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MEA Bulletin - Guest Article No. 40b - Thursday, 31 January 2008
Improving MEA Compliance: the Role of National Audit Offices
By Vivien Lo, team member from the past Chair of INTOSAI’s Working Group on Environmental Auditing, Office of the Auditor General of Canada
Full Article

Introduction

At all levels, governments have made commitments to address environmental issues and sustainable development. International leadership has provided direction and facilitated cooperation on some of the more daunting environmental problems. As a result, for several decades, multilateral environmental agreements (MEAs) have been part of the solution to addressing transboundary environmental problems.

Governments work to protect the environment in their countries. Issues such as waste management, contaminated sites, and national park management often fall within national boundaries. Domestic action can involve a variety of public policy tools, including legislation, taxes, enforcement, market incentives, regulations, and policies. These tools are necessary if nations are to implement domestic environmental protection and MEAs at home.

Supreme Audit Institutions (SAIs) can play a major role in evaluating whether the tools that their governments use to manage and protect the environment have produced the intended results. A description of SAIs, their functions and their diversities are provided at the end of this article. This article explains the work of public sector auditors (auditors of the government) beyond financial matters. In particular, it describes their positive role in improving environmental governance.

Audit criteria—Audit criteria are benchmarks, against which the subject matter can be assessed. They can provide a basis for assessing how well audit objectives are met.

Environmental audits, like all other audits, essentially compare the current situation with what it should be. For public sector auditors of the environment, what the situation should be is derived from multi-jurisdictional agreements, legislation and regulations, policies, programs, and enforcement requirements. Environmental audits also incorporate traditional audit criteria that are grounded in principles of good management and accountability.

SAIs’ sphere of environmental auditing

Korea—Improved water quality
Between 1993 and 2000, the Korean government spent US$15 billion to improve water quality in four major rivers—with no noticeable improvements. In 2001, an audit was conducted to identify why water conditions had not improved. Based on the audit findings and recommendations, the Ministry of Environment carried out a post-project examination and set up a feedback review system. They adjusted the size of the sewage treatment plants and shifted their emphasis from simply treating livestock sewage to producing organic fertilizers. The audit and its recommendations have resulted in steadily improving water quality.

For SAIs, environmental audits can be conducted from several perspectives and on a variety of government activities that affect the environment. For instance, environmental audits from a compliance perspective can examine the enforcement of environmental regulations on toxic substances, the transportation of hazardous hospital waste, or the protection of endangered species. Auditors examine how government activities are conducted, according to relevant environmental laws, standards, and policies—both at national and international levels.

An environmental audit from a financial perspective is conducted to ensure that public funds were spent efficiently and for their intended purpose. This is particularly important as a lot money is being spent to govern the environment and, at the same time, funds are being transferred between more parties. For instance, developed countries contribute to international pools of funds (e.g. Global Environment Fund) to support transfer of technology and capacity building to developing countries.

Australia—Improved environmental management of toxic substances
In 1996, an audit on Contaminated Sites and Pollution Prevention gave the Australian Government considerable impetus to adopt environmental management systems and to examine the ISO 14001 system. The audit forced the clean-up of a number of contaminated sites and resulted in the allocation of resources to prevent pollution. As a result of the audit, a new evaluation unit, with an improved framework, was created within the department.

Furthermore, audits of financial statements can include initiatives to conserve renewable and non-renewable resources. Financial audits can also include initiatives to prevent, abate, or remedy damage to the environment and consequences of liability imposed by the state.

Finally, from a performanceperspective, environmental audits have been conducted of environmental indicators, programs, and policy decisions to see if these activities were completed economically, effectively, and efficiently.

Paraguay—Poverty decreased and water and land quality increased in a tri-Nation watershed
The Pilcomaya River flows from Bolivia to the borders of Paraguay and Argentina, covering about 270,000km2. For many years, insufficient water flow resulted in prolonged drought, loss of cattle and wildlife, and damage to wetlands and other ecosystems. Ranchers often built small dams to retain water.

