Carbon Emissions Disclosure and Its Effect on External Auditors’ Risk Assessment

Okeke; Nneka Maureen PhD; Iweias; Seth Sokiri PhD

doi:10.56201/jafm.vol.11.no8.2025.pg394.406

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Carbon Emissions Disclosure and Its Effect on External Auditors’ Risk Assessment

Okeke, Nneka Maureen PhD, Iweias, Seth Sokiri PhD

Abstract

Amid growing global emphasis on climate accountability, carbon emissions disclosure has emerged as a critical concern in corporate reporting and assurance. This study investigates how carbon emissions disclosures influence external auditors’ risk assessments. Specifically, it evaluates the extent to which the scope and credibility of emissions data shape auditors’ evaluations of inherent, control, and detection risks, and how these disclosures affect the nature of audit procedures. Primary data were obtained from 40 practicing external auditors working in high climate-risk exposure companies Nigeria. Using the t-test as the main analytical technique, the study finds that credible and detailed carbon emissions disclosures significantly influence auditors’ evaluation of inherent and control risks, but have a marginal effect on detection risk. The findings indicate that carbon-related disclosures prompt more rigorous audit planning and substantive procedures, especially in industries with higher environmental exposure. The study concludes that carbon emissions disclosures are becoming increasingly relevant to audit risk models, challenging the traditionally financial-centric orientation of audit assessments. It recommends that audit firms incorporate structured climate risk assessment protocols into their standard audit methodologies and that regulatory bodies provide clearer guidance on the auditability of non-financial environmental disclosures.

Keywords

Carbon Emissions DisclosureExternal AuditAudit Risk AssessmentInherent Risk

References

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Carbon Emissions Disclosure and Its Effect on External Auditors’ Risk Assessment

Abstract

Keywords

References

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