Limited or Reasonable Assurance for NFI?: Effectiveness and Criticalities, in Non-financial Disclosure and Integrated Reporting. Theoretical Framework and Empirical Evidence

In the rapidly changing landscape of non-financial information (NFI) provided by firms in the EU, neither a universal standard for reporting has yet emerged, nor the market has expressed a clear preference towards a limited or more comprehensive (technically referred as reasonable) assurance of the NFI. This study focusses on the latter of these two interconnected issues, not yet fully investigated in the literature, given the novelty and the fast pace of change. Hence, we discuss which kind of assurance best serves the interests of the users of NFI and what can we expect as emerging trends in this area for the coming years. The study is outlined as follows. In par. 1, we present the regulatory requirements in EU Member States about the auditors’ involvement in NFI after the implementation of the EU Directive 2014/95/EU. In par. 2, we illustrate the differences between limited and reasonable assurance, in terms of scope of work, and relative costs and benefits. We conclude in par. 3, commenting on some insights coming from the EC survey (2020) on the review of the NFR and tentatively advancing the third way of mixed assurance as a pragmatic compromise for the next years.