Environmental Auditing
Agenda Environmental Audit definitions Brief history Types of audit Process
Introduction Auditing important since 1970’s Number of environmental laws Clean Water Act (CWA) Clean Air Act (CAA) Resource Conservation and Recovery Act (RCRA) Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, Superfund) Toxic Substance Control Act (TSCA)
Environmental Audit definitions Environmental auditing is a systematic and periodic documented verification process of objectively obtaining and evaluating evidence to determine whether specific environmental activities, events, conditions, management systems, or information about these matters, conform with audit criteria and communicating the results of this process to the client.
The role of the Audit Program within the EMS
Definitions The most widely accepted definition is that of the International Organization for Standardization (ISO). Systematic: the audit process follows a logical and rigorous methodology that meets basic audit standards as defined by industry and recognised standard setting bodies. Verification: an assessment to determine whether the activities or conditions of the audited organisation meet specific standards and expectations. Audit criteria: the specific standards against which performance is compared. These can be legal or voluntary requirements.
History of Environmental Auditing Began in 1970 -s in the US: a few industrial companies, working independently and on their own initiatives, developed environmental audit programs as internal management tools to help review and evaluate the status of the company’s operating units. Crystallisation of environmental auditing as a recognised environmental practice occurred during 1977 -1980 when US Securities Exchange Commission (SEC) required 3 large industrial companies to conduct environmental audits to disclose the environmental liabilities to shareholders more accurately. 1980 -s - effective management tool Now – effective environmental management practice
Dimensions of audits Typically categorised along three dimensions: Criteria: - (Legal) compliance (e. g. , federal, state, provincial, municipal regulations); - Corporate policies and standards; - Industry standards; - Management system standards. Topic Scope: - Biophysical: solid waste, hazardous waste, air, water, energy etc. - Focus: env. performance, management system effectiveness. Organisational Scope: - Narrow focus (e. g. , one facility, one division; - Wide focus (e. g. , multiple facilities or divisions, cross-organisational). Env. Audits vary in three dimensions:
Categories of Environmental Audits COMPLIANCE – comparison of operations and performance against legal or other requirements. ENVIRONMENTAL MANAGEMENT SYSTEM – assessment of EMS against established EMS standard, for internal purposes or as part of the EMS certification process. DUE DILIGENCE – examination of practices to determine whether due care is taken to prevent environmental problems. - Specialty audits Specific topics (e. g. , waste audits, air quality audits) Specific facilities (e. g. , pipeline audits, waste storage area audits) Specific technical criteria (e. g. , fire code, PCB, regulatory audits) Multidisciplinary - Environment, health, and safety - Environment and quality.
Disadvantages of an audit Requires a commitment of resources, both manpower and money Requires repeated use of resources Disrupts plant operations Presents unique legal issues Unclear nature of whether recommendations must be implemented, and the implication if they are not followed
Audit program must address: Confirmation of compliance with environmental rules and regulations Reporting and monitoring systems Structure of system, including layout and personnel Response to emergencies and changes Investment in compliance equipment, etc.
Identification of potential and current problem areas Weaknesses Solving problems internally Protecting company assets Strengths in programs to provide positive reinforcement Recognizing potential areas of opportunities at the facility and other facilities Potential to commercialize processes
Legal aspects of audits Reporting obvious violations Protection from discovery from potential lawsuits What to do with prior audit findings Control, access to reports Use corporate attorney and conduct audit under his/her direction
Keys to success Inspect all facilities and personnel to determine how well they are complying with corporate and regulatory requirements Evaluate all maintenance records Develop a written status report Designed to explain any deviations from the normal and provide recommendations for corrective actions Designed to operate as an independent function
The Environmental Audit Process Follows a standardised systematic process - Consists of three stages of activity: Audit Planning On-site Post-audit Different types of audits focus on different issues, result in different reports but the process always follows the same three-stage process! Each stage will be discussed in detail further
Audit Planning Stage 1. Select the facility to be audited 2. Determine the objectives of the audit 3. Determine the scope of the audit 4. Select the audit criteria 5. Select the audit team 6. Prepare the audit protocol 7. Communicate with the auditees (the customer) 8. Arrange the audit logistics
1. Select the facility to be audited The audit manager (typically the client, not the auditor!) determines what facility to be audited = can be difficult in big companies Employ risk assessment techniques to identify what site would benefit most: - Nature of activity; - Size and complexity of operation; - Location; - Age of facility; - Regulatory environment & - Environmental track record.
