1. RTI, MUIMBAI / Slide 1.2.1 Environmental Auditing - Concepts  What is Enviromental Auditing  Is it differrent from any other audits

2. RTI, MUIMBAI / Slide 1.2.1 Why is EA Unique and Special?  Specialised subject.  Requires knowledge.  Environment is globally important.  Material social, economical, environmental impacts in many areas.  Regulated globally and has global and regional impacts.  Mutiple players and actors

3. RTI, MUIMBAI / Slide 1.2.1 SAI Classification  Audits of Government monitoring of compliance with environmental laws.  Audits of the performance of Government environmental programmes.  Audits of the environmental impact of other Government programmes.  Audits of environmental management systems.  Environmental assessment of proposed environmental policies and programmes.

4. RTI, MUIMBAI / Slide 1.2.1 Performance Financial Compliance Planning Executing Reporting Waste WaterAir Biological Diversity

5. RTI, MUIMBAI / Slide 1.2.1 ENVIRONMENTAL AUDITING  Methods Regularity Audit-1) Financial Audit 2)Compliance Audit  Performance Audit

6. RTI, MUIMBAI / Slide 1.2.1 Financial Audit  Cost from Environmental Policies and obligations- Pollution, abatement cost, cost of decontamination of land, cost of decontamination of water etc.

7. RTI, MUIMBAI / Slide 1.2.1 Environmental cost included in other cost of operation  Audit to probe Environmental issues and ensure correctness of Environmental cost, Liabilities, Assets.  Audit to ensure disclosure of Environment liabilities, non compliance of obligations and penalty etc  Concept of upfront cost, back end cost  Cost incurred for making environmentally clean atmosphere before commencing the operations– upfront cost

8. RTI, MUIMBAI / Slide 1.2.1 Contd… Such cost if incurred would be treated as environmental cost to commence the business Decontamination of the land for a new business, cleaning of plants and machinery etc are upfront costs Cost to be considered for making the venture environmentally clean before the business is handed over to others is backend cost Cost incurred to clean the rigs of oil companies and the ships of shipping companies before it is used for other purposes after it was uesd to handle hazardous substances etc are backend costs.

9. RTI, MUIMBAI / Slide 1.2.1 Contd.. Environmental liabilities include the liabilities arising out of fees and penalties levied by regulators Other liabilities as result of non conforming of rules and regulations imposed by the Govt/regulators etc. Liabilities for rehabilitation of displaced persons form a project site Liabilities for cleaning of environment for fresh air, fresh water and land etc.

10. RTI, MUIMBAI / Slide 1.2.1 Assessment of Environmental Impacts  Involves complex calculations  Involvement of experts necessay  SAI to adopt the figures and procedures designed by experts for reporting  SAI to assess the competence of experts for assessment of impact

11. RTI, MUIMBAI / Slide 1.2.1 Compliance Audit  From environment to sustainable development  1972 United Nations Conference on the Human Environment (Stockholm)  1987 Report of the World Commission on Environment and Development (Brundtland)  1992 United Nations Conference on Environment and Development Rio Declaration  Agenda 21  Framework Convention on Climate Change  Convention on Biological Diversity  Guiding Principles on Forest  2002 World Summit on Sustainable Development (WSSD)

12. RTI, MUIMBAI / Slide 1.2.1 Other Treaties  Summits and declarations (Rio, Johannesburg)  Conventions and Protocols  Waste –Basel Convention on the Control of Tran boundary Movements of Hazardous Wastes and Their Disposal  Biodiversity –Convention on Bıologıcal Dıversıty –Convention on Wetlands of International Importance Especially as Waterfowl Habitat (Ramsar) –Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)

13. RTI, MUIMBAI / Slide 1.2.1 Other Treaties (contd.)  Water –International Convention for the Prevention of Pollution from Ships (MARPOL)  Air –Framework Convention on Climate Change –Convention on Long-range Transboundary Air Pollution (LRTAP) –Vienna Convention on the Protection of the Ozone Layer and the Montreal Protocol on Substances That Deplete the Ozone Layer

14. RTI, MUIMBAI / Slide 1.2.1 Compliance of Treaties  Government Policies and Directives –Direction setting / Intentions  Legal Tools –Domestic legislation, regulations, permits, licences, control orders –Used to implement global treaties and to address national issues –Can be at many levels - national, state, local  Can be used to control pollution, protect parks and species, use of pesticides, manufacturing of chemicals, trade, waste disposal and more!  Economic / Financial Tools –Taxes, subsidies, loans, user charges and fees

15. RTI, MUIMBAI / Slide 1.2.1 Audit of Compliance  International Environmental Treaties are ratified by individual Countries.  Individual Legislation for Environmental issues in alignment with Treaties  SAI audits the legislation for compliance  Governments frame Environmental Programmes for Environmental issues

16. RTI, MUIMBAI / Slide 1.2.1 Audit of Legislation  SAI to compare the provisions of legislation with reference to provisions in the treaties  Inadequacy to be brought out  Environmental Programmes to be audited for: Sufficiency of fulfillment of target, Sufficiency of fund allocation, Sufficiency of meeting the International Accords.

17. RTI, MUIMBAI / Slide 1.2.1 Compliance audit (Contd.)  SAI to audit adequacy of monitoring of provisions of law by law enforcing agencies – CPCB/SPCBs  SAI to ensure adequacy of information/ data on environmental issues to be catered by the enforcing authorities.  SAI to audit the activities of regulating authorities in respect of governmental/ non- governmental agencies carrying out environmental protection work.

