Technical Articles

International Journal of Auditing – April 2004

Making the World a Better Place to Live One Audit at a Time: Improving Governance and Accountability in Environmental Protection

Rapid and profound changes have taken placed across our planet over the past few decades. Not only have our societies undergone rapid transformation at the hands of new economic and technological forces, but the physical world in which we live—our natural environment—is also being transformed. In 2002, the United Nations Environment Program (UNEP) released its third Global Environmental Outlook, also known as GEO-3. Assembled by leading scientists and experts from around the world, the Outlook paints an alarming picture of our planet’s condition. Rainforests and coral reefs are disappearing; drinking water supplies are contaminated with disease-causing agents and toxic chemicals; air pollutants cause respiratory ailments in children and adults; land is spoiled by the dumping of hazardous wastes; overexploitation of resources is putting many animals and plants on endangered species lists; and global warming is producing unprecedented changes to our climatic system. (See text box for the key environmental trends identified in GEO-3.)

The Global Environmental Outlook and other UNEP assessments show that there have been significant changes in our lives and the environment over the past 30 years. While some notable improvements have been achieved, the overall state of the environment is more fragile and degraded than in 1972. For many SAIs, none of this is news. They have identified issues of waste management, water and air pollution, forest loss, land degradation, and impaired ecosystems as the top environmental issues facing their respective countries.

Our governments are responsible for dealing with these problems and working toward solutions. It isn’t an easy challenge. Because environmental problems are rooted in economic and social policies, they occur at all levels from local to global (and thus can involve municipal, regional, and national governments), and success requires action by many players over long periods of time. Nevertheless, governments around the world have addressed environmental issues over the years through the creation of environmental ministries, policies, and programs and through international institutions and treaties, laws and regulations, and expenditures.

How Do Auditors Fit In?

What does the condition of our planet’s environment have to do with auditors, you might ask? Well, if the thousand-plus environmental audits conducted by SAIs over the past decade are an indication, quite a lot! “Environmental auditing” is a catchall term used to describe a range of audit activities focused on the environment. While there are many variations, SAIs are currently engaged in three basic types of auditing with an environmental perspective: financial (attest), compliance, and performance (value-for-money). Each of these is formally described and defined in INTOSAI auditing standards and in guidance prepared by the INTOSAI Working Group on Environmental Auditing (WGEA). Environmental audits apply general audit methods and standards with a different focus. When conducting environmental audits, auditors might ask the following questions:

  • Do the financial statements properly reflect environmental costs, liabilities (including contingent liabilities), and assets?
  • Is the organization spending money in accordance with financial rules and governing legislation?
  • Is the government complying with international environmental treaty obligations, domestic environmental laws and regulations, and government policies and programs?
  • Is the government meeting the environmental performance targets it has set for itself, and what results has it achieved?
  • Is the government controlling environmental risks from its own operations?
  • Has the government put in place an effective accountability framework for its environmental programs and policies?

For many SAIs, environmental auditing has become a mainstream activity, as important as any other type of audit or area of mandate. And SAI efforts in this area are helping governments do a better job. Addressing environmental matters falls squarely within the mandate—some argue the responsibility—of national audit offices for the following reasons:

  • Governments spend significant public resources on managing environmental problems—SAIs need to hold them accountable for prudent financial management, reporting, and results.
  • Governments have signed numerous international agreements and enacted domestic laws and regulations—SAIs need to hold them accountable for compliance.
  • Governments, in their financial statements, must account for the environmental costs and liabilities created by their landholdings and operations—accounting standards require them to adhere to proper accounting practices.
  • In some cases, the governing legislation for the SAI specifies environmental requirements.

Meeting the Challenges: How the WGEA Can Help

Although environmental auditing is now a popular activity in SAIs, it is not without its challenges. INTOSAI members have identified a number of real and perceived barriers to undertaking environmental audits, including

  • inadequate SAI mandates;
  • insufficient established environmental auditing norms and standards;
  • lack of skills or expertise within SAIs;
  • insufficient data on the state of the environment;
  • insufficient national monitoring and reporting systems; and
  • ; insufficient formulation of governmental environmental policy, such as the lack of measurable goals, the absence of strategies, and insufficient regulatory frameworks.

