Page 1 of 12 Barry Ackers University of South Africa The auditor’s corporate social responsibility assurance role: a South African perspective BARRY ACKERS UNIVERSITY OF SOUTH AFRICA SOUTH AFRICA E-MAIL:ackerb@unisa.ac.za Stakeholders are holding corporations responsible for the non-financial impacts of their operations, making corporations not only accountable to shareholders, but to stakeholders as well. In response, corporations are voluntarily implementing CSR initiatives. King III is driving the institutionalisation of CSR assurance into South African corporate practice. To capitalise on the benefits of strong CSR performance, unscrupulous corporations may use greenwash to falsely report their CSR performance. Independent third party assurance therefore increases stakeholder confidence about CSR disclosure integrity, with assurance importantly improving the credibility of CSR reports. The study research population comprised the largest 200 JSE listed companies. A qualitative content analysis of CSR assurance statements determined the prevalence of CSR assurance in South Africa and considered the different CSR assurors’ roles, in terms of the standards, guidelines and frameworks used, the engagement scope, the assurance levels and the assurance opinions reached. In addition, selected empirical data is compared against other similar international studies. CSR assurance is increasing and presently dominated by the auditing profession, despite providing lower assurance levels. This is attributed to the auditing profession’s perceived credibility, particularly the Big 4, and enhanced by rigorous assurance methodologies. 1. Introduction Friedman (1970) argued that the social responsibility of business was using its resources in activities to iŶĐƌease pƌofits, ǁhile opeƌatiŶg ǁithiŶ soĐietLJ’s pƌedefiŶed rules and norms. Stakeholder theory holds that business is responsible to various societal groups with a legitimate interest in a company’s activities, while simultaneously achieving its business objectives (Freeman, 1984). Companies contribute to the social agenda, by creating employment opportunities, stimulating the economy and uplifting neighbouring communities. However, stakeholder expectations may have instrumental value ďLJ oŶlLJ ďeiŶg ĐoŶsideƌed ǁheŶ iŶ the shaƌeholdeƌs’ interest (Sadler & Lloyd, 2009). Companies respond to demands for increased accountability and transparency by disclosing their operational impacts on society and the environment (CorporateRegister, 2008:5). While responsible companies (able to self-regulate), may prefer voluntarism, it is also suppoƌted ďLJ uŶsĐƌupulous ĐoŵpaŶies usiŶg gƌeeŶǁash to falselLJ ƌepƌeseŶt their CSR status, hoping to capitalise on the positive association with strong CSR performance, knowing that it would be difficult to verify assertions. Voluntary practices may result in companies only selectively disclosing information placing them in a favourable light. Companies disclosing CSR information may therefore not necessarily be good corporate citizens, but may simply wish to favourably influence perceptions (Okoye, 2009:624). The illusion of responsible corporate behaviour may provide uninformed investors with a safer image of the company, reducing the cost of capital (Aras & Crowther, 2008). Consumers expect a return on involvement and may