environmental auditing

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Why Audit?

• Improve environmental compliance.

• Determine liabilities. • Minimize corporate liabilities. • Ensure profitable future. • Minimize liabilities for:

- Share holders

- Stake holders

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Why Audit?

• Improve processes. • Minimize liabilities for corporate

officers. • Determine future expenses and costs. • Improve savings. • Improve functionality. • Improve Public Image. • Enhancement of regulatory relations.


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Impact on Regulated Community


Defining Environmental Audits

• Multi-Media - All Envt. Regulations

- Full Review & Disclosure.

- System Analysis.

- ISO

- QA/QC

• Media Specific - Very focused.

- One statute or law

- One envt. Medium (i.e., air, land, water)

- Site specific.

- Trend Analysis throughout complex/corporation.

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Advantages vs. Disadvantages

• Better compliance

• Fewer surprises

• Fewer fines

• Better public relations

• Potential cost savings

• Improved information transfer

• Increased environmental awareness.

• Commitment of resources.

• Temporary distribution . In production/operations.

• Increased information to fine or bring law-suits

• I ncreased liability

• Opening up corporate weaknesses.


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Real Reasons to Audit is:

·VSCA (Verify Adequate System Competently Applied)!

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• §ystems always think system in-place. Always!


EPA Policy on Audits

• Comply or DIEI • Enforcement of

administrative laws resulting in record penalties and fines.

• Come to Jesusl • Let's sit-down and

reason with one another.

• Convert into a Good Corporate Citizenl

• Some fines, but can repent.

• The repenting can hurtl


EPA Encourages Envt Auditing

• Full disclosure.

• Programmatic compliance

• Limited fines

• Improved public image

• Good faith effort

• Less litigation and more cooperation.


Attorney-Client Privilege

• If possible - always conduct audit under attorney client privilege.

• Establish a buffer in possible.

• Full disclosure under attorney client privilege.

• Work with regulators

• Invite them in and make them part of the family - sort of ...


EPA States

• Corporate manager are responsible. • Part of mitigating factors during sentencing. • Judge is required to take into consideration. • Creates environmental insensitive. • Creates environmental partnership. • EPA will NOT dictate or interfere. • EPA will NOT mandate auditing? • ISO 14001 - want to do business? • Voluntary Basis - goes along way.


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Elements of Effective Audit Program

• Explicit top management support. • Independent of operations. • Independent of audited activities. • Attorney client privilege • Adequate team staffing and support • Adequate auditor training • Explicit audit objectives, scope, goals

clearly stated with frequency of audits



• A process which collects, analyzes, interprets and documents information sufficient to achieve auditing objectives.

• (put your money where your mouth is)! • Process includes specific procedures

and instruction - do not deviate. • Report directly to senior management. • Top down flow (senior management to

bottom feeders).



• Mechanism that creates: - Clear reports.

- Prompt (don't water it down)

- Concise (to the point)

- Corrective actions and resources clearly provided to remedy situations of noncompliance.

- Don't shoot the messenger!

- Accurate, Thoroughness, and Quality!

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Confidentiality?

• Audits produce information or opinions that may, if revealed, could be harmful for your company.

• Certain underlying facts can never be protected from disclosure. - Establish attorney client privilege. - Eventually the veil will be pierced! Its just a

matter of time. - Release under your terms.


Protect the company through audit process by:

• Senior management support. • Conducted through Counsel. • Memorandum from senior management to legal

counsel directing: - Audit by conducted. - Conducted through counsel. - Obtain legal advise. - Information is to be held confidential and privileged. - Litigation is anticipated (asserting the basis for this

assumption) this is important. - All notes are to be logged in the attorney's bound journal. - A similar memorandum from Counsel to Consultant if they

are used.



• Counsel directly retains consultants -inserting a buffer or barrier.

• ALL written communication are labeled in the following manner: - "privileged and confidential" and add the

words "do not duplicate"



• ALL written communications are kept in separate secured files under the control of counsel.