In many ways, the INTOSAI WGEA exists to help SAIs overcome these barriers. It was formed by INTOSAI in 1992 to meet the burgeoning requirement for environmental auditing expertise. The WGEA membership has grown from 12 founding members to more than 50, and it is now a large and active INTOSAI body.

The Netherlands Court of Audit chaired the WGEA for the first 9 years of its existence, and impressive accomplishments were achieved under its leadership. Since 2001, the Office of the Auditor General of Canada has been the WGEA Chair and Secretariat. In 2001, a 15-member steering committee was established to manage the operational and day-to-day activities of the WGEA. In addition, six INTOSAI regions have established their own regional working groups on environmental auditing.

INTOSAI WGEA Secretariat from the OAG of Canada: Sylvie McDonald, John 
  Reed, Liliane Cotnoir, and Johanne Gelinas

INTOSAI WGEA Secretariat from the OAG of Canada: Sylvie McDonald, John Reed, Liliane Cotnoir, and Johanne Gélinas

The WGEA aims to encourage SAIs to use their audit mandates and audit methods in the field of environmental protection and sustainable development. Its mission is to assist both member and nonmember SAIs in acquiring a better understanding of the issues involved in environmental auditing, to facilitate the exchange of information and experience between SAIs, and to publish guidelines and other information for their use. The WGEA provides a variety of services and products to SAIs, including the following.

Web Site

The WGEA Web site ( contains extensive information for use by members. This includes the mission and mandate of the WGEA, contact data for members, downloadable copies of all guidance documents produced to date, titles and extracts of hundreds of environmental audits, minutes of meetings, and updates on events and activities.

Guidance Documents

The WGEA has developed many papers to help SAIs identify audit issues and use their mandates to conduct environmental audits. They are all available on the WGEA Web site. For a list of some of these documents, see this issue’s “Reports in Print” section.

Information Exchange

The WGEA handles this key aspect of its mission in many ways. As noted earlier, considerable information about auditing practices—including access to environmental audit reports—is available on its Web site. In addition, the WGEA now holds a technical seminar featuring presentations by SAIs as part of its regular meetings. The 8th meeting of the WGEA held in Warsaw in June 2003 featured sessions on the topics of waste, water, and sustainable development. At the 9th meeting, to be held in Brasilia in June 2004, seminar sessions will deal with biodiversity; meeting new challenges; regularity audits; and joint, concurrent, or coordinated audits.


In 2002, the WGEA entered into a unique partnership with the INTOSAI Development Initiative (IDI) to develop a training program for environmental auditors designed to strengthen SAIs’ ability to conduct environmental audits. Environmental subject matter experts and certified training specialists worked together to produce an intensive, 2-week training course on environmental auditing that has met with enormous success. The first pilot course, the Environmental Auditing Workshop, took place in Antalya, Turkey, in 2003 and the second in Nairobi, Kenya, in February 2004. Plans are under way to deliver the course in other regions. (See the article, “Going Back to School: A New Approach to Environmental Audit Training,” for more information about this course.)

Survey of Members

Among the tools developed by the WGEA to assist SAIs in conducting environmental audits are the INTOSAI member surveys it carries out every 3 years. The surveys gather information that marks the progress achieved by WGEA members and allows for the evaluation of trends and accomplishments. The information also serves to shape the WGEA’s work plan, strategies, and products. Since its inception, the WGEA has undertaken four surveys.

The fourth INTOSAI survey conducted in 2003 covered 2000-2003. It was sent to all the SAIs participating in INTOSAI. The results are quite revealing: during the survey period, 67 SAIs produced a total of 568 audit reports concerning environmental issues. Of these, 54 percent have personnel dedicated to environmental auditing, and 63 percent indicated an interest in auditing aspects of sustainable development. Perhaps most impressive was the volume and range of environmental audits conducted by SAIs. Table 1 shows the environmental issues that SAIs audited and the number of reports issued on those audits from 1994 through 2003.