ENVIRONMENTAL AUDIT

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ENVIRONMENTAL AUDIT

• AN EMERGING ISSUE.

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ARTICLE

• A company has reportedly
• established a soft-drink manufacturing unit
  in Kerala.
• By 2002, the unit has not only begun dumping
  foul smelling
• waste slurry on the nearby land, but also
  succeeded in
• contaminating the water to the extent that it
  turns white on boiling and is unfit for drinking,
  washing or even bathing. Over 1000 families have
  been affected in the surrounding villages within
  a radius of 5 kms., of which a quarter are
  adivasis.
• It is also reported that the tribals in that area
  protesting peacefully demanding that the factory
  from which over 39 lakh ml of beverages are
  crated out daily, be closed down. The slurry was
  earlier sold as fertilizer to ill-informed
  farmers. Later, as buyers turned wiser, it was
  given off free. Now, it is dumped forcibly.

Source Hindustan Times
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INTRODUCTION

• Organizational response to the environment
  and the role of the accounting profession for the
  environmental protection are fairly recent
  developments.
• Environmental issues are business issues and
  have considerable implications for 'audit' in all
  its semblance leading to a separate specialized
  area viz., 'environmental auditing'.
• It is seen as an essential element in any
  organization's environmental response. In view of
  their core competencies in the field of auditing,
  chartered accountants can play a significant role
  in the 'environmental protection' - which is one
  of the essential objectives of the environmental
  auditing. .

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Definition Meaning

• The Confederation of British Industry has
  defined environmental auditing as
• the systematic examination of the
  interactions between any business operation and
  its surroundings.
• This includes all emissions to air, land and
  water legal constraints the effects on the
  neighboring community, landscape and ecology the
  publics perception of the operating company in
  the local area - Environmental audit does not
  stop all compliance with legislation. Nor is it a
  green-washing public relations exercise.
  Rather it is a total strategic approach to the
  organization's activities.

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Industry and environment relationship
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Definition Meaning

• Article 2(f) of the European Union Eco Management
  And Audit Scheme defines EA as
• A management tool comprising a systematic,
  documented, periodic and objective evaluation of
  how well environmental organization, management
  and equipment are performing in the aim of
  helping to safeguard the environment by
• Facilitating management and control of
  environmental practices,
• Assessing compliance with company policies, which
  would include meeting regulatory requirements.

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Why Environmental Audit

• Business can assess the environmental impact of
  their operations
• Corporate decisions are spoiling companys market
  for its products, destroying the source of
  essential supply, damaging or polluting the very
  infrastructure that makes usage and demand of the
  product grow
• EA can highlight areas of inefficiencies in
  process
• e.g. where the amount of resources used are out
  of proportion to the amount of saleable
  items/services produced.
• It can highlight excessive wastes
• Can provide opportunity for business to decrease
  its wastes output and reduce the cost of waste
  treatment or waste disposal

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EIA goals

• Environmental Impact Assessment is a tool
  designed to identify and predict the impact of a
  project on the bio-geophysical environment and on
  man's health and well-being, to interpret and
  communicate information about the impact, to
  analyze site and process alternatives and provide
  solutions to sift out, or abate/mitigate the
  negative consequences on man and the environment.
• The EIA is a means of avoiding environmental
  disturbances that are always much more expensive
  to correct after their occurrence than before. It
  is also important to underline that very few
  projects have been deemed not viable merely
  because of the cost of pollution control and that
  modern environmental control, in a new plant, is
  less than 3 of the initial investment.
• The environmental issues must be addressed as
  soon as possible during project planning. There
  should not be any hesitation in abandoning a
  project or a process at an early stage, or in
  proposing alternatives to any project which would
  have very detrimental impact on the environment.
  In the same way as economic, financial,
  institutional, or technical analyses, EIA is an
  integral part of the project.

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EA GOALS

• EA should provide answers to the following
  questions raised by company managers
• What are we doing? In particular, are we in
  compliance with government regulations,
  guidelines, codes of practice, permits conditions
  ?
• Can we do it better? In particular, are there non
  regulated areas where operations can be improved
  to minimize the impact on the environment?
• Can we do it more cheaply ?
• What more should we do ?
• It is also important to note that an EA cannot
  stand alone and must be integrated in an overall
  management system and must include dialogue
  between the plant manager and people living in
  the vicinity.

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EIA and EA Process
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Steps for EA Audit

• The International Chamber of Commerce presents
  the different steps of an EA as follows
• Pre-audit activities which include
• Selection and scheduling of facility to audit,
• Selection of audit team,
• Contact with facility and planning of the audit.
• Site activities which are divided into 5 steps
• First understanding of internal controls,
• Assessment of internal controls,
• Gathering of audit evidence,
• Evaluation of audit findings,
• Report of findings to facility.
• Post audit activities which include
• Production of a draft report,
• Production of a final report,
• Preparation and implementation of an action plan,
  
• Monitoring of action plan.

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Scope of EA

• 1. Material Audit The thrust areas of material
  audit is the effective utilization of materials,
  conservation of materials and minimizing wastages
  in different processes.
• 2. Energy Audit It deals with overall energy
  consumption, minimizing pollution etc.
• 3. Water Audit Evaluation of raw water intake
  facilities and evaluation of water treatment
  facilities.
• 4. Health and Safety Audit Health and safety
  measures are examined e.g. occupational diseases,
  compliance with labour laws, adequacy of safety
  measures etc.
• 5. Environmental Quality Audit It examines
  noise level, status of existing air quality,
  review of greening program undertaken by the
  enterprise, Installation and functioning of anti
  pollutant equipment.
• 6. Water Disposal Audit Review of waste
  disposal measures relating to solid and hazardous
  wastes, recycling etc.
• 7. Engineering Audit It analyses the aspect
  relating to efficiency of plant and machinery,
  engineering designs, cost effective methods of
  production etc.

