Environmental Audit - Ocean of opportunities
Published: Jan 21, 2020
Shweta Jain
Environmental Audit - Ocean of opportunities
ENVIRONMENT protection is a buzzword around world. In India various Acts have been passed to safe our environment. These Acts are namely the Indian Forest Act, 1927, the Wildlife Protection Act, 1972, Water (Prevention and Control of Pollution) Act, 1974, the Forest (Conservation) Act, 1980, Air (Prevention and Control of Pollution) Act, 1981 and the Environment (Protection) Act, 1986. Apart from these acts, Ministry of Environment and Forests has made and implemented various rules and regulations for protection of environment, animals and wildlife. The Ministry of Environment & Forests is the nodal agency for the planning, promoting and implementing various environmental and forestry programs. Major policy initiatives by Ministry of Environment and Forests are National Environment Policy, 2006, Policy Statement for Abatement of Pollution, 1992and National Forest Policy. It is realized that making laws is not enough but it is equally important to see, how much industries and companies are complying with environmental laws. Thus concept of Environmental Audit emerged. Environmental Audit is essential to safeguard the environment and natural resources used by orgainsations to ensure minimum wastage and to verify compliance status with applicable domestic and international environment laws. This area of audit is gaining more and more importance and relevance with passage of time.
Environmental Audit in India is conducted by Supreme Audit Institution (SAI) which is headed by the Comptroller and Auditor General (CAG) of India. In fact, CAG and the Indian Audit and Accounts Department (IAAD) functioning under him, is collectively called the Supreme Audit Institution of India. Environmental Audit is conducted within a framework of Compliance and Performance Audit. Specialized guidelines {MSO (Audit) 2002} have been framed for conduct of Environmental audits.
These are the broad guidelines which enables SAI India's auditors to check whether the auditee institutions or an entity is complying with relevant law or not and whether entity concerned is giving due regard to the efforts of promulgating sustainability development and environmental concerns, where warranted. For Environmental Audit, SAI India has designated the office of the Principal Director of Audit (Scientific Departments) as the nodal office. This office undertakes environmental audits of central government programs, all over India. A Regional Training Institute in Mumbai is the training center to give training to officers and staff of SAI India on environmental auditing. Internationally, SAI India is a member of INTOSAI, WGEA and ASOSAI working group on Environment.
SAI India has a team of trained professionals and good techniques for carrying out environmental audit. The Environmental Audit can be divided into five broad categories, (i) Air issues (ii) Water issues (iii) Bio diversity (iv) Waste (v) Environment Management System. Through various field offices, SAI has been conducting Environmental audits from last 25 years. Below are mentioned few examples of Environmental audit done by SAI India.
- In 2002, audit of air pollution and industry emissions was conducted in 23 States. It was found that Air Pollution Control Act was not properly implemented and monitored which has led to increase in pollution levels.
- In 2005, Environmental audit of Thermal Power Stations of Bihar State Electricity Board was carried out and ineffective pollution control was observed.
- In 2006, audit on issue of Conservation & protection of Tiger in India was conducted in 28 tiger reserves in India. The audit suggested that relocation of the people living within the Tiger Reserves as well as removal and prevention of encroachment is essential to ease the biotic pressure on the tiger population.
- In 2008, audit on "Management of Waste in India" was conducted in 24 States and it was found that policies regarding waste reduction and recycling is not properly followed. It was observed through audit that poor monitoring and lack of accountability led to the ineffective management of waste in India.
In 1990s, Environmental audit was considered as only a subset of social accounting but has now expanded to become essential element of organisation's environmental responsibility. Environmental audit is new field where professionals demand is increasing day by day and it serves as one of the good areas of practice for professionals like CA, CS etc.
ICAI in the past was reluctant to participate in green issues, because their knowledge and capability for doing such audit may be questioned as it is a non financial area and requires expertise in various environmental laws. But over a period of time it was noticed that role of CAs in such audit is very significant. In fact, accounting professionals of various countries have published research reports on Environmental audit and accounting. Nowadays, environmental financial accounting is done by preparation of the environmental financial reports for stake holders using generally accepted accounting principles. In year 1996, ISO 14012 guidelines for environmental auditing was issued. It says that environmental auditors should have appropriate work experience and formal training in audit procedure and techniques. In year 2002, ISO 19011 was issued, which superseded ISO 14012. It says that environmental auditors should have personal attributes like decisive, observant etc. Auditor should have specific knowledge of environmental laws and Environmental Management System (EMS) terminology related to environmental matters. Some audit companies have already started creating and training specialized team on environmental audit. The team consists of environmental engineers, financial experts and legal professionals etc.
There is ample opportunity in this area of audit for professionals, but to avail, it is important to provide relevant education to professionals by institutes like ICAI, ICSI etc so as to enable the professionals to deal with issues pertaining to environment. Continuous training of professionals will be required to deal with dynamic nature of Environmental Audit related issues. There is also need to prepare framework of environmental reporting along with financial and management reporting for organizations by policy makers. The access to training, mentoring and guidance is required by auditors, not only to meet emerging challenges in environmental audit but also to continue to develop and maintain good auditing practices.
