How ESG is Shaping Demand for Professional Audit Support Services

In recent years, the worsening state of our environment has pushed for a collective shift in our society’s mindset. Suddenly, making sustainable community-positive choices is no longer just the priority of a select few, but has become the framework in which entities from all industries conduct their operations. 

Because of this, the United Nations coined a new framework to act as the benchmark of an entity’s success beyond profitability and operational efficiency: the Environmental, Social, and Governance (ESG) Framework. This framework assesses an entity’s decision-making processes – are they ethical and sustainable?  

 
Understanding the ESG Framework 

• Environmental: Under environmental factors, the framework assesses the entity’s ability to reduce its carbon footprint. This can be anything from lessening and properly managing physical waste to minimizing resources used, even if it means designing a remote work set-up to reduce the energy use of your office space. 

• Social: For social factors, this framework looks into the entity’s ability to create a positive impact within the community – this includes their employees, their investor relations, and the local community where their office is located. To make a positive impact socially, one can make active efforts to adhere to labor rights, promote diversity, and foster connections with other entities within the vicinity. 
• Governance: Last but not least, governance in the context of the ESG framework assesses an entity’s ability to conduct its operations ethically. This would mean being mindful of the operational processes set by management, making sure that it manages risks, does not negatively affect anyone, and overall contributes to a sustainable future.  

As companies are collectively making a conscious effort to abide by this framework, the rising demand for audit support services, particularly those that align themselves as well with the same standards and have the expertise to handle increasingly complex disclosures brought on by ESG efforts, have emerged. They are now turning to offshore outsourcing providers to meet the heightened expectations brought on by ESG assurance and transparency. 

Read: How to Strengthen your Company's ESG Efforts this 2024 

 
The Link Between Audit and ESG 

As said earlier, ESG is no longer a framework one uses should they want to. Instead, it has evolved into something that everyone must know and adhere to – not just your corporate social responsibility (CSR) units.  

For audit firms that want to remain competitive on a global scale, it is important to note that investors, regulators, clients and even your own employees would be looking at you to see how you conduct your business moving forward. What does this mean? As times change, your clients will be looking for extra support to help audit their ESG compliance.  

In fact, studies show that one’s ESG performance can be linked to having an increased access to capital as investors choose conscious companies that strongly adhere to the ESG framework. This regulatory evolution means that ESG efforts must now be treated as a necessity – even in your financial operations. 

The Expanding Scope of Audit 

Traditionally, when you hear the word “audit” used in the context of a company’s operations, it mainly focuses on verifying financial statements and regulatory compliance. Now, this takes on a new form as verification now includes ESG metrics, sustainability disclosures, and non-financial data. For many firms, this expanded scope is stretching in-house audit teams to their limits. That’s where audit support services come in. 

 
Is a company’s ESG efforts relevant during an internal or external audit?  

The simple answer? Yes. As soon as a company takes their ESG initiatives from theory into practice, it becomes part of factors to consider during both an internal audit that checks for a company's operational efficiency and relevant internal controls and an external audit that verifies public-facing disclosures and financial standing. 

From how your company manages waste and utilizes energy and resources to how it fosters a safe and diverse workplace -- which can both be seen in your internal processes and evidences, auditors can be asked to validate not only what's on your financial reports but also what's behind your sustainability claims.  

So, whether you’re preparing for an audit yourself and helping a client prepare for theirs, ESG plays a significant role when it comes to an entity’s audit readiness. For your internal teams, this means designing controls that capture ESG data with the same accuracy as financial metrics. For external audits, this means being able to provide evidence, documentation, and context around every ESG disclosure made. 
 
 

Importance of Audit in Heightened ESG Efforts 

How can audit support services help with this shift in the audit industry? Audit support services are no longer just about balancing workloads during peak seasons. Today, they’re a critical component of how firms adapt to the growing complexity of audit requirements. 

How Audit Support Services Help 

Handling High Volumes of ESG Data 

ESG audits require data that sometimes doubles or even triples the amount of data that comes from financial transactions. From energy consumptions logs to third-party supplier documentation, the data collection and validation process can be extensive. 
 
With this, offshore audit services offer experienced professionals the ability to orient themselves with the data and the know-how to help with ESG audits you are conducting for clients. They can help make sure that the data and findings you present are complete, consistent and audit-ready – strengthening client trust as the demand for audit becomes more complex. 

Adaptability to Evolving Standards 

ESG reporting frameworks are constantly evolving, and audit teams must stay up to date on the latest methodologies, standards set by regulatory bodies in different countries, and overall best practices. 
 
In this regard, audit support services with global expertise are constantly updated on the industry-specific frameworks that both your firm and your clients need. This ensures that your work is consistently compliant regardless of how often changes occur.  

Delivering both Audit and ESG Assurance  

When it comes to audit, we all know that assurance is the gold standard of financial reporting. Your client’s stakeholders want to be able to see verification – to assure themselves that they are working with an entity whose financial and sustainability claims are accurate. 