2. Determine the objectives of the audit Decided by audit manager. Possible goals include: - To assess compliance with regulations? - To assess management practices from a due diligence standpoint? - To evaluate the EMS against some specific standard?
3. Determine the scope of the audit Audit manager determines the scope that provides boundaries for the audit Includes: - operational scope (e. g. , specific operations at the facility that will be audited); - topic areas to be included (e. g. , waste management, water quality, air quality) - time period to be assessed (i. e. , how far back in time will the audit research Typical audit includes all operations at a facility, all environmental topic areas, and performance over the past 2 -4 years
4. Select the audit criteria Laws and regulations (federal, state or provincial, local) Licenses, permits, and approvals Corporate policies and procedures Industry association or other codes EMS standards (ISO 14001, EMAS etc. ) Stakeholder concerns Previous audit results
5. Select the audit team Audit manager or team leader selects the audit team May consist of: - External auditors (i. e. , consultants) - Internal auditors (i. e. , corporate environmental staff) - Combination of two Employee responsible for environmental management at the facility CANNOT act as an auditor, otherwise CONFLICT OF INTEREST!
Auditor Team Key team members Chemical/environmental engineers Operations personnel Budgeting/accounting personnel Attorneys Managers Designate a team leader Acquainted with regulations
Team leader Familiar with regulations that apply Able to focus team during the audit Prior audit experience Knowledgeable of operations
6. Prepare the audit protocol The audit team collects & reviews relevant information, obtained through consultation with the client, prior to the site visit. This includes: - Copies of licences and permits - Monitoring data - Operations drawings and blueprints - Procedures and manuals - Accident reports - Organisational charts - Site maps - Facility history Audit protocol = documents that will guide the auditors during the interviews, site inspections and document reviews Important as this is a documented evidence indicating criteria covered by the audit and a proof that the audit was thorough.
7. Communicate with the auditees (the customer) Environmental audit should not be a surprise to those being audited If not informed, audit may fail through lack of cooperation by the auditees or difficulty in locating or accessing necessary information When informed in advance, facility management can fix problems & clean things = acceptable It is unlikely the site will be able to correct major problems (e. g. , poor waste management practices) Auditors must carefully check any areas that appear newer than the rest of the site!
8. Arrange the audit logistics Travel arrangements; Accommodation Audit schedule Necessary to ensure effective process!
Conducting the audit Pre-visit questionnaires to be used Saves auditor time and resources Size of audit team (limited to 1 -5) Full-time/part-time Dedicated Duration of the audit (1 day-1 week) Depends upon size of facility Depends upon complexity of operations Procedures for pre-visit, onsite visits and post-audit should be developed
On-site Stage Opening meeting Site tour Information collection Initial assessment of evidence 5. Exit meeting 1. 2. 3. 4.
1. Opening meeting - With key facility representatives, including: management; environmental staff; others (e. g. , union representatives, health & safety representatives) - The purpose is to: Introduce the audit team and the site representatives; Review the purpose, scope & methodology of the audit; Schedule interviews & other meetings; Discuss health & safety risks at the site.