In 2002, the Controller General of Paraguay conducted an audit of the Government of Paraguay’s 10-year environmental management of the tri-national development of the Pilcomaya River. The following changes resulted from the audit conclusions and recommendations.

  • The government produced the required human and economic resources and logistical support to open a new canal and clean existing streams.
  • The former Estero Patiño wetlands in Tinfunqué National Park, a RAMSAR site that covers about 280,000 hectares, was once again covered in water.
  • The government appropriated land and destroyed all dams built for downstream drainage, so building more dams and causing more environmental damage was unnecessary.
The audit owes its success to a multidisciplinary team and on-site verification, including interviews with ranchers, local settlements, and aboriginal populations.

All SAIs are unique. They may address environmental auditing by using a combination of these three types of audits (compliance, financial, and performance) from an environmental perspective.

Environmental auditing in the public sector is now a common part of the cycle for good governance. Environmental audits are often reported to elected assemblies, executive governments, or central government bodies. Elected officials (for example, parliamentarians) can depend on audits from their SAIs, as sound sources of information about their government’s performance.

SAI audits can make a difference, and environmental audits have been linked to improved water quality in rivers, strengthened protection of flora and fauna, and reduced desertification and pollution. Benefits of environmental governance include the development of new legislation and regulations and stronger compliance with those that already exist.

Due to government response to the findings of SAIs environmental audits, there have also been improvements to the monitoring and gathering of environmental data, disaster preparedness, performance reporting and the way results are measured.

With over 2,000 environmental audits completed by SAIs all around the world—close to 400 in the past three years alone—environmental auditing is now mainstream in many audit offices.

Public Sector Auditor’s Unique Role in Auditing MEA implementation

Chile—Ramsar Convention
The Comptroller General of Chile audited the management of one of its nine wetlands. El Yali Wetland is the most important wetland in central and northern Chile because of its diversity of aquatic bird life. A total of 115 species have been recorded—25 percent of all bird life in Chile. The 2005 audit found that the government was successful in designating an area a Ramsar site. However, much remains to be done to ensure that the site can maintain its integrity. The audit concluded that the government needed the National Wetlands Committee to coordinate action, a national wetlands strategy, a coherent national policy, and financial resources, among other things. The auditors observed illegal draining and urban and industrial encroachment onto the wetlands. The audit concluded that the penalties for protecting the area and the rules for conservation were ineffective.

When SAIs examine their government’s actions on the environment, they consider if their country has signed MEAs, so they can audit MEA implementation and compliance. In most countries, only SAIs have the mandate and access to audit government’s progress on MEAs.

Important MEA factors that auditors consider include the country’s compliance obligations, how long the agreement has been in place, which is linked to realistic expectations of results, and actions and responsibilities laid out in the agreements. These factors can form potential lines of enquiry and audit criteria. For the issue addressed in the MEA, SAIs also consider the availability of government information, signs of non-compliance, and environmental risks.

Austria—Ramsar Convention
In Austria, environmental protection requires that provincial and federal jurisdictions work together. In 2003, the Austrian Court of Audit audited the performance, legality, and finances of the federal and provincial jurisdictional frameworks to ensure that they met the commitments made under the Ramsar Convention. The audit covered all eleven Austrian Ramsar sites—1,180 km of protected lands.

The audit found that not all sites were protected, and the protection that did exist used a mix of legal frameworks and contracts. The Court of Audit recommended using legal methods rather than contracts, since environmental protection is a long-term issue. The lack of a comprehensive research concept affected different aspects of the Ramsar sites. For instance, borders in some areas were not clearly defined. Decisions were not made with a comprehensive biological inventory, and because using mixed tools were used to protect sites, there were no standards for protection. The audit had a significant impact. Five new sites were nominated to the Ramsar Bureau, and another site is expected to be nominated. Many legal and ecological measures have been put in place to improve the condition of Austrian wetlands.

Even if the government has not signed an MEA, it can be an important source of audit criteria. SAIs have audited governments’ performance in managing domestic environmental issues that were, in part, influenced by international environmental leadership.