18. RTI, MUIMBAI / Slide 1.2.1 Performance Audit  3 Ees concept – Economy, Efficiency and Effectiveness  Environmental Auditing is the 4 th E  2 more EEs are the speciality of performance audit—Ethics,Equity

19. RTI, MUIMBAI / Slide 1.2.1 Performance Audit(Cond.) Focuses on  Compliance of Environmental laws  Performance Audit of Environmental programmes  Environmental impact of normal programmes of Government  Environmental Management Systems  Evaluation of proposed Environmental policies

20. RTI, MUIMBAI / Slide 1.2.1 Performance Audit(Cond.)  Environmental issues being implemented by Governmental agencies, NGOs etc  Audit of Regularity, bodies to ascertain their roles in pollution control, abatement etc.  Statistical sampling techniques to be used for Audit of Environmental issues concerning Hundreds, Thousands entities.

21. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  Compliance Mechanisms of International obligations  Legislative compliance by enactments  Legislation of regulating pollution, monitoring discharges. Identification of Breaches.  Legislation for enforcement in case of violation.

22. RTI, MUIMBAI / Slide 1.2.1 Performance Audit(Cond.)  In case of data regarding compliance available at scattered places:  Audit to concentrate on data base created by Regulatory bodies  In case of absence of centralised data, Regulatory bodies to compile and submit as they have direct access to the data in Non-Governmental sources

23. RTI, MUIMBAI / Slide 1.2.1 Performance Audit(Cond.)  Absence of reliable data in Regulatory bodies to form audit comments  SAI to rely on available data and comment on indicating therein the insufficiency  Yet with the limited data, form opinion and report so that audited entity can act upon for control or abatement of Environmental Issues.

24. RTI, MUIMBAI / Slide 1.2.1 Performance Audit(Cond.)  SAI to compare obligations under International treaty and the sufficiency of Governmental Programmes to address them.  SAI to audit and review the targets set vis-à- vis achievement  SAI to report the shortfall to highlight environmental threat to the country or mankind

25. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  SAI to insist for responsibility centres for accountability for implementation. SAI to evaluate the program on 36E Es basis  Whether the program was carried out economically  Whether the implementation was efficiently done.  Whether the target group has got the benefit- effectiveness

26. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  Auditing the Environmental impacts of other Government programs  Any program implementation will have environmental aspects/impacts.  Certain programs will have significant impacts.  Impacts-positive, negative.  Programs to be evaluated for environmental impacts.

27. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  SAI to review Program objectives  Measure the impacts  counter the impacts  Experts to be involved in assessing the impacts and SAI to rely upon for impacts of such assessment

28. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  SAI to review EIA (Environmental impact assessment) carried out by Government through specialised agencies  In its absence SAI to seek information through some other source-NGOs, Shareholders etc.  Executive Regulations to ensure compliance of Environmental issues and Not SAI

29. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  SAI to audit measures which counter or reduce environmental impacts ascertaining whether:  measures have been put in place and are in accordance with best practice or best available technology not entailing excessive cost (BATNEEC) and  have had the preventive effect intended and, if not, what actions the Government has taken instead.

30. RTI, MUIMBAI / Slide 1.2.1 Performance Audit (Cond.)  EMS-Standards (ISO 14001) requires procedure for impact assessment  SAI, in such cases to use data from EMS and review the  Procedures  Training of staff involved  Frequency of testing the procedures for fool proof system  Whether the audited entity can influence the remote agencies such as suppliers, Contract workers etc

31. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS  Assurance on Environmental friendly quality in services assumes paramount importentance  ISO certification (14001) worldwide has been recognised as a Management tool for such assurance

32. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  EMS ensures that the entity:  has Environmental policy, planned for assessing aspects and impacts of environment, has set targets, has responsibility centres, has plans for training of staff, communicating the requirements internally as well as externally

33. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  Is checking the systems for corrective and preventive actions, identifying non- compliance and Management is reviewing periodically.

34. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  SAI to ascertain whether the Government is introducing EMS in its functions-  SAI to verify the need and effectiveness  Where large scale introduction of EMS is not needed, piecemeal EMS audit to be done to insure that there is continual improvement in tune with Environmental policy

35. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  Government’s policy to be audited to compare the introduction with the international obligations the country has undertaken.  To demonstrate that the entity is trying to make the environment clean and documents needed are in place

36. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  SAI may audit one or more elements across a range of departments  SAI can develop significant recommendations based on diverse procedures/practices in various Departments  SAI can judge the materiality of audit based on the Environmental impacts-some department will have less impact and others such as Industrial production process etc will have more impact

37. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  SAI to decide whether performance of Entities with reference to set targets is to be audited  At best performance can be compared with that obtaining elsewhere and with the Governments’ commitments to international agreements  SAI can audit performance and comment shortfall.  Evaluating proposed policies and programs

38. RTI, MUIMBAI / Slide 1.2.1 Auditing EMS (Cond.)  Generally SAIs exhibit reluctance to comment on policies regarding Environmental issues  At best SAI can present factual statement rather than commenting on policy suitability Non implementation of policies can be highlighted  SAI can involve experts to work on cost benefit analysis and secure consensus when asked to do so by the Executive for policy formulations