Name:

Rathod Sandeep Kanak

Paper on:

Environmental Auditing

Url: www.geocities.com/sandeepkrathod.com
E-mail: rathodsandeep@hotmail.com
Synopsis:
The essay is a brief overview on the specialized subject of 'Environmental Auditing'. The
growing awareness among the public at large on the need to take steps to protect the environment
has resulted in a growth of legislation & material on this relatively new subject of Auditing.
The essay starts with a general introduction of the topic & analyzes its definition. It goes on to
describe the various types of Environmental Auditing programs & later enumerates the requisites
of this exercise. Next in line are the advantages of such a program with an emphasis on the cost
aspect. Also a practical e.g. has been discussed.
Later on the ISO 14000 series of standards are discussed. Lastly the relevance of the exercise
with regard to the Indian corporate scene is looked upon. A list of useful Internet sites where
further information is available, is attached & a visit to these is highly required for further
reference.
Words: 2353 (excluding the synopsis & the appendix of Internet sites)

Environmental Auditing:
Introduction and Definition.
The Industrial Revolution that started since the end of the 18th century has bought unparalleled &
radical changes in man's lifestyle as compared to any other period in history. Interestingly, it also
has been a saga of ruthless exploitation of the Earth & it's available natural resources. This has
resulted in a host of unwanted & very often-unforeseen circumstances such as:

Global warming.

The depletion of the ozone layer.

Acid rain.

Photochemical smog; just to mention a few.

As a result, society as a whole is taking a much keener interest in what organisations are doing.
Today legislation has become much more exacting, financial institutions are much more
concerned as to where their money is going, & citizen's pressure groups have been established.
Not only are customers are looking for more environmentally friendly products, even staff and
prospective staff are wanting to be associated with environment caring & conscious companies.
Because of the growth of environmental business issues, the environmental audit function has
grown dramatically since its inception in the 1980's.
International Chamber of Commerce defines the environmental audit 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; and the public's perception of the operating
company in the local area... Environmental audit does not stop at compliance with legislation.
Nor is it a 'green-washing' public relations exercise... Rather it is a total strategic approach to the
organization's activities.' The important features are that environmental auditing is a management
tool for evaluating environmental performance against specified objectives. Environmental
Auditing is normally regarded as part of an overall environmental management system & it is
therefore not considered in isolation but as one of a series of regular audits to assess
improvements in performance. Environmental auditing has evolved over from being primarily a

scientific undertaking to one which now includes evaluation of compliance with pre-determined
standards and emphasizes a management control system.
Procedure:
It is a process of a systematic, periodic and objective approach to investigating business
operations - from conception to grave. It starts from an analysis of the construction of plant,
purchasing of starting building materials and various possible alternatives, processing, recycling,
control of waste, storage, distribution, use, repair / recycling and final disposal of end effluents.
A series of questions (i.e. questionnaires & checklists), of the type outlined above on all stages of
the enterprise & it's processes, are prepared. Where possible figures are put to these, & the
results are recorded. A report is written, highlighting the good and bad points that need attention
and then using these as the baseline to set objectives and targets against which future audits can
be measured. During a typical environmental audit, a team of qualified inspectors, either
employees of the organization being audited or contractor personnel, conducts a comprehensive
examination of a plant or other facility to determine whether it is complying with environmental
laws and regulations. Using checklists and audit protocols and relying on professional judgment
and evaluations of site-specific conditions, the team systematically verifies compliance with
applicable requirements.
The team may also evaluate the effectiveness of systems in place to manage compliance and
asses Technical accrual of the amount of liabilities and costs for the environmental damages and
properly disclosing these costs to the public and investors is it's main function. Environmental
audits are comprehensive and systematic reviews of the enterprise's environmental performance
used to improve compliance with environmental laws and minimize future environmental
damage & the environmental risks associated with the facility's operations.
Types:
Environmental Audits may be conducted for different purposes & hence there are several types
of environmental audits depending upon their objective & depth. Chief among them are as
follows:

1) Compliance audits - used to insure that the company is meeeting all regulations regarding
specific environmental practices, or the implications of non-compliance.
2) Systems Audits that focus on how systems are used internally to manage environmental risks.
3) Property Audits of transactions of property transfers and due diligence for purchasing property
to reduce or become aware of the potential risks involved in these transactions.
4) "Treatment, Storage, Disposal Facility" Audits which are used to follow different types of
hazardous material throughout it's life cycle and disposal. This helps insure they are properly
disposed of and stored etc.
5) Preventative Measures Audits that focus on how & what steps can be taken to reduce the
amount of risk a company has if these measures are put into place.
6) Appraisals on the production process itself to insure that products meet specific standards both
as per Government Regulations & as per internal safety standards.
Requisites:
An immediate reaction to the mere mention of the conducting of an environmental audit is that it
will cost more money. This need not be the whole truth. Organisations that really care can
actually save money, comply with legislation, enhance their reputation and increase their market
share. At one time, it was fashionable to consider products "from cradle to grave" but today we
need to extend this to consider "from conception to grave" and get things right from the start.
This will be better for the environment and more cost-effective in the long run. Environmental
auditing is applicable as a management tool regardless of the size of the organisation or sector.
The approach will vary, but the principles are the same Commitment - effective environmental audit programs need strong support from top
management for the resources necessary to hire and train audit personnel. There must be a
commitment to the environment from the top of the organisation and this must be conveyed
throughout the organisation through Communication and training - Everyone in the organisation should understand what the
organisation is trying to achieve and be trained in the methods as to achieve it.

