The Role of Audit Assurance Management on Climate Change Disclosures in Selected Companies in Malaysia: Mediating Role of Artificial Intelligence

Mukhtar Idris Abu Baker Adam, Ibrahim Yagoub Ismail Osman, Mohyee Eldin Mohamed Ibrahim Osman, Abdoulrahman Aljounaidi, Fahad Saad Soliaman Algorabi Alharbi, Alharath Ateik, Siti Maisara Binti Mohd Jafre

Abstract

This study explores the influence of Audit Assurance management on the quality of climate change disclosures in selected firms in Malaysia, with special emphasis on the role of artificial intelligence (AI) as a mediator in this relationship. The purpose of this study is to evaluate the impact of audit quality and auditor independence on the reliability and transparency of statements regarding climate change. Considering the increasing significance of environmental, social, and governance (ESG) reporting, this study aimed to provide insights into the main components that improve the integrity of climate-related disclosures. Using a mixed-method approach, information was collected from 360 auditors across Malaysia, representing a wide range of organizations. Structural equation modelling (SEM) was used to investigate the relationships between the variables. Based on these findings, it appears that audit quality and auditors’ independence significantly influence the quality of disclosures associated with climate change. Artificial intelligence also plays an important role as an intermediate, which helps improve the accuracy and dependability of disclosures. This study highlights the significance of developing robust audit methods and utilizing cutting-edge technologies to improve the transparency and accountability of corporate climate change reporting.

 

Keywords: audit assurance management, climate change disclosures, audit quality, auditor independence, artificial intelligence, Malaysia, ESG reporting.

 

https://doi.org/10.55463/issn.1674-2974.51.7.12


Full Text:

PDF


References


DELOITTE. SEC Climate Disclosure Guidance, 2024.

EY. Climate Related Disclosures, 2024.

HO S. PCAOB Advisory Panel highlights AI, climate reporting and talent as emerging issues. Thomson Reuters, 2023. https://tax.thomsonreuters.com/news/pcaob-advisory-panel-highlights-ai-climate-reporting-and-talent-as-emerging-issues/

INSTITUTE OF INTERNAL AUDITORS. SEC: Climate change disclosures, 2021. https://www.theiia.org/en/content/response-to-regulators/2021/sec-climate-change-disclosures/

MUNOKO I., BROWN-LIBURD H. L., and VASARHELYI M. The Ethical Implications of Using Artificial Intelligence in Auditing. Journal of Business Ethics, 2020, 167(2): 209–234. https://doi.org/10.1007/s10551-019-04407-1

HAN H., SHIWAKOTI R. K., JARVIS R., MORDI C., and BOTCHIE D. Accounting and auditing with blockchain technology and artificial Intelligence: A literature review. International Journal of Accounting Information Systems, 2023, 48: 100598. https://doi.org/10.1016/j.accinf.2022.100598

PWC. Using AI in Auditing: Considerations for Assurance Providers, 2023.

SILK D. M., LU C. X. W., and SACHS R. The SEC’s proposed Climate-Related Disclosure Rules: Thoughts for audit committees. Harvard Law School Forum on Corporate Governance, 2022. https://corpgov.law.harvard.edu/2022/04/06/the-secs-proposed-climate-related-disclosure-rules-thoughts-for-audit-committees/

ARENS A. A. Auditing and Assurance Services, 2015.

RAHMINA L. Y., & AGOES S. Auditors' Ethical Orientation and Independence, 2014.

OKEZIE C. The Impact of Ethical Orientation on Auditor Independence, 2016.

MARGANINGSIH S. Ethical Issues in Audit Practice, 2018.

GREEN W., & ZHOU S. Assurance Practice and Ethics in Auditing, 2013.

QUICK R., & INWINKL P. Assurance of Climate Change Disclosures, 2020.

GUSAI O. P. Robot human interaction: role of artificial intelligence in accounting and auditing. Indian Journal of Accounting, 2019, 51(1): 59-62. https://indianaccounting.org/downloads/IJA%20Jun%202019.pdf#page=65

CRESWELL J. W., & PLANO CLARK V. L. Designing and Conducting Mixed Methods Research. 2nd ed. Sage Publications, Los Angeles, California, 2011.

BRYMAN A. Social Research Methods. 4th ed. Oxford University Press, 2012.

HAIR J. F., BLACK W. C., BABIN B. J., and ANDERSON R. E. Multivariate Data Analysis. 7th ed. Pearson, New York, 2010.

BRAUN V., & CLARKE V. Using thematic analysis in psychology. Qualitative Research in Psychology, 2006, 3(2): 77–101. https://doi.org/10.1191/1478088706qp063oa

TAVAKOL M., & DENNICK R. Making sense of Cronbach’s alpha. International Journal of Medical Education, 2011, 2: 53–55. https://doi.org/10.5116/ijme.4dfb.8dfd

LIBBY R., & WITZ P. D. Can artificial intelligence reduce the effect of independence conflicts on audit firm liability? Contemporary Accounting Research, 2024, 41(2): 1346–1375. https://doi.org/10.1111/1911-3846.12941


Refbacks

  • There are currently no refbacks.