TL;DR — Using Korea's National Greenhouse Gas Management System data (2014–2021), firms with higher carbon intensity receive significantly more audit hours, and firms with better industry-adjusted energy efficiency receive fewer. But neither is associated with audit fees. Auditors already expend extra effort on carbon-intensive clients — they just are not paid for it.
Key findings
1. Carbon risk is already an audit risk. Carbon intensity is significantly positively associated with audit hours; industry-adjusted energy efficiency is significantly negatively associated. Auditors respond to clients' carbon exposure with more effort.
2. But the effort is not priced. Neither measure shows a significant association with audit fees. The burden from carbon risk is absorbed by the auditor rather than passed through — robust to using abnormal audit hours and abnormal audit fees.
3. ESG systems make carbon visible. Using KCGS ESG ratings, ESG rating positively moderates both the carbon-intensity–audit-hours relationship and the energy-efficiency–audit-fees relationship.
Method in one line
Carbon intensity and energy efficiency — computed from greenhouse-gas emissions and energy consumption reported to Korea's National Greenhouse Gas Management System, 2014–2021 — regressed on year-end audit hours and audit fees, with robustness tests on abnormal audit hours/fees and moderation by KCGS ESG rating.
국문 요약
[연구목적] 탄소위험이 하나의 감사위험으로서 감사시간과 감사보수에 미치는 영향을 실증 검토한다. 정부의 탄소규제 강화와 탄소위험 관련 재무제표 공시 의무화는 기업 성과·평판뿐 아니라 외부감사인의 감사위험 평가에도 영향을 미칠 수 있다.
[연구결과]탄소집중도는 감사시간과 통계적으로 유의한 양(+)의 관련성을, (산업조정)에너지효율성은 유의한 음(−)의 관련성을 가졌다. 그러나 두 변수 모두 감사보수에는 영향을 미치지 않았다. 비정상감사시간·비정상감사보수를 이용한 결과도 대부분 유사했다. 한국ESG기준원 ESG 등급을 이용한 분석에서는 ESG 등급이 탄소집중도–감사시간, 에너지효율성–감사보수 관련성에 양(+)의 조절효과를 가졌다.
[시사점] 탄소위험이 감사인의 감사노력에 잠재적으로 영향을 미치고 있으나, 그로 인한 부담이 감사보수에 충분히 반영되지 못하고 있음을 보여준다. 향후 탄소위험을 포함한 환경·ESG 활동에 대한 감사노력이 추가로 발생할 것으로 예상되는 만큼, 감사인의 역량 강화와 인식 제고가 필요하다.
FAQ
Q. Why does this matter for auditors and audit committees? If carbon risk raises audit effort but not audit fees, the cost sits with the auditor. As ESG and carbon disclosure become mandatory, that gap widens — a pricing and capacity issue for audit firms, and a quality question for audit committees.
Q. What is "carbon intensity" here? Firm-level greenhouse-gas emissions scaled to firm size, computed from Korea's National Greenhouse Gas Management System filings; energy efficiency is derived from reported energy consumption and adjusted for industry.
Q. Related work by the authors? See Woo & Kwon (2024) on how carbon risk showed up in Korean stock prices around the EU CBAM agreement, and Qing et al. (2024, JCP) on climate exposure and corporate performance.
English: Jung, W., & Woo, C.-W. (2023). The relationship between carbon risk and audit hours and audit fees. Korea International Accounting Review, 110, 181–215.
BibTeX:
@article{jung2023carbonaudit,
title={The Relationship between Carbon Risk and Audit Hours and Audit Fees},
author={Jung, Woojun and Woo, Chung-Won},
journal={Korea International Accounting Review},
number={110}, pages={181--215}, year={2023},
doi={10.21073/kiar.2023..110.008}}