Conducting an audit
Review Applicable regulations Corporate and facility policies, procedures, etc. Study pollution control equipment Characteristic waste streams, pollutants and toxic chemicals
Inventory/Assess Documents Forms Manifests Permits Inspection reports Maintenance/operating logs Analytical results Monitoring data Assess the effects of the facility on the environment Inspect pollution control equipment and operations Inspect pollution generation equipment and operations Judge against environmental criteria
Audit phases Preparation for the audit Interview with plant management Collecting plant information Touring the plant Visiting with regulators Reviewing findings Writing the audit report
Auditor knowledge Taking short courses Understanding regulations Interpreting regulations Engineering knowledge Understanding of science On the job experience
Audit preparation tasks Defining the audit parameters Collecting preliminary information Preparing the materials and equipment needed to perform the audit
Audit parameters Scope of audit Management decision Amount and type of information determines ho long it will take to prepare for it
Preliminary information Operations Address, etc. Safety requirements Local governing bodies Land use surrounding History Key individual names Products/services provided
Power loads Byproducts and waste produced Regulatory areas covered Emission sources Control equipment Problem areas Discharge points Permits Haulers and TSDF’s used Spill protections and history Provided by a questionnaire
Audit materials Checklists and data forms PPE Safety shoes Camera and film Instant Digital Tape measure Sampling equipment
Photographs Obtain permission before taking Have camera with adjustable exposure and focus settings Have a flash available Name of photographer Date and time photograph taken Description of the photo Direction taken
Data inventory forms Data form for each Air emissions Water emissions PCB storage Waste storage Tanks Design depends upon the complexity and type of facility Forms should describe control equipment Guide for conducting audit Aids in the preparation of the final report
Sampling Take duplicate samples Have independent analysis Sampling equipment Air monitoring Wastewater sampling Noise sampling Jars to hold sampling
Other pre-audit tasks Determining team member assignments Detailed schedule Review audit protocols and manual and determining what applies to the specific audit
On site inspection Must be conducted to be: Efficient Comprehensive Cover all regulatory areas Consistent
Meet with plant manager Make appointment ahead of time Plant manager may be negative Discuss Introduction of auditors Authority of audit Purpose of audit Advantage of audit Confidentiality Concern of plant manager Previous visits by regulatory agencies
How the audit will be conducted How the report prepared and distribution What follow up will occur Audit schedule Requests for facility information Work area Camera permission Access to all areas Staff introductions Knowledge of plant manager
Confidentiality Unforeseen hazards Improper disposal practices Ensuring findings not become public Attorney/client privilege Expensive compliance activity or clean ups Keeping it internal Actual or impending regulatory inspections
Other plant manager concerns Adequacy of specific pollution control equipment Legitimacy of disposal practices High cost of compliance Uncertainty of plant practices Media relations Special permission sought by auditors
Work Space Desks Tables Computer access Telephone Near files and copy machine Smaller space than a conference room to reduce interruptions
Other Issues Discuss the audit schedule Discuss hours of operations Discuss Post-audit schedule Staff Introductions
Audit schedule Day 1 Interview with manager Facility tour Day 2 Inspect files Detailed facility tour Day 3 Continue facility tour Day 4 Visit regulatory agencies Interview regulatory/operations staff Day 5 Exit interview with personnel
Day 1 Meeting with environmental coordinator Assistant to audit Maps and plot plan of plant Plant layout and system flow sheets Walk around the plant Familiarize with plant layout May take 1 -2 hours Have coordinator accompany team Develop questions to seek answers to Location of files
Day 2 Records review Personnel interviews
Records Record-keeping systems May be located in several areas Look at each paper and conduct an evaluation Sort by media Record data on forms Memos, reports, invoices, etc.
Records review Use checklists Review each piece of paper Interview staff based on records Raw materials Waste generated Finished products
Interview Personnel associated with environmental issues Environmental coordinator Purchasing manager Quality assurance manager Shipping supervisor Electrician Maintenance foreman Lab manager Operators Different for each facility Use plant diagrams to determine most appropriate
Day 3 Plant tour Pollution control systems Outfalls PCB equipment Oil storage tanks Waste storage and disposal areas Provide data to verify that equipment are as previously described Identify any areas of environmental impacts not previously known
Tour, Part 2 Conducted in segments Walk around plant perimeter Valuable way to uncover unpermitted outfalls or disposal areas Inspect various manufacturing areas Chemical units Tank farads Storage areas Shopping ands receiving areas Conduct each segment separately or by individual audit team members
Complex facility Use individual diagrams to determine segments Consider as a small plant Examine individual subunits Use checklists for specific areas Use clip board to segregate units Use camera to aid memory and show condition of units and discovered non-compliance issues Get detail for each photo