• Distribution of the report is on a needto-know basis.

• An oral audit brief is considered only in especially sensitive situations (for maximum protection of information) always exceptions.


Liabi I ities

• Cooperation & Officers.

• Envt statutes impose reporting, record keeping, documentation of compliance.

• Failure to submit, report, document, falsify, hide, obscure.

• Willfully and Knowingly!

• Auditors/assessment Team. - Errors & Omissions.

- Falsifying and hiding

- Water down findings

- Obfuscate/confuse

- Lie

- Remiss

- Failure to obtain, report, find, discover.

- Destroy

- Intimidate, etc.


Planning the program Nuts and Bolts.

• Program objectives: - Assurance of compliance.

- Management of liabilities

- Making management accountable

- Tracking of compliance costs.

- Commitment of monies and resources.


Planning the program Nuts and Bolts.

• Organization of the program - Corporate control with full-time auditors - Consultants anyone?

- A small corporate oversight group?


Management issues

• Expectations of senior management.

• Measures of successful performance. • Unannounced audits (this is a key)

• Reporting protocols

• Supportive vs. combative style (this will make you or break you as a cooperate auditor)

• Is your hat white, gray or black?


Legal Issues

• Written vs. oral reports. • Retained documentation - how much? • Corporate counsel involvement? • Watch the stinky attorneys! • Protection from discovery. • Report format and watchwords • Language • Offer recommendations? (be careful).


Program coverage

• Frequency of audits/assessments • All regulations/some regulations • All plants/some plants/random sample

• Past practices • Vendor audits (always)

• Waste contractor audits (always)


Process Issues

• Pre-visit questionnaire

• Number of auditors/field of expertise.

• Duration of audit

• Pre-visit, on-site, post-site activities.

• Sampling procedures/QA/QC

• Interview techniques (open ended questions)

• Inspection procedures.

• Use of portable computers/lab-tops/I-pads.


Auditor Selection and Training

• Skills required?

• Attorney's role with auditors

• Training procedures

• Full-time vs. part-time vs. consultants.


Tools

• Pre-visit questionnaire. • On-site coordinator (very critical) • Wind Shield Tour. • Be ware of the guided tour. • Compliance checklists Uust checklists) • Programmatic vs. systemic. • Regulatory updates • Audit reports (past, present & future) • Guidance/procedure manual • Follow up reports and visits • Computer support • Division of duties


Conducting the Audit

• Pre-Audit Activities - Organize team - Determine scope of audit - Submit pre-audit questionnaire - Establish on-site coordinator. - Develop detailed agenda

• Interviews (who, what, where, why, how, when) • Review regulations and assigned leads. • Review records previously requested.


Conducting the Audit

• On-site Activities: - Meet and greet

- Layout the rules of engagement

- Observe throughout entire process

- Records review on-site continued.

- Wind-Shield Tour.

- Assign duties to On-site Coordinator.

- Conduct Walk-Down

- Convene - write down and summarize

- Reacquire target.


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On-site

• Conduct interviews: - Open ended questions. - Focus on key-players. - Pull-the-String - Follow-up on what you found, heard, and

discovered. - Use your checklist - to remember! - Observe (compare, contract, records, logs) - Maintain photo log (be careful) - Close on positive note - if possible. - Your baby is ugly!!!!!


Post-Site/Audit Activities • Review and follow-up while still fresh. • Completed document review • Request additional documents • Make plans for future visits or interviews if necessary. • Outline audit report • Assign duties to write report • Establish format - stick to it. • Involve legal or senior management if required. • Write Draft Report • Agree to findings, concerns, recommendations. • What is your audit criteria? How are you going to rank your finding . • What your words, wordsmithing, • What are the requirements. • Liabilities worth reporting to management or counsel? • Submit report - follow agreed to protocol • Provide debrief of audit activities.


environmental auditing

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