Environmental Auditing and the Role of the Accountancy Profession: A Literature Review

This review of the literature on environmental auditing and the potential role of accountants distinguishes between compliance audits and audits of the environmental management system. After an extensive introduction to the concept, this review focuses on the similarities and differences between an environmental audit and a financial statement audit. The general approach to both types of audits is similar, except that environmental audits are largely unregulated. Both audits place an emphasis on the evaluation of control systems, which is an argument in favor of external auditors playing a role in environmental audits. Another argument for including external accountants is their code of ethics. However, these professionals seem to be reluctant to enter the field of environmental auditing. It is argued that this reluctance is because of a lack of generally accepted principles for conducting environmental audits. If external accountants are engaged in environmental auditing, they should be part of multidisciplinary teams that also include scientists and engineers to avoid a too strong focus on procedures. Rather than treating these audits as totally different, it is proposed that there be a move towards integrated, or even universal, audits.     

The business implications of implementing ISO 14000

The ISO 14000 standards for environmental management systems (EMS) are voluntary standards intended to aid companies that wish to improve their environmental performance. The standards owe their existence, at least in part, to three widely shared views: (1) that existing environmental management systems are either inadequate or ineffective; (2) that companies will want to improve environmental performance for economic or social reasons; and (3) that governments and stakeholders will require companies to exercise greater control of the impacts to the environment through new regulations. ISO 14000 offers a solution—an ?integrated”? EMS, with components designed to effect sound management in any size organization and in any country. The standards are an embodiment of both the policy and practice of environmental management. This article is a consideration of the business implications of the ISO 14000 series of standards. How will a movement toward an integrated EMS be realized? Who will be in the best position to respond? ISO 14000 is a management system, and it carries with it business consequences.     

The value of “EHS auditing” in the United States: Making sense out of the current chaos

Conventional wisdom has advocated environmental auditing as a prudent part of an internal control program and one of the key tools in driving proactive efforts. As a part of risk management activities, it is often employed to protect an organization, its employees, and officers from liability. Conscientious use of such audits has undoubtedly protected human health and the environment. Ironically, those who make the most consistent efforts to audit compliance and management systems, according to advocates of audit protection, may be the most vulnerable to enforcement actions and lawsuits. This article places the escalating calls for audit protection in a proper context.     

The value of EHS auditing in the United States: Solutions for audit protection

Conventional wisdom has advocated environmental auditing as a prudent part of an internal control program and one of the key tools in driving proactive efforts. As a part of risk management activities, it is often employed to protect an organization and its employees and officers from liability. Conscientious use of such audits has undoubtedly protected human health and the environment. Ironically, those who make the most consistent efforts to audit compliance and management systems, according to advocates of audit protection, may be the most vulnerable to enforcement actions and lawsuits. In this, the second part of a two-part article, we turn our attention to the likely solutions for audit protection in the current context.     

Challenges of meeting ISO 14000 auditing guidelines: Audit program gaps

At long last, the ISO 14000 environmental auditing guidelines have been issued in final form and have been accepted in the United States and elsewhere as official national standards. The auditing guidelines consist of: Guidelines for environmental auditing—General principles (ISO 14010: 1996(E)) Guidelines for environmental auditing—Audit procedures—Auditing of environmental management systems (ISO 14011: 1996(E)) Guidelines for environmental auditing—Qualification criteria for environmental auditors (ISO 14012: 1996(E)) Unlike the environmental management system (EMS) standard (ISO 14001), the auditing guidelines are just that, guidelines. The ISO 14000 auditing guidelines are not long documents: ISO 14010 is three pages, ISO 14011 is five pages and ISO 14012 is three pages.     

Environmental cost accounting: The bottom line for environmental quality management

Recent years have seen the environment emerge as one of the most pressing issues facing American business. Eventually, environmental costs will affect the bottom line of every American company. A recent study in the National Law Journal estimates that cleanup of the nation's known hazardous wastes sites will cost $752 billion over thirty years under current environmental policies. Environmental legislation and regulations impose annual compliance costs estimated by the Environmental Protection Agency at more than $30 billion. In the near future, environmental expenses for cleanup, regulatory compliance, and management are anticipated to grow to between 2.5 and 3 percent of GNP. Corporations that wish to be competitive must successfully manage these costs while maintaining or improving their role as responsible corporate citizens. Implementing a comprehensive system for identifying and managing environmental costs requires a multidisciplinary team effort. Environmental costs impact product selection, design and pricing, capital budgeting, and future strategic direction. In order to make informed and meaningful managerial decisions on environmental programs, real cost data are vital. An environmental management systems (EMS) requires information to set goals and then monitor progress towards those goals over time. This article will discuss the current cost accounting systems (CASs) available to support the myriad goals of environmental management systems. In addition, the article will outline a framework for plotting the location of your current EMS on a matrix of regulatory and information requirements and evaluating whether your corporation's CAS is adequate to support the goals and objectives set by your environmental management program. By anticipating future regulatory and information requirements, flexible systems can be developed to adapt to new and more stringent regulations and more complex information requirements.     

