Implementation of Environmental, Social, Governance (ESG) in the Audit and Financial Reporting Process: Systematic Literature Review

The implementation of Environmental, Social, and Governance (ESG) in the audit and financial reporting process is increasingly relevant along with the increasing demand for transparency and accountability of corporate sustainability. The purpose of this study is to systematically analyze how ESG is integrated into the audit and financial reporting process, identifying research trends, implementation challenges, and existing research gaps. The research method used is a Systematic Literature Review (SLR) with a qualitative approach, supported by the WATASE (Write, Assess, Thematize, Analyze, Synthesize, Evaluate) method and PRISMA guidelines. Data were obtained from Scopus-indexed journal articles published between 2020 and 2025 and analyzed using the Watase UAKE application. The results show that ESG has become a primary focus in audit and financial reporting research, where ESG implementation in auditing encourages the expansion of the auditor's role in assessing non-financial risks and increasing the credibility of sustainability reports. Furthermore, the implementation of ESG in financial reporting contributes to increased transparency, reduced information asymmetry, and strengthened investor and stakeholder trust. However, this study also identified challenges such as limited ESG audit standards, differences in disclosure quality, and uneven company readiness. These findings emphasize the importance of strengthening ESG-based auditing and financial reporting practices to support corporate sustainability and accountability.