Audit Quality and Sustainability Reporting: A Conceptual Framework for Transparent and Responsible Disclosure

In response to the growing demand for greater transparency and accountability in corporate sustainability reporting, audit quality has emerged as a vital assurance mechanism to enhance the credibility and reliability of sustainability disclosures. However, despite the significance of audit quality, concerns persist regarding its effectiveness in promoting transparent and trustworthy sustainability reporting, particularly in contexts with limited regulatory oversight and weak governance frameworks. This conceptual paper aims to explore the relationship between audit quality and sustainability reporting, specifically discovering how high audit quality may enhance transparency and reduce opportunistic reporting behaviors. Employing a narrative review methodology, this study critically examines existing literature on audit quality and sustainability disclosures through the theoretical perspectives of stakeholder theory and legitimacy theory. Drawing on prior empirical research, the paper develops a conceptual framework demonstrating that effective sustainability reporting is positively influenced by core elements of audit quality, including auditor independence, technical competence, and rigorous compliance with auditing standards. However, the effectiveness of audit quality in improving sustainability reporting is contingent upon strong governance structures and effective regulatory enforcement. The findings suggest that audit quality significantly reduces information asymmetry, aligns corporate behavior with stakeholder expectations, and enhances corporate legitimacy. The implications of this study are both theoretical and practical. Theoretically, it enriches the literature on audit quality and sustainability assurance by integrating stakeholder and legitimacy theories to explain how audit quality mitigates reporting deficiencies. Practically, it provides valuable insights for auditors, corporate leaders, and regulators aiming to strengthen auditing practices and governance frameworks, thereby promoting more transparent and credible sustainability disclosures.