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Environmental Auditing

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Mohammed Rizwan Hassan

on 14 October 2012

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Transcript of Environmental Auditing

Case Study 4.27 Environmental Auditing
- Rizwan
- Avneet
- Ricky

- Introduction
- What is Environmental Auditing (EA)?
- The Standards for Environmental Auditing
- Tasks involved in Environmental Auditing
- Case Study
- Conclusion and Recommendations
- Class Discussion Presentation Outline: An environmental audit is a tool that a company can use to identify the full extent of its environmental impacts, determine whether or not the company is in compliance with applicable laws, regulations, and the expectations of
its stakeholders, and gain an understanding on how it can sustain or improve its environmental performance while going forward.(Adapted from Green Biz) What is Environmental Auditing The auditing process is designed to: (1) verify compliance with corporate environmental requirements

(2) evaluate the effectiveness of existing environmental management systems or environmental impact assessment.

(3) assess risks from regulated and unregulated materials and practices. Types of Environmental Auditing: 1) Environmental compliance audit

- An environmental compliance audit is a means of observing whether the company is meeting its objectives at the time of the audit and whether improvements can be made. 2) Environmental Management System (EMS)

- EMS is a systematic process of objectively obtaining and evaluating evidence to determine the reliability of an assertion with regard to environmental aspects of activities, events and conditions as to how they measure to established criteria, and communicating the results to the stakeholders to be specific.

- EMS would usually be found in large companies. ADVANTAGES of Environmental audit. 1) the major benefit of an environmental audit is the subsequent reduction of the company's risk. By performing an environmental audit, companies know which problems they could be facing.

3) This enables companies to create a competitive advantage if they understand their relation with the environment

2) Some other benefits are the provision of management decision support data, liability assurance, the creation of an additional measurement tool, better compliance management, an aid in educating the employees, and a tool for public relations and marketing. DISADVANTAGES of Environmental audit: 1) The nature of an environmental audit raises the question of who should bear the costs of the collection and disclosure of environmental information: the company or the stakeholders in whose interest the information is collected, and that the company should bear the costs

2. The danger of disclosing environmental information to public is that, an environmental audit can reveal violations of environmental rules that might affect the company financially or can have negative consequences for its corporate image
3. The audit might also disrupt the operations of the company, although proper scheduling might mitigate this risk.

4. There is an increased risk of liability if the response to the audit is insufficient or if the environmental audit reveals several problems simultaneously, which can cause difficulties in setting priorities. FACTORS INFLUENCING ENVIRONMENTAL AUDITING 1) Regulations: It is believed that, Environmental laws and regulations have an impact on the environmental audit.

2) Penalties: Existence of penalties in environmental audits is another strong motive for a firm to conduct timely and completely environmental audit.

3) Costs: another element that can be expected to play deceive role is the cost associated with an environmental review or audit. ISO 14000 - Environmental management The ISO 14000 family addresses various aspects of environmental management. It provides practical tools for companies and organizations looking to identify and control their environmental impact and constantly improve their environmental performance. Group Members (a) Explain the meaning of environmental auditing.
(b) List some standards that have been issued in relation to environmental auditing.
(c) Describe the types of tasks that may be involved in environmental auditing. ISO 14001:2004 ISO 14001:2004 sets out the criteria for EMS and EIA.

It does not state requirements for environmental performance, but maps out a framework that a company or organization can follow to set up an effective environmental management system. ISO 14001:2004 and SMEs Small and medium sized enterprises (SMEs) also benefit from ISO 14001:2004.

This standard may help make them make it easier for small and medium-sized enterprises to achieve the benefits of implementing an environmental management system based on ISO 14001. ISO 14004 Other environmental management tools developed by ISO/TC 207 include: ISO 14004, which complements ISO 14001 by providing additional guidance and useful explanations.

Environmental audits are important tools for assessing whether an EMS is properly implemented and maintained.

