). Internal Audit’s Role in ESG Reporting.

IIA. (2022). Perspektif & Pandangan Global Lanskap Risiko ESG. www.theiia.org/GPI.

Kementerian Lingkungan Hidup dan Kehutanan. (2016, April 23). Indonesia Menandatangani Perjanjian Paris Tentang Perubahan Iklim. Siran Pers No. S. 302 /HUMAS/PP/HMS.3/4/2016. http://ppid.menlhk.go.id/siaran_pers/browse/298

Lizzy, G. (2021, May 9). ESG investing to reach $1 trillion by 2030, says head of iShares Americas as carbon transition funds launch. CNBC.

Mendes de Oliveira, D. K., Imoniana, J. O., Slomski, V., Reginato, L., & Slomski, V. G. (2022). How do Internal Control Environments Connect to Sustainable Development to Curb Fraud in Brazil? Sustainability, 14(9), 5593. https://doi.org/10.3390/su14095593

Park, S. R., & Jang, J. Y. (2021). The Impact of ESG Management on Investment Decision: Insti-tutional Investors’ Perceptions of Country-Specific ESG Criteria. International Journal of Financial Studies, 9(3), 48. https://doi.org/10.3390/ijfs9030048

Scherer, T. (2020, May 19). COSO-Based Internal Auditing. Risk Optics. https://reciprocity.com/coso-based-internal-auditing/

Shuwaili, A. M. J., Hesarzadeh, R., & Bagherpour Velashani, M. A. (2023). Designing an inter-nal audit effectiveness model for public sec-tor: qualitative and quantitative evidence from a developing country. Journal of Facili-ties Management. https://doi.org/10.1108/JFM-07-2022-0077

Simpson, S. N. Y., Aboagye-Otchere, F., & Ahadzie, R. (2022). Assurance of envi-ronmental, social and governance disclosures in a developing country: perspectives of regulators and quasi-regulators. Accounting Forum, 46(2), 109–133. https://doi.org/10.1080/01559982.2021.1927481

Soh, D. S. B., & Martinov-Bennie, N. (2015). Internal auditors’ perceptions of their role in environmental, Social and governance assurance and consulting. Managerial Auditing Journal, 30(1), 80–111. https://doi.org/10.1108/MAJ-08-2014-1075

Winston, A. (2022, December). 2022_ A Tumultuous Year in ESG and Sustainability (Winston 2022). https://hbr.org/2022/12/2022-a-tumultuous-year-in-esg-and-sustainability

Xu, J., Liu, F., & Shang, Y. (2021). R&D investment, ESG performance and green innovation per-formance: evidence from China. Kybernetes, 50(3), 737–756. https://doi.org/10.1108/K-12-2019-0793

Downloads

Additional Files

Published

2023-07-20

How to Cite

Ramadhan, R. D., & Julian, L. (2023). Evaluation of the Internal Auditor Roles in Environmental, Social, Governance Activities. AFRE (Accounting and Financial Review), 6(2), 185–194. https://doi.org/10.26905/afr.v6i2.10142

Issue

Vol. 6 No. 2 (2023): Vol. 6 No. 2: July 2023

Section

Articles

License

You are free to:

  • Adapt — remix, transform, and build upon the material
  • The licensor cannot revoke these freedoms as long as you follow the license terms.

Under the following terms:

  • No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.

AFRE (Accounting and Financial Review) Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.