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ENVIRONMENTAL AUDIT

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Title: ENVIRONMENTAL AUDIT


1
ENVIRONMENTAL AUDIT
  • AN EMERGING ISSUE.

2
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
3
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. .

4
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.

5
Industry and environment relationship
6
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.

7
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

8
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.

9
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.

10
EIA and EA Process
11
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.

12
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.

13
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.

14
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.

15
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

16
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.

17
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.

18
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.

19
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.

20
How green is the Material Girl?
21
  • 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."

22
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