ISO 14004 provides guidance on the development and implementation of environmental management systems and principles... and their co-ordination with other management systems. ISO 19001 The auditing standard, ISO 19011, is equally useful for EMS and quality management system audits.

It provides guidance on principles of auditing, managing audit programmes, the conduct of audits and on the competence of auditors. The cost of failing an environmental/quality management systems audit can take a number of forms:

companies can lose valuable contracts or prized certifications;
they may have to pay for an expensive range of improvements demanded by a client;
they may experience and erosion of efficiency; etc. ISO 14013/15 Guidelines for Environmental Auditing - Audit Programs, Reviews & Assessments

It provides audit program review and assessment material. Under stage 90.20 International Standard under periodical review. AGS 1036 The AUASB has withdrawn, with immediate effect, AGS 1036 The Consideration Of Environmental Considerations In The Audit Of A Financial Report.

The work being done by the IAASB on this topic and the significant revisions to auditing standards that have occurred since AGS 1036 was first issued in 2002, all of which have rendered it obsolete. A replacement for AGS 1036 will be considered when these developments stabilize. The IAASB approved ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, at its March 2012 meeting. The ISAE is effective for assurance reports covering periods ending on or after September 30, 2013. BASIC STEPS in an Environmental Audit There are three essential phases in carrying out an environmental audit. These are:

1. Planning,

2. Gathering information, and

3. Concluding the audit. Planning stage Identify the audit objectives.
Define the scope of audit.
Determine who is the audience for the environmental audit.
obtain all relevant background information.
Determine the audit approach.
Ascertain, evaluate and document the relevant environmental systems and controls operating. Prepare a detailed audit programme.
Select the audit team on the basis of skills and experience.
Evaluation of a company’s internal controls and risk management systems.
Perform reasonableness checks on a company’s disclosure.
Reviewing the adequacy of costs on insurance premiums, covering the costs of clean-up in an event of leak in hazardous materials, or major environmental disasters.
Reviewing a company’s policy and controls on occupational health and safety and the adequacy of provisions/expenditures on work cover. Gathering Information Gathering audit evidence.

Audit Testing
Select the items to be tested.
Carry out detailed compliance and /or substantive testing. Concluding
Post-audit research and verification
Analysis of audit findings
Preparation of an audit report Content of the EA Report 1. Introduction

2. Description of the Development or Activity under Audit

3. Description of the Environment

4. Description of Environmental Effects

5. Conduct of the Audit

6. Evaluation of Environmental Effects

7. Recommendations Environmental matters are becoming significant to an increasing number of entities and may, in certain circumstances, have a material impact on their financial statements.
For some entities, environmental matters are not significant. However, when environmental matters are significant to an entity, there may be a risk of material misstatement (including inadequate disclosure) in the financial statements. Introduction In principle, environmental auditing can be done by any person from ranges of discipline; it can be accountant, scientist, engineers external or internal auditors or any one but most of time it is done by multidisciplinary team so as to avoid a too strong focus on procedures. 3) Environmental Impact Assessment

Environmental assessment is a procedure that ensures that the environmental implications of decisions are taken into account before the decisions are made.

Environmental assessment can be undertaken for individual projects, such as a dam, motorway, airport or factory Case Study Companies in focus:
- British American Tobacco Fiji
- Sustainable Energy Limited
- Air Pacific
- Punjas
- Namosi Joint Venture Discussion and Analysis After the Environment Management Act was Passed in 2005, environment auditing in the form of EIA and EMS became mandatory.

According to the Department of Environment Fiji, there were a total of 80 EIA projects in 2011.