Environmental auditing: Theory and applications

The environmental audit has become a regular part of corporate environmental management in Canada and is also gaining recognition in the public sector. A 1991 survey of 75 private sector companies across Canada revealed that 76% (57/75) had established environmental auditing programs. A similar survey of 19 federal, provincial, and municipal government departments revealed that 11% (2/19) had established such programs. The information gained from environmental audits can be used to facilitate and enhance environmental management from the single facility level to the national and international levels. This paper is divided into two sections: section one examines environmental audits at the facility/company level and discusses environmental audit characteristics, trends, and driving forces not commonly found in the available literature. Important conclusions are: that wherever possible, an action plan to correct the identified problems should be an integral part of an audit, and therefore there should be a close working relationship between auditors, managers, and employees, and that the first audits will generally be more difficult, time consuming, and expensive than subsequent audits. Section two looks at environmental audits in the broader context and discusses the relationship between environmental audits and three other environmental information gathering/analysis tools: environmental impact assessments, state of the environment reports, and new systems of national accounts. The argument is made that the information collected by environmental audits and environmental impact assessments at the facility/company level can be used as the bases for regional and national state of the environment reports and new systems of national accounts.     

Influence of Motivations for Seeking ISO 14001 Certification on Perceptions of EMS Effectiveness in China

This study examines the motivations of mainland Chinese facilities in seeking ISO 14001 certification and examines the linkages between these motivations and self-reports of the effectiveness of major environmental management system (EMS) components. In a sample of 128 facilities in Beijing, Shanghai, and Guangzhou, the main drivers for certification were reported to be to ensure regulatory compliance, to enhance the firms reputation, and to improve environmental performance, in that order. Although motivation to achieve cost reductions were least emphasized, a broad range of motivations appears to be considered in the decision to seek certification to ISO 14001. Regression models linking these motivations to the EMS components suggests that internal motivations have an influence on most EMS components. One interesting exception to this, however, is that no significant relationship was observed between internal motivations and the promulgation of environmental objectives and targets. The relationships associated with external motivations for certification (i.e., those in response to customer and other stakeholder pressures) and EMS components, on the other hand, are weaker and tend to occur earlier in the process cycle. No significant relationships were found between motivations to reduce costs and perceptions of the effectiveness of EMS components. Overall, these findings suggest that ISO 14001, as currently being implemented in mainland China, may have a modestly useful role when used in combination with other policy mechanisms to move the Chinese economy toward more sustainable practices. It is asserted that the ISO standard could provide even greater benefits if Chinese registrars were more proactive in developing EMS in conjunction with even more rigorous third-party audits.Published online     

Enforcement Lessons from the Vienna Übahn

/ This paper combines a review of recent publications on the effectiveness of environmental enforcement in the United States with new data to address the question of what type of enforcement activity is most productive. Using data on 39 state National Pollutant Discharge Elimination System (NPDES) programs, the measures of effort and cost typically applied to environmental enforcement and inspection activities were tested for relationships with compliance outcomes. No statistically significant relationships were found. In the absence of any improving trend in traditional measures of compliance, this lack suggests all enforcement systems presently used by states are failing. To work, an environmental enforcement system needs to include maintenance and restoration of compliance, real deterrence, mobilization of public opinion, minimal obtrusiveness, conformity with legal search requirements, cost-effectiveness for all parties, effective primary role for skilled inspectors, self-monitoring, compatibility with environmental management systems (e.g., ISO 14000), environmental auditing, robustness in the face of changing strategies by permittees, segregation of technical assistance from enforcement, team orientation, adaptability to multimedia, and, most difficult of all, disconnection from today's timely, appropriate, proportionate standard. These goals can be achieved through a proposed new environmental enforcement approach built on infrequent, random, but thorough inspections leading to fully documented enforcement actions resulting in high penalties. The enforcement system used by the Vienna übahn, or subway, can serve as a model for this type of environmental enforcement system. KEY WORDS: Enforcement; Deterrence; Environmental water quality; Discharge elimination systems     