Personnel - need to be independent from external or internal pressures, and employ quality
assurance procedures to ensure accuracy and thoroughness; The personnel structure of the
organisation should be clearly defined so that all are aware of their responsibilities and authority.
Policy - The organisation should develop a company environmental policy. This will involve Preliminary review - of the operations. This will be semi-quantitative to avoid going into detail
on issues that can be readily corrected.
The Policy should lead to a number of Objectives and Targets being defined and a formal
Documented System being put into place to help achieve these targets and objectives. In order to
monitor progress against these objectives, the system will need to be audited. We need to form
an audit team - this will vary with the type and size of organisation concerned. In large
organisations, where there are, perhaps, separate sections dealing with environmental issues, this
is most likely to be an internal audit. With smaller organisations, where the necessary expertise
does not necessarily exist in house, it is most likely to be external. Some organisations prefer to
use a mixture of both. In all cases, it is desirable to have an external audit with "fresh eyes"
approach at some stage. The team should be composed of members with differing skills. Being a
member of an audit team can also be a useful training ground for new auditors - there are so
many nuances, that environmental auditing cannot be learned from a book.
Advantages:
If approached in the right way, there are considerable advantages that can be gained through
environmental auditing. Environmental Auditing encourages an organisation to examine its
operations in a constructive manner and is the cornerstone of an Environment Management
System. An initial review of operations provides an organisation with the baseline information
and gives a health check on its operations today. This will provide the basis for making an
environmental policy statement and allow objectives and targets to be set and provide the basis
to audit against. Regular monitoring of the system will allow the tiller to be tweaked and ensure
that the targets are being met. The advantages of doing this are that it allows costs savings to be
made and generally improve operations - both environmentally and for the business as whole considerable savings can result. It will also make any organisation more aware of legislation and
ensure that it is complying with the relevant regulations. Environmental auditing will assist an

organisation to enhance its environmental policy statement which in turn will be welcomed by
customers and give the organisation competitive edge.
In addition, environmental audits have many other benefits, which may vary in importance from
company to company, but can:
Assess efficiency of the current management system
Identify deficiencies and cost saving opportunities
Provide the basis for environmental improvement plans
Recommend corrective actions
Identification of further training needs
Those organisations that have introduced environmental auditing as part of an overall
environmental management system have experienced the benefits;
First and foremost, they are in control of what they are doing. They can account to stakeholders,
observe trends and anticipate and take corrective action before problems arise rather than
reacting to (sometimes-costly) problems.
They ensure that they are complying with legislation and their own objectives and targets. This
is welcomed by regulatory bodies, financial institutions, staff and all other organisation that take
an interest in the company.
Improved staff relations. Staff appreciate the involvement and the feeling of contributing to the
environment.
Cost:
Many people are concerned about cost & consider this exercise "an action without benefit".
Environmental auditing will cost an organisation in both time and money but if approached
correctly the organisation should be able to recover these costs very easily. It will be unusual for
an audit to be carried out that does not expose some weakness or waste in the system. If
corrected, these can lead to direct cost savings. From the list of priorities drawn up look at those
that are simplest and cheapest to install. Develop cost savings from these and use the savings to
think in terms of the next savings that can be made. In this way, you will not have to make large
outlays at any one stage and can effect improvements in a controlled manner. You may

eventually reach the stage where the additional costs outweigh the benefits and there is no point
in proceeding further - there is no point in putting the company out of business by installing
expensive equipment that goes to extremes.
Practical example:
This applies to most organisations - replace your tap washers, this will cost a very small amount
but could save considerably on your water bills and also on your sewage bills. If it is hot water
that is being lost then this action will also save on your energy bills. The savings that you have
made can be used to pay for adjustments to your plumbing - you may be able to segregate your
waste streams into harmful and less harmful and save on effluent discharge costs, in some cases,
you may even be able to feed some of what was waste back into the front end of your operations
and save on raw materials also.
ISO14000 - Introduction:
This is a comprehensive series of standards designed to cover the whole area of environmental
issues for organizations in the global marketplace. The ISO 14000 series emerged primarily as a
result of the Uruguay round of the GATT negotiations and the Rio Summit on the Environment
held in 1992. The standards apply to all types and sizes of organizations and are designed to
encompass diverse geographical, cultural and social conditions. For ISO14001, except for
committing to continual improvement and compliance with applicable legislation and
regulations, the standard does not establish absolute requirements for environmental
performance. Many organizations, engaged in similar activities, may have widely different
environmental management systems and performance, and may all comply with ISO14001.
The following is list of the ISO 14000 standards relevant for Environmental Auditing: 14010
Guidelines for Environmental Auditing - General Principles of Environmental Auditing.
14011 Guidelines for Environmental Auditing - Audit Procedures-Part 1: Auditing of
Environmental Management Systems.
14012 Guidelines for Environmental Auditing - Qualification Criteria for Environmental
Auditors.
14013/15 Guidelines for Environmental Auditing - Audit Programs, Reviews & Assessments.

