Assurance of natural resource management: a case study

The thesis is set within the context of growing adoption of independent assurance of nonfinancial information (NFI) by organisations, with the specific subject matter focus on assurance of natural resource management (NRM). The Australian Government has invested significant resources in NRM programs. For example, in the state of New South Wales, a region covering over 800,628 square kilometres, Government funding totalled $1,042 million during the period from 2004 to 2010. This significant investment coincided with the establishment of a statutory organisation in 2003, the primary responsibility of which was to provide independent assurance in relation to whether ongoing investment achieved improvements in the condition of natural resources across the regions. This thesis responds to the calls for research (e.g., Adams et al., 2014; O’Dwyer et al.,2011; Power, 2003) into assurance practices within NFI contexts by exploring various aspects of the development and implementation of assurance processes and practices emerging within organisations. The thesis is by publication format and comprises three inter-related but distinct papers, each framed around the key elements of assurance practice, utilising a longitudinal (six year) case study with data collection from multiple sources. The first paper, titled “Assurance of Natural Resource Management”, sets the scene and explores the challenges of the case study organisation in developing an audit framework to guide its legislated NRM audits at a time when NFI assurance standards on specific subject matter were limited and more tailored to the private sector. The findings suggest the development of such guidance is complex and acknowledge a lack of consensus as to the ‘best practice’ in NRM and NFI assurance. The findings also challenge assumptions that accepted assurance concepts developed for the financial audit context, such as audit scope, assurance levels and materiality, are transportable to non-financial assurance and our public sector case context. The second paper titled “The Multidisciplinary Audit Team: Diversity Challenges for NFI Assurance” draws upon resource diversity theory from social psychology and Power’s (2003) theoretical perspectives on emerging non-financial audit practices to examine multidisciplinary audit teams (MATs) in practice. The study explores how the MAT’s composition and diverse member subject matter knowledge and various aspects of team dynamics shape assurance processes (e.g., gathering and assessing audit evidence) in practice. The findings suggest that the challenges and complexities of managing the team, understanding the diverse mindsets of team members, including effective communication between members, are not to be underestimated if the diversity benefits of MATs are to be realised. The third paper titled “Audit Reporting on Non-financial Information : One Audit, Two Reports” examines the construction of the NRM audit report over a three year period. The analysis is framed around the key audit report elements drawing upon Power’s (2003,2004) theoretical insights on NFI audits in addition to literature from NFI assurance, public sector audits and Fiske’s (1990) communication theory. The findings suggest that for the audit report to be of communicative value, it needs to identify clearly the audience, audit objectives, scope, content and level of assurance at the beginning of the audit process. The empirical evidence from the three papers contributes to contemporary NFI and public sector audit and assurance literature and to our understanding of NFI and performanc eassurance practice. More specifically the case study context illustrates how NRM assurance practice has developed in the presence of specific legislative requirements bu tlimited practical guidance. The case study findings have significant practical implications for public and private sector assurors in developing their NFI assurance practices and frameworks and in managing multidisciplinary audit teams.