Photo taking Items of interest Background to show location Include scale using known items, such as humans Lighting details are important Instant photos can be retaken Identify photos with written details Number and date each photo Recorded in a log sheet Evaluate each photo
Record equipment information Nameplate information Conform with checklist Record variances Visible indications of proper and improperations Meter and gage readings Signs of deterioration Signs of poor maintenance
Inspection Make sure all areas covered Check roofs for vents, etc. Make sure they are noted Fill out forms for discovered area Look for areas no longer operating or removed May need to remove these from permits New plant tour segment should be started as each is completed Complex facility may require several days to complete tours
Team members May conduct tour segments separately Should compare notes frequently Serve to assist each other Should conduct perimeter tour as a group
Perimeter tour No specific checklists Purpose of discovery Perimeter areas should be mowed Looking for Unauthorized outfalls Contaminated runoff Trash accumulations Abandoned equipment Evidence of process upsets Photograph areas discovered
Important information Sort and organize information from inspections Identify apparent violations Ensure all questions are answers Proper interviewing integral
Interviewing At the work spaces of individuals being interviewed Conducted during plant tours Schedule ahead of time Allow the interviewee to prepare for it Purpose of audit General questions to be asked Types of documents to be reviewed
Interviewing, contd. May have others available for interviewing Have at least one day in advance Interviewing at work space Interviewee more relaxed and less defensive Key records often located at work space Opportunity to observe workplace conditions and staff attitudes Distractions and interruptions will likely occur Noisy in work places
Interviewing, part 3 Sensitive to interviewee’s nervousness Reassure purpose of audit Not an audit of the interviewee Not a threat to job security Uncooperative interviewees should be handled by managers Should not seek to interrogate, when interviewee is struggling
Interviewing, part 4 Focus on getting interviewee to open up Not secure only yes/no answers Ask open ended questions Follow up answers with more questions
Agency Interviews Almost as familiar with plants as plant staff Different from region Not practical to meet all agencies May seek to not interview during first audit Discussions with inspectors from agencies Record review
Agencies, part 2 Determine agency attitude towards Do not seek to negotiate for the facility Discourage agency personnel from giving an unbiased viewpoint Tone of conversation then not about the overall compliance of the facility Learn as much about agency’s view of the problem without offering any rebuttal
Agency, part 3 Request copies of information not in facility's files Request a copy of latest regulations Offer to correct errors in files, specifically part of emission data Try to get agency’s input on latest NOV’s etc.
Coordinator interview Discuss with environmental coordinator Missing information Fill in gaps Resolve questions wrt permits, malfunctions, etc. Review overall perception on compliance program Eliminate misconceptions of audit team May take several hours
Coordinator, part 2 Do not focus on negative findings only Provide positive feedback Do not provide detailed oral report Discuss corrective actions required Reporting obligations should be emphasized Supply answers to auditor questions May require an additional walk through Have coordinator look over all worksheets Auditor brings observations from other plants Provide follow up actions
2. Site tour The tour achieves 3 goals: It allows the audit team to identify areas requiring future detailed inspections; 2. It allows the audit team to assess the amount of effort required to complete the audit and to determine whether the planned schedule is achievable; 3. It allows the audit team to become familiar with the health & safety issues and standards at the site. 1.
3. Information collection The primary goal of the audit is to collect relevant & credible information All audits rely on 3 basic means of information collection: 1. Carry out site inspection, using prepared checklists & protocols; 2. Review relevant documents, such as environmental monitoring data and summary reports 3. Conduct structured interviews with selected facility personnel. Audit information should be cross-checked to ensure it is correct!
4. Initial assessment of evidence While on site the audit team reviews the collected information and prepares a preliminary summary of the audit findings (areas where the facility’s practices or conditions do not meet some specified standard). The summary may be given to the site representatives in written or verbal form during the exit meeting; It is unofficial until the audit report is issued!
5. Exit meeting = Closing meeting between the audit team & the site representatives The purpose is to: - review the purpose, scope, and methodology of the audit; - provide an overview of how the audit went & comments on the nature of findings; - review the findings, stressing that these are preliminary and are subject to change during the preparation of the final report; - discuss the findings to ensure they are based on correct information; - discuss the next steps (e. g. , preparation of the report & action plan); - thank the site personnel for their cooperation & hospitality.