All these projects were likely to have significant adverse impact on the environment and hence required an EIA or EMS. According to the Department of Environment, activities that require EIA or EMS include ‘activities that alter the physical nature of land’ such as:

constructions of buildings/works,
deposit of wastes or other materials from outfalls,
the removal of sand,
coral, shells,
natural vegetation,
sea grass or other substances,
land reclamation,
mining or drilling of minerals,
but does not include fishing. Sustainable business practice is at the heart of
the Group’s strategy. By addressing our social,
environmental and economic impacts, we build
value for the business, for our shareholders and
for other stakeholders.
(Nicandro Durante, Chief Executive) The Nadarivatu Hydro Power Project is part of a programme of developments being undertaken by Sustainable Energy Limited (SEL), a joint venture company between the Fiji Electricity Authority (FEA) and Pacific Hydro Limited.
Biological survey of terrestrial and aquatic species and habitats.
Social baseline assessment and impact assessment.
Hydrological modeling of modified flows in the Sigatoka and Ba Rivers.
Archaeological survey.
Water quality testing in the Sigatoka and Ba catchments.
Economic impact assessment at the local and national level. Specific EIA studies included: The EIA process has identified a number of potential adverse impacts of the proposed scheme.
These include:
Sedimentation effects on aquatic ecology as a result of sediment discharges from earthworks in and around the rivers.
Disturbance and loss of terrestrial ecology under the Nadarivatu Dam and Lake.
The diversion of water from the Qaliwana and Nukunuku Creeks will create uniformly low river flows downstream in the Sigatoka River. Changes to downstream ecosystems and fish populations in the Sigatoka River as a result of the change in flow and the dam structure.
Changes to Ba River flow during some scenarios, affecting fording and other river uses downstream, but providing improved fish habitat.
Disturbance to traditional village life, and in particular to Buyubuya Village, during construction as a result of the works and influx of workers to the district. Sustainable business practice is at the heart of
the Group’s strategy. By addressing our social,
environmental and economic impacts, we build
value for the business, for our shareholders and
for other stakeholders.
(Nicandro Durante, Chief Executive) They monitor and reduce their direct environmental impacts by making their operations more efficient.

They also address their indirect impacts by choosing suppliers with strong environmental credentials and encouraging their existing suppliers to improve their environmental performance. When it comes to reducing their environmental impacts within their direct operations, the main priority of British tobacco is to minimize energy consumption.

They also aim to do this by carefully assessing and planning their energy needs to maximize efficiency; by investing in energy-efficient equipment; by employee engagement; and by encouraging our suppliers to reduce their energy use. The benefits of using an EMS by British Tobacco The use of EMS helped BAT focus on increasing their understanding of future risks and opportunities by mapping their risks from climate change, assessing their water footprint and engaging with stakeholders. Results of using an effective EMS: Conclusion and Recommendation Some of the recommendations to firms performing Environmental Audit include:
Environmental Awareness
Risk Evaluation
Policies and Strategies
Increased Monitoring List some standards that have been issued in relation to environmental auditing. Question 2 Describe the types of tasks that may be involved in environmental auditing. Question 3 The Environmental Management System process: Which one of the following is not an advantage of Environmental Auditing?
a. reduction of the company’s risk
b. provision of management decision support data
c. competitive advantage
d. increased risk of liability Questions for you :) Which one of the following is a factor influencing Environmental Auditing?
a. Regulations
b. Costs
c. Penalties
d. all of the above Which of the following is not an Environmental ISO standard?
a. ISO 14001
b. ISO 14004
c. ISO 14013/15
d. ISO 014-117 Which of the following are the most common types of Environmental Auditing??
a. Compliance Audit
b. Environmental Management System
c. Environmental Impact Assessment
d. Both b and c Which of the following is not a major step in Environmental Auditing?
a. Planning
b. Gathering information
c. Concluding the Audit
d. Reporting to Prena Rani Why do you think a firm should hire an outside firm for its company's Environmental Audit? • An outside firm may provide specialized knowledge that your company does not possess internally
• Hiring an outside firm will add credibility to your results in the eyes of your external stakeholders Question 1

What is Environmental Auditing According to our research and understanding, we believe that Environmental Auditing is a very important concept in today's corporate environment.

Moreover, new standards needs to be developed so that the actual cost of environmental damage is taken into accounts when doing environmental auditing ISO 14000 Series

ISO 14001
ISO 14004
ISO 14013/15
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