Coercive Mechanisms and Audit Documentation Quality in Integrated and Sustainability Reporting: A Comparative EU Analysis
Abstract
Abstract Financial transparency is a key factor that influences market confidence in the EU, and the quality of audit documentation is essential to this process. To address this, the EU implemented the Audit Regulation (EU No 537/2014) and, more recently, the Corporate Sustainability Reporting Directive (CSRD). These helped reconfigure the supervisory practice and enforcement mechanisms in place. As a result, the audit authorities in each country adapted their structures, methodologies, and sanctioning practices to meet the required standards. This paper uses a qualitative, document-based comparative analysis, using the 2024 annual reports, of the audit authorities in France (H2A), Germany (APAS), and Spain (ICAC) with the goal of understanding how differences in the supervisory architecture and sanctioning regimes reflect in enforcement signals for audit quality. Our findings showed that there are clear contrasts: Germany presented a high volume of disciplinary actions and a detailed categorization of issues; France focused on early integration of sustainability assurance; Spain showed increased focus on the transparency and proportionality of penalties issued. All three jurisdictions show that documentation failures and breaches of independence are the reasons most frequently subject to disciplinary actions. This helped to confirm that the supervisory model applied, the transparency practices, and the way resources are allocated affect enforcement outcomes. Our paper showed that the design model used affects documentation quality, especially through the level of inspection coverage, the ability of follow-up procedures, the deterrence level, and the learning effects influenced by the visibility and details of published sanctions. These factors encourage auditors to improve completeness, traceability, and compliance with the applicable standards in their work. Also understanding the way in which design affects sanctions, the paper provides guidance for improving audit quality and supervisory effectiveness. Risk-based inspections, consistent sanction types, and transparent presentation help strengthen the documentation quality.