Post-audit Stage 1. 2. 3. 4. 5. Final assessment of evidence Drafting of audit report Finalization and distribution of audit report Initial assessment of evidence Exit meeting
1. Final assessment of evidence After returning to the office, the audit team leader performs a more thorough review of the findings Ensures that findings are accurate and backed by supporting evidence Other audit team members may be consulted for information It is inappropriate to contact the audited facility for additional information
Audit Report Each team member should write his/her portion Team leader combines Sent to senior management with a copy to site management
Findings/Recommendations System to provide recommendations Ensure changes are made Methods of informing senior management Prepares corrective actions Computer based system to track
Key elements of success Top management support and commitment Independent functioning of team Adequate team staffing and resources Detail program objectives Outline of audit scope and resources Process to collect adequate information Specific audit procedures Quality assurance program Commitment to pursue recommendations from the audit
Audit Considerations Fresh eyes to view the facility Company personnel from division or corporate Use sister plant auditors Plant personnel most familiar with operations Best to start with a media-specific audit Could include contractors and vendors May include off-site facilities Include regulators Restrict to a representative or only major facilities
2. Drafting of audit report Good practice is to submit a draft report to the audit manager for review and comment, not submitting a final report directly Decisions on the distribution of the audit report are made by the audit manager The reviewers of the draft report are given 1 -2 weeks to review and comment If no comments are received within the specified period, the audit team leader assumes there are no comments, and the report is finalised.
3. Finalisation and distribution of audit report Once the comments on the draft report are returned and addressed, the audit team leader submits the final report to the audit manager & others as identified by the audit manager Sometimes the audit team may be asked to present the report in a formal presentation to senior management The audit team leader (not the audit manager!) should always retain final editorial control of the report Therefore, the team leader should only provide electronic versions of the report to the audit manager after he/she has obtained assurance that the findings
Report Written intended for corporate or plant management Findings of audit team Note lapses of system Documents where policing of systems has been inadequate Effective tool to upgrade plants compliance management system
Report, part 2 Format should meet conditions of the original audit purpose Format varies Audits designed to assist plant management in obtaining or maintaining compliance (recommendations) Audits designed to inform corporate management of potential and real liabilities (factual information)
Report, part 3 May have to issue two reports, one for plant, one for corporate Start with audit purpose List dates and audit team members Can be used as evidence of plant’s compliance status report
Report sections Executive Summary Introduction Scope of work Review of Findings Conclusions and recommendations
Introduction Audit purpose Dates of audit Times of audit Audit participants Summary of plant facilities covered Procedures followed during the audit Summary of recommendations
Audit scope Brief description of facility including history Environmental impacts of facility All environmental permits and restrictions Review of regulations affecting facility Review of corporate policies, procedures, etc. Violation histories
Findings Including worksheet summaries Description of each source of environmental impact Identification of each Assessment of compliance of each with applicable regulations and policies Acknowledgement of properation Listing of each deficiency
Conclusions Comments, both positive and negative regarding plant operations Specific recommendations needing prompt corrections General recommendations on policies and procedures Narrative summary of plant status Assessment of liabilities Restrictions to expansion Reviewing environmental control systems against present and future regulations Comprehensive summary of reporting requirements Inventory of worksheets.
Corrective Action Phase 1. Action Planning 2. Implementation and Monitoring 3. Completion and Sign-off
1. Action Planning Management from the audited operation reviews the audit report and prepares a response to each audit finding Someone at the audited facility will be assigned responsibility for designing and implementing each corrective action Target date for completion is set Where many findings were identified, the findings and corrective actions are prioritised to ensure the most important deficiencies are addressed first The action plan is often documented in a memo or report and included as part of the audit file.
2. Implementation and Monitoring The status of the corrective action is tracked / monitored by site management or by the organisation’s environmental management to ensure that the target date is met and to provide assistance if necessary.
3. Completion and Sign-off Once the corrective action is implemented, management of the audited site and/or the organisation’s environment department must verify completion through site inspection, interviews, or document review and sign off that the deficiency has been appropriately remedied. Time required for the corrective action phase depends on factors incl. : available people with skills and knowledge, budget, time, and the urgency of resolving the deficiency. In some cases, corrective action occurs over a number of years as budget resources become available.
Why Audit? Greater assurance to senior management that the organisation’s environmental risks are being controlled Overall improved environmental performance Cost-savings through avoidance of environmental problems, litigation & fines Improved compliance with legal requirements Improved environmental management processes Increased awareness of environmental issues at the opening sites Improved stakeholder relations.
Audit Frequencies Annually for major facilities One time for a small unregulated facility Biannually for a moderately regulated facility Poorly performing plants more frequently
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