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One of the key players in the assurance market, the global consultancy
URS, has decided to stop providing detailed assurance of corporate
responsibility reports. The move comes at a time of rising concern
among the larger providers of audit services at the liabilities that
may arise from opinions given on corporate statements.
EP has learned that URS decided to end its involvement in the assurance of non-financial reports some months ago. The consultancy said legal concerns had not played a significant part in its decision, but an executive at another leading assurer said: ‘as this area grows in importance I would imagine that someone might get sued sooner or later. The big firms will be the target, not the smaller ones, because they have the money.
URS told EP: ‘We are still honouring the [assurance] contracts we have with companies, but we are moving away from verification. There has been a move in the market more towards the use of expert advisory panels and opinion.’
Malcolm Guy, director of the Reassurance Network, one of the smaller assurance providers, said the emerging worries for larger firms such as URS in part result from changes in the market. ‘Companies are looking more for firms to assure their behaviour rather than just their CSR report and the information in it. That means providing more opinion, which is riskier and legally sensitive. So the big firms are becoming less willing to express an opinion. On the other hand, smaller firms are more flexible and nobody can sue them for millions, so they can be braver and offer opinion,’ Guy said.
He argues that any flight of bigger companies may therefore open the market up for smaller assurance providers.
However, one big player, Deloitte, said it has no intention of withdrawing from the field, ‘although the market is still quite fragmented with a lot of confusion as to what is being assured and to what standards’. Leon Olsen, manager at Deloitte’s corporate responsibility assurance practice, said he was ‘conscious of the challenges of report assurance’ but added that the best way to address ‘liability risks’ is to ‘apply professional standards with clear and transparent criteria’ rather than to quit the field altogether.
see also this month's Diageo story
EP has learned that URS decided to end its involvement in the assurance of non-financial reports some months ago. The consultancy said legal concerns had not played a significant part in its decision, but an executive at another leading assurer said: ‘as this area grows in importance I would imagine that someone might get sued sooner or later. The big firms will be the target, not the smaller ones, because they have the money.
URS told EP: ‘We are still honouring the [assurance] contracts we have with companies, but we are moving away from verification. There has been a move in the market more towards the use of expert advisory panels and opinion.’
Malcolm Guy, director of the Reassurance Network, one of the smaller assurance providers, said the emerging worries for larger firms such as URS in part result from changes in the market. ‘Companies are looking more for firms to assure their behaviour rather than just their CSR report and the information in it. That means providing more opinion, which is riskier and legally sensitive. So the big firms are becoming less willing to express an opinion. On the other hand, smaller firms are more flexible and nobody can sue them for millions, so they can be braver and offer opinion,’ Guy said.
He argues that any flight of bigger companies may therefore open the market up for smaller assurance providers.
However, one big player, Deloitte, said it has no intention of withdrawing from the field, ‘although the market is still quite fragmented with a lot of confusion as to what is being assured and to what standards’. Leon Olsen, manager at Deloitte’s corporate responsibility assurance practice, said he was ‘conscious of the challenges of report assurance’ but added that the best way to address ‘liability risks’ is to ‘apply professional standards with clear and transparent criteria’ rather than to quit the field altogether.
see also this month's Diageo story
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