The Green-Auditing Framework: Constructing Forensic Accounting Diagnostics for Measuring Carbon Offset Double-Counting and Environmental Liability Concealment

• Adaan Ahsun

  Covenant University

  Author

The rapid expansion of carbon markets and corporate environmental, social, and governance (ESG) reporting has created unprecedented opportunities for financial misrepresentation through carbon offset double-counting and environmental liability concealment. Despite regulatory advances including the EU Green Claims Directive and Corporate Sustainability Reporting Directive (CSRD), existing verification mechanisms remain critically dependent on self-reported data, creating systematic vulnerabilities to greenwashing . This study develops and validates the Green-Auditing Framework (GAF), a forensic accounting diagnostic system integrating satellite-based Earth Observation verification, artificial intelligence-driven claim extraction, and blockchain-enabled audit trail protocols. The framework was tested on a dataset of 1,247 corporate environmental disclosures from 186 organisations across land-intensive sectors, with validation against ground-truth site audits. Results demonstrate that the GAF achieves 89.4% accuracy in detecting carbon offset double-counting instances (p < 0.001), representing a 34.7% improvement over traditional audit methods. The framework successfully identified environmental liability concealment in 76.3% of cases where material misstatements existed. Forensic accounting diagnostics offer a replicable, scalable methodology for enhancing environmental disclosure integrity, with direct applications for regulators, auditors, and institutional investors seeking evidence-based verification of corporate environmental claims .

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