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Vodafone is claiming to have become the first Fortune 100 company to have had its corporate responsibility report assured to a higher standard than is the norm for such reports.
The mobile phone group’s 2007 report, published last month, contains a ‘reasonable assurance’ statement, which puts it on a par with the audit of annual financial statements. Many non-financial reports are audited to the weaker standard of ‘limited assurance’, applicable to interim financial statements.
Ramon Arratia, senior corporate responsibility manager at Vodafone, said the company hopes this approach – which is in accordance both with the AA1000 assurance standard and the
ISAE3000 standard issued by the International Auditing and Assurance Standards Board – will convince readers of the report’s reliability. ‘Readers do not find it very reassuring that, at the end of the day, auditors can only say something like “nothing has come to our attention to prove this is wrong,”’ he said. ‘It’s better if they can say “we are positive that this is right”. The move is away from negative assurance, where you’re 90 per cent sure of something, to positive assurance, where you’re more than 95 per cent sure and for that reason can use more reassuring language.’
Neil Yeomans, the Deloitte partner in charge of Vodafone’s assurance, said: ‘Reasonable assurance sets out to prove the hypothesis, whereas limited assurance just does some work to make sure there is nothing to contradict the hypothesis.’
He told EP he had been able to offer reasonable assurance because of Deloitte’s long observation of Vodafone’s activities. ‘If you’re making a positive statement, inevitably you have to be more comfortable with the conclusions that you’re reaching, and a lot of that is down to an assessment of the robustness of the processes and systems which you develop over the period of the relationship with your client. We’ve worked with Vodafone for around five years, so we felt this would be a good time to do it.’ He said Deloitte now had a ‘comprehensive’ picture of Vodafone’s CSR operations, having visited all its operating companies over the past few years and having interviewed the key managers, including three board members and the chief executive.
Arratia added: ‘Reasonable assurance requires more work, but mainly for the company, because the processes have to be very robust and reliable in order to allow the auditor to express a positive opinion. Some companies – such as Shell a couple of years ago – went for reasonable assurance on the scope of certain data, but as far as we are aware only Novozymes has gone for reasonable assurance on AA1000 principles.’
Yeomans said Deloitte did not consider that this approach would expose it to legal challenge. ‘It just means the company needs good systems and processes in place, the scope of work we have to do is more comprehensive, and the knowledge of the organization has to be greater.
‘There is no greater risk in doing reasonable assurance than [doing] limited assurance, provided you do the work properly.’
The mobile phone group’s 2007 report, published last month, contains a ‘reasonable assurance’ statement, which puts it on a par with the audit of annual financial statements. Many non-financial reports are audited to the weaker standard of ‘limited assurance’, applicable to interim financial statements.
Ramon Arratia, senior corporate responsibility manager at Vodafone, said the company hopes this approach – which is in accordance both with the AA1000 assurance standard and the
ISAE3000 standard issued by the International Auditing and Assurance Standards Board – will convince readers of the report’s reliability. ‘Readers do not find it very reassuring that, at the end of the day, auditors can only say something like “nothing has come to our attention to prove this is wrong,”’ he said. ‘It’s better if they can say “we are positive that this is right”. The move is away from negative assurance, where you’re 90 per cent sure of something, to positive assurance, where you’re more than 95 per cent sure and for that reason can use more reassuring language.’
Neil Yeomans, the Deloitte partner in charge of Vodafone’s assurance, said: ‘Reasonable assurance sets out to prove the hypothesis, whereas limited assurance just does some work to make sure there is nothing to contradict the hypothesis.’
He told EP he had been able to offer reasonable assurance because of Deloitte’s long observation of Vodafone’s activities. ‘If you’re making a positive statement, inevitably you have to be more comfortable with the conclusions that you’re reaching, and a lot of that is down to an assessment of the robustness of the processes and systems which you develop over the period of the relationship with your client. We’ve worked with Vodafone for around five years, so we felt this would be a good time to do it.’ He said Deloitte now had a ‘comprehensive’ picture of Vodafone’s CSR operations, having visited all its operating companies over the past few years and having interviewed the key managers, including three board members and the chief executive.
Arratia added: ‘Reasonable assurance requires more work, but mainly for the company, because the processes have to be very robust and reliable in order to allow the auditor to express a positive opinion. Some companies – such as Shell a couple of years ago – went for reasonable assurance on the scope of certain data, but as far as we are aware only Novozymes has gone for reasonable assurance on AA1000 principles.’
Yeomans said Deloitte did not consider that this approach would expose it to legal challenge. ‘It just means the company needs good systems and processes in place, the scope of work we have to do is more comprehensive, and the knowledge of the organization has to be greater.
‘There is no greater risk in doing reasonable assurance than [doing] limited assurance, provided you do the work properly.’
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