An audit of an MEA in an individual country may include examining the capacity of the country’s institutions responsible for environmental management, the reporting material provided to international bodies, and the effectiveness and efficiency of the policy tools. Policy tools can include domestic programs, funds, and projects created to meet the MEA commitment. Governments can use the audit recommendations to improve their domestic actions and report back to the MEA secretariat with improved results.

Since 2003, more than a third of the SAIs have used international agreements as a source of audit criteria for a variety of issues: biodiversity, wetlands, endangered species, transportation of  hazardous waste, marine pollution, ozone protection, and climate change to name a few.

Cooperative audit of the Helsinki Convention
The Helsinki Convention was drawn up in 1974 and signed by countries bordering the Baltic Sea to protect against pollution. In recent years, the Baltic Sea has seen a dramatic increase in oil shipping and the transportation of other hazardous substances. This growth in traffic is a cause for concern, as it inherently increases the risk of collision and damage to marine ecosystems. The objectives of the Helsinki Convention are pursued through joint decisions and agreements, joint declarations and recommendations, and broad cooperation in environmental protection. Good environmental protection depends on thorough coordination of preventive, contingency, and combative measures, and requires fast and effective action by the responsible national authorities and international cooperation.

Given the increased traffic on the Baltic Sea and the collaborative nature of the Helsinki Convention, it was appropriate for eight SAIs (Denmark, Estonia, Finland, Latvia, Lithuania, Poland, Russia, and Sweden) to participate in a parallel audit with agreed upon terms of reference, scope, audit objectives, criteria, and methods. Conducted in 2004, the audit looked at the level of implementation of the Convention in each country. Auditors found that all countries have taken necessary measures to implement the Convention. However they also found that, due to dramatic increases in oil shipments, there was an urgent need for comprehensive risk assessment, a need for more cooperation, and a need to exchange information on research and on good practices. This audit ensured that the spirit of international cooperation that created the convention was applicable to the dynamic conditions on the Baltic Sea.

The joint audit report of the eight countries was shared with HELCOM (the Helsinki Convention governing body). HELCOM endorsed the SAIs' findings and recommendations, in which the governments of the contracting parties must act on their national program and legislations.

MEA international mechanisms, such as a secretariat or a commission, are a good source of timely information and often provide opportunities for two-way communication. SAIs can sometimes obtain timely regional and global information on specific environmental topics, including updates on implementation. Furthermore, SAIs could share auditing findings from domestic programs and policies directed at supporting the MEA.

There is no fool-proof method for auditing MEAs. In some cases, the language in agreements is not audit friendly; ambiguous phrases such as “do as appropriate” or “in as far as possible” do not provide clear expectations for auditors. This makes it challenging for SAIs to audit results and compliance. In addition, the agreements are applied inconsistently so implementation, reporting, and monitoring are not equally robust in every country. The SAIs of Austria and Chile conducted very different audits of their obligations under the Ramsar convention, because their domestic approaches to implementing Ramsar are different.

Cooperation among SAIs

One notable trend in environmental auditing that is gaining momentum is several SAIs auditing an issue cooperatively.

For example, eight SAIs recently conducted a cooperative audit of the Helsinki Convention, which addresses the transportation of hazardous waste in the Baltic Sea. This method was appropriate for this particular audit, because the objectives of this Convention were based on joint decisions and cooperation, and the signatory countries bordered the Baltic Sea. Benefits of cooperative audits for environmental policy-makers and auditors include benchmarks for comparing country results, common reports that can be easily distributed internally and internationally, joint recommendations that may make it easier to resolve common issues, and the mutual exchange of methods.

Border protected areas, shared water bodies, transboundary air pollutants and multilateral environmental policy tools have played a large part in SAIs working more closely together. In fact, European countries with numerous neighbours and transboundary issues are producing the majority of cooperative environmental audits.