The limitations of environmental management systems in Australian agriculture

The efficacy of government-supported programs to encourage improved management of land and water systems associated with agricultural land in Australia has been mixed. The broad approach of Australian governments is reviewed briefly. Evidence is presented from case assessments of a program to promote adoption of environmental management systems (EMSs) to improve environmental outcomes from agricultural practices. EMSs are systems implemented to manage the environmental impacts and ameliorate environmental risk associated with business activity. Data are presented on reported EMS activity and experience of four selected groups of farmers in Victoria, south-eastern Australia, representing broad-acre cropping, beef and dairy farming. The pro-environmental behaviours of farmers were mediated through voluntary adoption of government and industry sponsored EMSs, often with financial incentives and other support. Findings from the study were that adoption of EMS practices with sufficient public benefits is unlikely to occur at sufficient scale for significant environmental impact. Farmers more readily adopted practices which were financially beneficial than those which had a positive environmental impact. Although the focus on voluntary market-based instrument (MBI) type programs is popular in western countries, enforcing regulation is an important, but usually politically unpopular, component of land use policy. The comparative advantage of EMSs differed for the industries studied, but overall there were insufficient market drivers for widespread EMS adoption in Australia. Environmental outcomes could be more effectively achieved by directly funding land management practices which have highest public net benefits. Having a clear and unambiguous management objective for a particular land management policy is more likely to achieve outcomes than having multiple objectives as occurs in a number of international programs currently.     

ISO 14001 registration: The process,the benefits,and the choice of registrar

This article introduces the concept of ISO 14001 registration, outlines related assessment processes, and reviews the drivers behind developing an ISO-14001-concordant environmental management system (EMS) and seeking third party registration of that EMS. It focuses on registration strategies for larger organizations and considerations in choosing a registrar, including: auditor qualifications, standards for the conduct of EMS audits, and some issues for audit and registration service providers. The authors conclude that it is beneficial to pursue an ISO-14001-concordant EMS and that the value of the system can be enhanced through registration. However, some thought should be given to choosing the appropriate registrar, in particular to their EMS and audit approaches and to the qualifications of their audit team. Service providers are also cautioned to remember that ISO 14001 is not the same as ISO 9000, and that the registrar's standard of care in the discharge of their work should reflect that. © 1998 John Wiley & Sons, Inc.     

Assessment of the critical factors in ımplementing ISO 14001:2015 environmental management systems for developing countries: A case study for Sri Lanka

ISO 14001:2015 is an international standard that specifies the requirements of environmental management systems (EMS). This study assessed the influence of top management commitment, applications of compliance and other requirements, operational control, monitoring and measurements, resource management and improvements as critical factors on successful implementation and the operation of the ISO 14001:2015, by considering organizations in Sri Lanka as a case study. A data collection was conducted via questionnaires and structured interviews from stakeholders who are directly responsible for the EMS such as environmental managers, quality mangers and general managers of the organizations, who are certified with ISO 14001:2015, and comparisons were undertaken. The statistical analysis of the critical factors has shown a significant positive effect on both large‐scale organizations and export‐oriented organizations on EMS implementation. Furthermore, the results indicate that the EMS adoption has created significant positive impacts on efficient energy and resource consumption within organizations.     

Evaluating management systems as part of environmental audits

Evaluating management systems is a crucial component of any environmental audit. Evolving regulations and directives acknowledge this importance. Remedying management deficiencies can result in long-term, lasting improvements in environmental compliance with external requirements and internal policies. This article presents ideas and examples from leading companies on how environmental audits can be designed to enhance TQEM systems.     

Environmental management auditing: When credentials count!

We all know that the process of driving a car is not as simple as turning a key in the ignition and moving. When you want to drive a car, you take a written test to show your knowledge of the rules of the road. You learn to operate a vehicle (remember the operating difference between a standard shift and an automatic?) and then how to operate that vehicle in moving traffic. After you have gained competence in vehicle operation, you take a “hands-on” driving test to prove to an independent third party (the State) that you know what you are doing. Then, if you do know, you are issued a license, subject to renewal and perhaps retesting at some later point in time. Your license has become your credential to operate. It implies a certain minimum level of knowledge and experience. Should environmental auditing be any different? This article considers the application of a uniform standard for environmental auditor qualification. With an emphasis on ISO 14001¹ and auditing of environmental management systems, it discusses:

• the evolution of environmental auditing;
• established environmental auditor qualification processes;
• limitations of compliance auditing; and
• characteristics of a good auditor.