14024 Environmental Labeling - Practitioner Programs - Guiding Princciples, Practices and

Certification Procedures of Multiple Criteria Programs.
14031/32 Guidelines on Environmental Performance Evaluation.
14040/43 Life Cycle Assessment General Principles and Practices.
Relevance of Environmental Auditing in India:
Our country's Constitution vide its Article 47 commands the State to improve the standard of
living & public health of its citizens. Article 48-A, which is a part of the "Directive Principles of
State policy", orders the State to 'endeavor to protect & improve the environment & to safeguard
the forest & wildlife of the country'. Article 51-A (g) is a 'Fundamental Duty' & states that it
shall be the duty of every citizen to protect & improve the natural environment. Hence the
Government has also taken some steps in this field. The important ones are:
Introduction of the 'Eco-Mark' for environment friendly goods.
Making it mandatory to mention steps taken for energy conservation by corporate entities in the
Annual Report (MAOCARO).
Setting up of legislative bodies & provisions for penalty & punishment under various
legislations viz. The Environment Protection Act; The Air (prevention & control of pollution)
Act, 1981; The Water (prevention & control of pollution) Act, 1974;
Institution of various incentives & awards for environment friendly entities.
In conclusion it will be prudent to note the following points:
In India there is no legislation that makes conducting of an Environmental Audit compulsory!
Also there is not much literature by Indian Authors on this topic; whatever little is written deals
almost exclusively with 'pollution control & related issues'.
There is also no specialised course to pursue Environmental Auditing as a profession.
Having written about the salient points connected to the emerging area of " Environmental
Audit" I shall end on a positive note:
Remember, good environmental sense is good business sense!

Here are some links to organizations that discuss, explain, and implement the concepts of
Environmental Auditing.
1. United States Environmental Protection Agency
[http://www.epa.gov/]The EPA implements the Federal laws designed to promote public health
by protecting our Nation's air, water, and soil from harmful pollution.
2. Institute of Internal Auditors
[http://www.theiia.org/] The IIA is responsive to the specialized needs of its members through
conferences and seminars, membership sections, subscription services, special publications,
alliances or agreements of cooperation with industry/specialty auditing associations, networking
opportunities, and open communication with leaders in industry-specific/specialty auditing areas.
The purpose is to advance and strengthen the overall profession of internal auditing and to help
meet audit specialty or industry-specific needs on a global basis.
3. EnviroLink Network
[http://www.envirolink.org/] EnviroLink is a non-profit organization... a grassroots online
community that unites hundreds of organizations and volunteers around the world with millions
of people in more than 150 countries. EnviroLink is dedicated to providing you with the most
comprehensive, up-to-date environmental resources available.
4. Board of Environmental Auditor Certifications
[http://www.rutgers.edu/Accounting/raw/beac/] The BEAC is an independent, non-profit
corporation created by the Environmental Auditing Roundtable (EAR) and The Institute of
Internal Auditors (IIA) to certify competency in environmental auditing and related scientific
fields. BEAC's certification programs recognize environmental professionals and promote high
standards of ethical practice and professional competence and are distinguished by the
professional designation of Certified Professional Environmental Auditor (CPEA).
5. Centre for Social and Environmental Accounting Research
[http://www.dundee.ac.uk/accountancy/csear/] The CSEAR publishes the Social and
Environmental Accounting Newsletter which provides outlets for news, articles and reviews and
keeps members up to date with developments in the Centre and with relevant developments in
the field, in practice and academe around the world.
6. International Institute for Management Development
[http://www.imd.ch/] IMD is an independent not-for-profit foundation located in Switzerland
with a current research project in Environmental Accounting called Managing the Industrial
Business Environment (MIBE).
7. Global Environmental Management Initiative
[http://gemi.org/] GEMI provides strategies for business to achieve environmental, health and
safety excellence and economic success.
8. Risk and Environmental Management
[http://www.riskmgmt.on.ca/] REM is a professional management consulting firm specializing in
environmental and risk management. Not only does it provide Risk Management Programs and

Environmental Management Systems, but it also provides auditing, health and safety programs
and training.
9. Arent Fox Enviro Website
[http://arentfox.com/enviro/] This website serves as a resource for those interested in
environmental law. Its principal focus is environmental self-audit privilege and immunity
legislation in the United States.
10. Government Institute
[http://www.govinst.com/] GI publishes professional books, regulations, and electronic products,
in the fields of the Environment and ISO Standards. GI also leads the way as a training company,
helping individuals comply with government regulations and standards through implementing
our training services and seminars. It is also the best resource for Code of Federal Regulations
(CFRs) in print, on CD ROM, and on the Internet.