SAIs also work cooperatively to build capacity for environmental audits. Cooperative audits, especially those of MEAs, help auditors build knowledge, learn about auditing techniques, compare audit findings with other countries, and benchmark results. The INTOSAI Working Group on Environmental Auditing (WGEA) has published several guidance documents on audits of MEAs, including the Audit of International Environmental Accords (2001) and How SAIs may Cooperate on the Audit of International Environmental Accords (1998). For more information on INTOSAI’s WGEA, see the section titled the Working Group on Environmental Auditing’s efforts to promote environmental awareness.

The MEA link in the public-sector auditor’s latest guidance

All four of the WGEA’s latest guidance documents, which were produced by SAIs and actively support the WGEA’s environmental auditing efforts, contain strong MEA elements.

Auditing Biodiversity: Guidance for Supreme Audit Institutions
Office of the Auditor General of Canada
Brazilian Court of Audit
INTOSAI WGEA has created this timely and indispensable resource for audit practitioners. This guide introduces the basics of biodiversity to auditors and brings out the essentials of biodiversity-related MEAs for auditors to use, including
  • Convention on Biological Diversity
  • World Heritage Convention
  • Convention on International Trade in Endangered Species of Wild Fauna and Flora
  • Convention on the Conservation of Migratory Species of Wild Animals
  • Convention of Migratory Species
  • International Convention for the Control and Management of Ships’ Ballast Water and Sediments
  • International Plant Protection Convention
  • Ramsar Convention of Wetlands
  • International Convention for the Prevention of Pollution from Ships
  • The Cartagena Protocol on Biosafety
This is a rich source of information that is full of practical suggestions, sources of criteria, relevant international environmental agreements, and case studies on audits of biodiversity—many based on MEAs.
Evolution and Trends in Environmental Auditing
Office of the Auditor General of Canada
To invite discussion beyond the SAI community, this paper is intentionally written for a broader audience. This paper will be of interest to environmental professionals, environmental litigators, and auditors outside of SAIs. The paper describes
  • changes in SAIs environmental audit practice over time;
  • reasons for the changes—including global trends inside and outside of the SAI community that influenced environmental auditing in the past;
  • possible future influences on the environmental audit practice; and
  • opportunities to collaborate with external organizations.
This paper takes stock of what auditors have learned, challenges they overcame, and differences they have made in government and on the ground—as they conducted environmental audits.
The paper also includes a list of ten Frequently Asked Questions (FAQs) to guide auditors in their approach to environmental auditing. These FAQs are an excellent window for environmental professionals to gain insight into SAIs environmental auditing practices.
The World Summit on Sustainable Development: An Audit Guide for Supreme Audit Institutions
United Kingdom National Audit Office
In 2004, INTOSAI produced Sustainable Development: The Role of Supreme Audit Institutions in 2004. In 2007, the WGEA developed The World Summit on Sustainable Development: An Audit Guide for Supreme Audit Institutions guidance, which shows SAIs how to audit the implementation of WSSD commitments. The guidance starts by demystifying the key outcomes of WSSD that are relevant to audit. The author explains the relevancy of WSSD to for its government and the supreme audit institution. Using real experiences by SAIs, it goes through several approaches to audit commitments to WSSD with simple and practical advice in a field that is abstract and complex.

This guidance helps auditors hold their governments to account on WSSD—that is, to hold their “feet to the fire.”

Cooperation Between Supreme Audit Institutions: Tips and Examples of Cooperative Audits
Supreme Chamber of Control of Poland
The Netherlands Court of Audit
Resolving global environmental issues, such as ozone depletion, trade of endangered species, and transportation of toxic wastes, have involved multilateral environmental agreements—which, in turn, require funding and action.
Therefore, it is appropriate for SAIs to conduct cooperative audits of environmental issues. This guidance responds to the ongoing demand for information on how to conduct cooperative audits on environmental issues that are grounded in real-world experience.
The paper provides 22 tips and practical advice for each phase of the audit cycle. Examples of MEAs audited cooperatively include

  • OSPAR-Convention for the Protection of the Marine Environment of the North-East Atlantic
  • Helsinki Convention-convention on the Protection of the Marine Environment of the Baltic Sea Area (the Helsinki Convention
  • Basel Convention-Control of Transboundary Movements of Hazardous Wastes and their Disposal
  • Danube River Protection Convention
  • Environmental policies of the European Union
The tips are ideal for any cooperative audits and, perhaps, cooperation with local or regional audit institutions. Tip 1—Communicate!—is essential advice that readers will find reiterated throughout the paper.