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Benefits

• Facilitating comparison and interchange of
  information between operation or plants,
• Increasing employee awareness of environmental
  policies and responsibilities,
• Identifying cost-savings including those
  resulting from waste minimization,
• Evaluating training programmes and providing data
  to assist in training personnel,
• Providing an information base for use in
  emergency response arrangements,
• Assuring an adequate, up-to-date environmental
  database for internal management awareness and
  decision making in relation to plant
  modifications, new plans, etc.,
• Helping to assist relations with authorities by
  convincing them that complete and effective
  audits are being undertaken, by informing them of
  the type of procedure adopted.

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What is EMS

• EMS Stands for Environmental Management System.
  It is a system that enables any organisation
  irrespective of its size, type setting to
• Manage environmental impacts arising out of its
  activities, product services
• Ensures compliance to regulations
• Brings continual improvements
• Demonstrate high environmental performance to
  others by conforming to policy, objectives
  targets.

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Why EMS?

• The reasons why many companies are now adopting
  an Environmental Management System includes the
  following
• Improve compliance with legislative and
  regulatory requirements
• Facilitate access to overseas markets
• Reduce liability/risk
• Helps in attracting a high-quality work force
• Prevent pollution and reduce waste
• Generate a desire to profit in the market for
  "green" products
• Improve the internal management methods
• Create community goodwill

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What Is ISO 14001

• ISO 14001 is an Environment Management
• System (EMS) standard published by
• International Organization for
• Standardisation in year 1996 and later updated
  in the year 2005. It provides a highly effective,
  globally accepted framework for establishing and
  continually improving the effectiveness of
  environmental management. Implementation of ISO
  14000 may bring with it both reductions in
  environmental risk and environmental costs.

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How does the ISO 14001 Certification process work?

• Pre-assessment Visit Following documentation
  review, a pre-assessment visit is performed visit
  provides the Lead Auditor with a brief overview
  of the clients Environmental Management System.
• For ISO 140012004 certification, the assessment
  consists of two stage assessment. Both the
  assessments are conducted at site.
• Stage I In the first stage, in addition to the
  system document assessment the following issues
  are assessed
• 1. Identification of Environmental Aspects 2.
  Environmental regulations and laws are observed
  3. Internal Environmental Audit and Management
  Review
• Stage II On recommendation of the assessment
  team, the assessment moves to the state II of the
  audit. All Non - conformities raised at stage I
  should be closed before going for Stage II Audit.
  The aspects assessed in State II are
• 1 Operation2 Implementation3 Effectiveness of
  the Environmental Management System in the
  Organisation.

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How does the ISO 14001 Certification process work?

• Corrective action requests The applicant will be
  required to take corrective action within the
  committed time for any non-conformances found
  before certification can be granted.
• Certification STQC Certification Services will
  issue a certificate of registration to the
  applicant once the corrective action has been
  accepted and/or implemented. The certificate
  carries a validity of three years from the date
  of issue.
• Surveillance During the certificate validity
  period, surveillance assessments are carried out
  at an interval of 12 months (max) in the first
  and second year of the certificate validity.
• Renewal The client's quality system is
  re-assessment for the renewal of certificate. The
  re-assessment is carried out before at the end of
  the validity period of certificate.

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Environmental Audit Indian Status

• In India there is no Statutory requirement for EA
  in Corporate sector or in the Government sector.
• Few private sector companies like TISCO,ITC are
  periodically conducting EA.
• In India a procedure for EA was first notified
  under the Environment Protection Act in 1986 by
  the Ministry of Environment of Forests.
• This notification requires submission of an
  Environmental Audit Report or statement to the
  concerned state Pollution Board.
• As per the Indian Companies Act, 1956, details
  relating to energy consumption/energy
  conservation are presented in the Directors
  Report as annexure and it highlights the
  environment related policies/problems.

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How green is the Material Girl?
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• As London gears up for Saturday's Live Earth
  concert at Wembley to tackle climate change, we
  examine the carbon footprint of headline act
  Madonna...
• But how green are the Material Girl's own
  credentials? In the run-up to Live Earth, an
  environmental consultant has calculated Madonna's
  carbon output to be over 1,000 tons a year.
• Although the environmental audit was offered to
  Madonna for free, her management decided not to
  co-operate.
• Instead messages were posted on her fan site and
  'Madonna experts' were asked to draw up a full
  itinerary for the singer since May 2006.
• Environmental consultant John Buckley's
  assessment of Madonna The lion's share of the
  performer's carbon output was generated during
  the Confessions Tour, one of the biggest pop
  tours ever staged.
• Madonna clocked up 56 concerts across the world.
  At least 100 people, including crew, dancers and
  support staff, travelled with her.
• Based on these calculations it's estimated that
  the tour generated over 651 tons of carbon.
• "Madonna produces the same amount of carbon as
  102 average Britons," said Mr. Buckley. "Even
  though she runs a global business she's also set
  herself up as some sort of ambassador for the
  environment.
• "Therefore she needs to be seen to be walking the
  walk as well as singing the song."

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THANK YOU