     

3M international environmental management system

To meet the changing needs of 3M's expanding worldwide operations, its International Environmental Operations group is striving to enhance and integrate a global environmental management system. When well-designed, such systems not only can function to guarantee compliance with environmental regulations but also serve to help the company reap the benefits of going “beyond compliance.” They can also prepare facilities to meet the requirements of international standards, such as ISO 14000 or EMAS. An Environmental Management System (EMS) is a necessary step toward achieving sustainable development and gaining competitive advantage in the global marketplace. The challenge of constructing such a system can seem daunting to a multinational company confronted with the spectrum of regional environmental regulations/directives and its own diversity of business and social cultures. This article describes the development and implementation of the 3M International Environmental Operations global EMS initiative.     

Reasons for implementing ISO 14001 in Malaysia

Environmental management systems (EMS) have been introduced globally to reduce environmental degradation issues brought about by industrial development. The research discussed in this paper is aimed at identifying the benefits and motivations of the implementation of EMS in compliance with the International Organization for Standardization (ISO) 14001 standard in Malaysian industries by using the pairwise comparison method. Experts in EMS from the Scientific and Industrial Research Institute of Malaysia were invited to participate in the research panel. Based on the experts’ input, data analysis was carried out by using multi‐criteria pairwise comparisons. The findings showed the ranked benefits and motivations of the implementation of the ISO 14001 standard for businesses. The results can indicate to policy‐makers and business advisors how businesses can be encouraged to implement the ISO 14001.     

Tamarix and Diorhabda Leaf Beetle Interactions: Implications for Tamarix Water Use and Riparian Habitat

Tamarix leaf beetles (Diorhabda carinulata) have been widely released on western United States rivers to control introduced shrubs in the genus Tamarix, with the goals of saving water through removal of an assumed high water‐use plant, and of improving habitat value by removing a competitor of native riparian trees. We review recent studies addressing three questions: (1) to what extent are Tamarix weakened or killed by recurrent cycles of defoliation; (2) can significant water salvage be expected from defoliation; and (3) what are the effects of defoliation on riparian ecology, particularly on avian habit? Defoliation has been patchy at many sites, and shrubs at some sites recover each year even after multiple years of defoliation. Tamarix evapotranspiration (ET) is much lower than originally assumed in estimates of potential water savings, and are the same or lower than possible replacement plants. There is concern that the endangered southwestern willow flycatcher (Empidonax trailli extimus) will be negatively affected by defoliation because the birds build nests early in the season when Tamarix is still green, but are still on their nests during the period of summer defoliation. Affected river systems will require continued monitoring and development of adaptive management practices to maintain or enhance riparian habitat values. Multiplatform remote sensing methods are playing an essential role in monitoring defoliation and rates of ET on affected river systems.     

Evaluation of environmental management resources (ISO 14001) at civil engineering construction worksites: a case study of the community of Madrid

In recent years, significant advances have been made in business organization and management. The growing demands of clients as well as the globalization of world markets are among the many factors that have led to the establishment of systems of quality control and environmental management as a competitive strategy for businesses. When compared to other professional sectors, the construction sector has been slower to respond to environmental problems and to adopt Environmental Management Systems (EMS). In the world today the ISO 14001 standard is currently the main frame of reference used by construction companies to implement this type of management system. This article presents the results of a general study regarding the evaluation of the application of the ISO 14001 standard at civil engineering construction worksites in the Community of Madrid (Spain), specifically pertaining to requirement 4.4.1, Resources, roles, responsibilities, and authority. According to requirement 4.4.1, company executives should appoint people responsible for implementing the EMS and also specify their responsibilities and functions. The personnel designated for supervising environmental work should also have sufficient authority to establish and maintain the EMS. The results obtained were the following: - EMS supervisors did not generally possess adequate training and solid experience in construction work and in the environment. Furthermore, supervisors were usually forced to combine their environmental work with other tasks, which made their job even more difficult. - Generally speaking, supervisors were not given sufficient authority and autonomy because productivity at the construction site had priority over environmental management. This was due to the fact that the company management did not have a respectful attitude toward the environment, nor was the management actively involved in the establishment of the EMS. - Insufficient resources were allocated to the Environmental Management Unit. As a result, the application of EMSs in construction projects often appeared to be more of a formality, which was merely a way of maintaining the certification of the Environmental Management System. It was more a means of meeting the requirements for submitting a tender to contracting organisms rather than an indicator of any real commitment to improving the environmental performance of construction companies.     

Environmental health and safety management at vulcan chemicals: Total quality and auditing

At Vulcan Chemicals, total quality requires auditing and auditing ensures total quality. This article details the continuing integration of the two processes and describes some of the audits—and their measured regulate.