All guidance is available at http://www.environmental-auditing.org/intosai/wgea.nsf/viewStudies

The Working Group on Environmental Auditing’s efforts to promote environmental awareness

Since the WGEA was formed in 1992, its membership has grown from 12 countries to 62 countries in 2007. The WGEA has achieved a lot over the past 15 years. By the end of 2007, it had

  • formed Regional WGEAs in six of the seven INTOSAI regions;
  • increased the number of WGEA members to five times the previous membership;
  • developed guidance papers and studies on environmental auditing:
    • The basics. Guidance on Conducting Audits of Activities with an Environmental Perspective, Environmental Audit and Regularity Auditing, The Audit of International Environmental Accords, and Evolution and Trends in Environmental Auditing
    • Sustainable development. Sustainable Development: The Role of Supreme Audit Institutions and The World Summit on Sustainable Development: An Audit Guide for Supreme Audit Institutions
    • Specialized environmental topics. Towards Auditing Waste Management, Auditing Water Issues: Experiences of SAIs, Auditing Biodiversity: Guidance for Supreme Audit Institutions and Study on Natural Resources Accounting
    • Cooperative auditing. Cooperation between Supreme Audit Institutions: Tips and Examples for Cooperative Audits and How SAIs may Cooperate on the Audit of International Environmental Accords;
  • prepared, in conjunction with the INTOSAI Development Initiative (IDI), a two-week training course on environmental auditing and delivered this course in three INTOSAI regions;
  • conducted five surveys on environmental auditing in the entire INTOSAI community;
  • increased the profile of the WGEA with external international organizations, by participating at the World Summit on Sustainable Development (WSSD) and developing relationships with the
    • United Nations Department of Economic and Social Affairs (DESA),
    • United Nations Environment Programme (UNEP), and
    • the UN Commission for Sustainable Development (CSD);
  • strengthened networks between SAIs, which facilitated the exchange of information, ideas, and experience;
  • developed and maintained the WGEA website; and
  • published the WGEA newsletter, Greenlines (electronically).

More about SAIs

The International Organization of Supreme Audit Institutions (INTOSAI) is a non-governmental organization with special consultative status with the Economic and Social Council of the United Nations. INTOSAI is the internationally recognized leader in public sector auditing.

All SAIs are unique. Their mandates vary as do their governments’ environmental activities of their government. Therefore not all SAIs can audit environmental issues in the same way. Public sector auditors work in courts of audit, offices of the auditor general, and chambers of accounts. SAIs may also be called chambers, tribunals, or comptrollers. They are making great gains in working together to share knowledge, audit methods in a global community of environmental auditing. It’s the WGEA’s goal to work more with other organizations to achieve common goals.

Excerpts of the following documents were used for this article:
  • Evolution and Trends in Environmental Auditing (2007) INTOSAI WGEA
  • INTOSAI Working Group on Environmental Auditing 2008-10 Work Plan (2007), presented to the INTOSAI Governing Board and XlX INCOSAI, Mexico City, Mexico
  • State of Environmental Auditing in the SAI Community: Highlights from the Fifth Survey on Environmental Auditing (2007) INTOSAI WGEA
  • Auditing Biodiversity: Guidance for Supreme Audit Institutions (2007) INTOSAI WGEA
  • Environmental Auditing and Regularity Auditing, (2004) INTOSAI WGEA
To learn more about the organization and their work visit http://www.environmental-auditing.org. The author can be reached at vivien.lo@oag-bvg.gc.ca.
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