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ESG performance and auditor scrutiny: does corporate sustainability drive more key audit matters?

Noor Adwa Sulaiman et al.

Asian Review of Accounting2025https://doi.org/10.1108/ara-10-2024-0315article
AJG 2
Weight
0.44

What the paper says

Purpose This study investigates the relationship between environmental, social and governance (hereafter ESG) performance and the level of disclosure of key audit matters (KAMs) in selected ASEAN countries that have adopted ISA 701 and examines the moderating role of greenwashing. Design/methodology/approach The sample consists of nonfinancial companies listed in Malaysia, Singapore and Thailand for the period 2016–2022. The analysis was conducted using OLS regression, robustness tests and addressing potential endogeneity. Findings The results indicate a positive and significant statistically for the relationship between ESG performance and KAMs disclosure. Greenwashing is shown to strengthen this relationship, indicating potential misleading practices in sustainability reporting. Furthermore, in countries with stronger regulatory enforcement, companies with higher ESG scores tend to disclose more KAM, highlighting the importance of the institutional context in influencing auditor decisions. Research limitations/implications This study expands the literature on the link between ESG and KAMs by integrating global institutional and governance factors, providing a new perspective on the dynamics of auditing and sustainability reporting. Practical implications The findings confirm that ESG disclosure can help stakeholders identify hidden audit risks. However, high ESG performance does not necessarily guarantee better disclosure quality. Originality/value This study offers a contribution by bridging the discourse between ESG performance and KAM disclosure, which were previously viewed separately, and highlighting the composite governance mechanisms that influence auditor decisions.

3 citations

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https://doi.org/https://doi.org/10.1108/ara-10-2024-0315

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@article{noor2025,
  title        = {{ESG performance and auditor scrutiny: does corporate sustainability drive more key audit matters?}},
  author       = {Noor Adwa Sulaiman et al.},
  journal      = {Asian Review of Accounting},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1108/ara-10-2024-0315},
}

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ESG performance and auditor scrutiny: does corporate sustainability drive more key audit matters?

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Evidence weight

0.44

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.32 × 0.4 = 0.13
M · momentum0.57 × 0.15 = 0.09
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.