The question for this study is whether significant environmental matters relevant for financial reporting raise concerns for auditors. 18 New Zealand audit partners and managers from the North and South Islands were interviewed for their views on the research question. This study adopted an interpretive methodology. Legitimacy theory informed the interpretation of the research findings.

The research findings revealed that auditors could risk omitting environmental matters and environmental risks exposure in audit planning if disclosures are not made in the financial report or communicated to the auditor; also for new clients or clients not operating in obviously environmentally sensitive industries or sector. The auditors are challenged by the prolific environmental laws and regulations. AGS-1010 recommended that auditors apply the accounting standard for ‘Provisions, Contingent Liabilities and Contingent Assets’, however, it is subjective and creates some confusion in its application. Generally, auditors do seek technical advice but there are few suitable qualified environmental experts in New Zealand to assist them. Therefore, the research findings provided evidence which indicates that significant environmental matters relevant for financial reporting do present real concerns for auditors. The general implication is that the audit of significant environmental matters seems to extend the boundary of financial audits, reflecting perhaps unreasonable expectations of auditors’ knowledge of environmental issues and auditing environmental matters.