 
By integrating professional audit support services, companies can tap into a global talent pool of assurance professionals whose services include providing internal audit support, external audit support, audit preparation, cross-referencing of non-financial and financial data, and testing of ESG control environments, all to strengthen your client’s financial position. 

Benefits of Offshore Audit Support 

For some firms, the reluctance does not center around adhering to the ESG framework, instead, the reservations mainly circle around the fact that the audit support would be coming from an offshore location. While there is a hesitation to engage in offshore audit services, the benefits they provide may just be worth considering.  

Access to Global Expertise 

Offshore teams, especially those in emerging audit hubs like the Philippines or India, are increasingly trained in global ESG standards. They bring a diverse and international perspective to audits – as they handle clients from all over the world, bringing value to the quality of analysis and risk assessment done for your firm.  

Cost Efficiency 

Such as the benefits that offshoring back-end services provide, audit support outsourcing is no different. While the complexity of ESG requirements and audits mean more resources need to be spent to comply with the changes, a trusted offshore partner can easily rise to the occasion. Their support allows you to scale your efforts affordably – giving you quality assurance without inflating your budget.  

Round-the-Clock Audit Cycles 

With outsourced audit support services available across time zones, audit teams can maintain productivity even outside core business hours. This is crucial for ESG audits with tight turnaround times and stakeholder deadlines. 

 
Aside from the factors above, professional audit support services also have enterprise-grade technology and security, able to provide quality services from across the globe with streamlined processes that allow for seamless collaboration while being protected from the latest in security risks.  

The Role of Technology in Audit and ESG Compliance 

Today’s audit support services are powered not just by seasoned professionals, but also by the latest in accounting technology. A technologically forward approach helps make sure that your firm’s audit and ESG support services are accurate and compliant. 
 

Some of the most advantageous software in streamlining audit and ESG compliance-related processes include: 
 

• Advanced data analytics platforms 

• BI-Powered platforms for analyzing vast data sets 

• AI-Powered Risk Engines 

• Trained programs that monitor regulatory changes both in finance and in ESG compliance 

• ESG Management Systems: That centralize and standardize data collection 

These tools vary in use and availability, and investing in all of them at the same time may be too costly of a venture. Luckily, the right outsourced providers not only meet ESG and accounting standards but are also equipped with the latest software – adding a layer of digital efficiency to your operations and audit process. 

Now that we know how having the right outsourced accounting services and audit support benefits your firms’ own compliance efforts and increase the quality of the services you can provide for your own client base, the question that remains is: How do you find the right support? 

Choosing the Right Audit Support Partner 

When it comes to audit support services, you should know that it is rarely a one-size-fits-all situation. With the complexity that surrounds both ESG and financial audits, you need to find a partner with specific services and can handle the types of audits that you require.  
 
Here are key qualities to look out for as you find a provider that aligns with your own ESG initiatives: 

• ESG-Specific Training: Ensure the company’s own ESG initiatives aligns with yours 

• Industry Expertise: Choose partners with experience in your sector’s regulatory requirements 

• Data Security: Given the sensitivity of ESG and governance data, having the latest tools in cybersecurity protection are a must 

• Proven Track Record: Trust public opinion when it comes to choosing the right provider – network and connect with others in your same industry to see who they trust.  

As you move forward as an audit firm, you should note that the ESG framework is here to stay. Sustainability efforts on a global scale are not a passing trend.  Instead, it will only grow as we see more of the detrimental effects of humanity’s past actions within our own communities. With climate risks escalating, social awareness increasing and governments taking collective action, the pressure on private entities will continue – encouraging us all to operate with sustainability in mind.  

Regulatory compliance requirements will become more stringent, investor and client relations will focus largely on ESG efforts, and the demand for ESG and financial compliance will surge, bringing business in the face of constant change.  

The Bottomline 

As ESG continues to redefine compliance efforts, audit support becomes a key asset to the audit industry. Financial accuracy will no longer be what regulatory bodies look at as they now demand comprehensive, reliable, and assured sustainability reporting. 

To meet this demand, we must rethink how we deliver audits. Leveraging audit support services, particularly through audit support outsourcing and offshore audit services, may just be the push they need to remain competitive.  

Overall, outsourced audit services provide strategic value and bring much-needed ESG expertise to the table. In a world where every ESG claim can impact reputation and valuation, the right step is to evolve with the times.  

Read Next: Why Outsource Internal Accounting And Auditing Services? 

Let D&V Philippines Be Your Partner 

Are you searching for a dependable outsourcing partner to meet the industry’s current audit demands? Look no further than D&V Philippines. With over a decade of expertise in providing top-tier finance, accounting, and audit support services to clients worldwide, you can be sure that we can be your trusted audit outsourcing partner. Schedule a free consultation with us today.    

You can also download our Seasonal Audit Support for US Audit Firms and discover how our audit support solutions can help you deliver quality services with the latest in accounting technology.