Internal audit can help organisations build trust with key stakeholders by assuring the quality of the information in their non-financial reports, according to new guidance published by ECIIA – the European Confederation of Institutes of Internal Auditing.
The guidance – Non-financial reporting: building trust with internal audit – shows how internal audit can help organisations achieve better transparency in their reporting and improve their corporate governance when implementing the new European Directive on Non Financial Reporting. The Directive is expected to come into effect across Europe over the next couple of years.
The paper says companies that adopt an integrated approach to assess their financial, environmental, social and other activities will benefit most.
“Internal audit has a crucial role to play in this respect,” Thijs Smit, ECIIA President, says. “That is because it is in a unique position to provide a helicopter view of an organisation and help develop a forward-thinking strategy on these issues.”
The paper demonstrates how internal audit provides assurance over both financial and non-financial information. That includes assurance on the systems, policies and controls supporting the production of such information – specifically in the areas of sustainability activities and reporting, and non-financial communication.
As a result, internal audit can assure boards on the quality of information contained in reports on non-financial issues and build trust with key stakeholders.
All large companies will need to report on the non-financial aspects of their operations under the Directive, which has been voted on by the European Parliament and will be implemented into national laws by 2017. The European Commission is organising workshops in those countries for the transposition of the Directive into national laws.