Evolution and Trends in Environmental Auditing
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EvolutionEvolution andand TrendsTrends inin EnvironmentalEnvironmental AuditingAuditing Evolution and Trends in Environmental Auditing November 2007 This publication was prepared by the INTOSAI Working Group on Environmental Auditing (WGEA). The WGEA aims to encourage the use of audit mandates and audit methods in the field of environmental protection and sustainable development by Supreme Audit Institutions (SAIs). The WGEA has the mandate to • help SAIs gain a better understanding of the specific environmental auditing issues, • facilitate exchange of information and experiences among SAIs, and • publish guidelines and other informative material. This publication may be downloaded free of charge from the INTOSAI WGEA website http://www.environmental-auditing.org. Permission is granted to copy and distribute this publication, giving appropriate credit, provided that such copies are for academic, personal or professional use and are not sold or used for commercial gain. Catalogue No. FA3-47/2-2007E ISBN 978-0-662-46861-5 Acknowledgements The knowledge expressed in the paper is only possible with the participation of numerous Supreme Audit Institutions (SAIs). Auditors from SAIs provided case studies, answered questionnaires, and partook in lengthy interviews. I’m also extremely appreciative of all the SAIs that contributed papers and presentations regarding their audit experience at the Working Group on Environmental Auditing meetings. The records of their audit experience were a key source of examples and experience upon which this paper is based. I’d also like to thank experts in auditing and environmental field from outside of the SAI community that took the time to provide comments to complete drafts. This is particularly important as this paper is also intended to reach an external audience. Special thanks to the steering committee members and subcommittee members that provided thoughtful and detailed comments on the paper. Their comments were often the only opportunity to have this paper peer reviewed with much thought-provoking observations. Lastly, the Office of the Auditor General of Canada has contributed numerous staff to support the development of this paper, including master’s degree students, editors, and graphic designers. In particular, I’d like to thank Rose Hum from the Publications and Graphics Design Unit for working closely with me on the graphic details of a highly complex and abstract subject matter. The idea for this piece was originally envisioned by John Reed. Without his guidance and leadership, this paper would not exist. Vivien Lo, Office of the Auditor General of Canada November 2007 Table of Contents Acronyms and Abbreviations ...................................................................................... vii Foreword......................................................................................................................... ix Executive Summary....................................................................................................... xi Introduction ..................................................................................................................... 1 Chapter 1: The Foundations of Environmental Auditing in SAIs ............................... 5 1.1 Benefits for the environment and for government............................................... 6 1.2 Tools for auditing the environment.................................................................... 10 1.3 Audit findings .................................................................................................... 13 Chapter 2: The Evolution of Environment in Governance and in Auditing ............. 15 2.1 Historical overview ............................................................................................ 15 2.2 Collective efforts on environmental auditing: INTOSAI WGEA......................... 24 2.3 The regional and national context of individual SAIs ........................................ 26 Chapter 3: The State of Environmental Auditing in SAIs .......................................... 27 3.1 Building methods, capacity and knowledge in SAIs.......................................... 27 3.2 Emerging areas of environmentally related audits............................................ 33 3.3 SAIs’ special role in auditing International Environmental Agreements............ 35 3.4 Cooperating and building relationships............................................................. 41 Chapter 4: Future Directions........................................................................................ 45 4.1 Current environmental conditions and development pressures........................ 45 4.2 Trends for SAIs to watch in global environmental governance......................... 48 4.3 Implications for SAIs’ environmental audit practice .......................................... 50 4.4 Strengthening external relations ....................................................................... 52 Chapter 5: Conclusion.................................................................................................. 55 INTOSAI WGEA—Evolution and Trends in Environmental Auditing v Appendix 1—Frequently Asked Questions—A Quick Guide for Practitioners .................................................................................................................. 57 FAQ 1: How can SAIs build the capacity, skills, and knowledge to execute successful environmental audits?..................................................................... 58 FAQ 2: What does a SAI need to know in order to conduct its first environmental audit? ........................................................................................ 60 FAQ 3: When and why are cooperative environmental audits appropriate?............. 61 FAQ 4: How can SAIs use external experts?............................................................ 63 FAQ 5: What are some typical obstacles faced in SAIs’ audits and how can they be managed?............................................................................................ 64 FAQ 6: What government actions can be audited, and what approach should SAIs use? ......................................................................................................... 65 FAQ 7: How are SAIs involved in verifying and learning about aspects of sustainable development?................................................................................ 67 FAQ 8: How are SAIs incorporating environmental auditing into their work?............ 69 FAQ 9: How can SAIs increase the impact of environmental audits?....................... 71 FAQ 10: How can SAIs and environmental non-governmental organizations work together?.................................................................................................. 73 Appendix 2—WGEA Resources for SAIs.................................................................... 75 Appendix 3—Contributing Countries.......................................................................... 78 Appendix 4—Audits...................................................................................................... 79 Glossary......................................................................................................................... 83 Bibliography .................................................................................................................. 87 vi INTOSAI WGEA—Evolution and Trends in Environmental Auditing Acronyms and Abbreviations CITIES Convention on International Trade in Endangered Species of Wild Fauna and Flora CMS Convention on the Conservation of Migratory Species of Wild Animals EU European Union GEF Global Environmental Facility IDI INTOSAI Development Initiative IEA International Environmental Agreement INTOSAI International Organization of Supreme Audit Institutions INTOSAI WGEA INTOSAI Working Group on Environmental Auditing LRAP Convention on Long Range Transboundary Air Pollution OECD Organization for Economic Co-operation and Development MARPOL International Convention for the Prevention of Pollution from Ships MDG Millennium Development Goals* RAMSAR Convention on Wetlands of International Importance especially as Waterfowl Habitat RWGEA Regional Working Groups on Environmental Auditing SAI Supreme Audit Institution UNCSD United Nations Commission on Sustainable Development UNEP United Nations Environment Program* INTOSAI WGEA—Evolution and Trends in Environmental Auditing vii UNFCCC United Nations Framework Convention on Climate Change* WSSD World Summit on Sustainable Development* *definitions available for these items in the glossary viii INTOSAI WGEA—Evolution and Trends in Environmental Auditing Foreword Environmental auditing is now a mainstream activity in many Supreme Audit Institutions (SAIs): Over 2,000 environmental audits have been conducted—close to 400 in the past 3 years alone— on topics as wide-ranging as river basin management, pesticide regulation, sustainable development reporting, biosecurity, climate change, waste incineration, and international environmental agreements. These audits are having a significant impact on many governments’ management of environment and sustainable development issues around the world and can be directly linked to positive environmental results. The INTOSAI Working Group on Environmental Auditing (WGEA) was established almost 15 years ago, and since then it has experienced considerable growth and change. So too has the practice of environmental auditing. Over the years,