Cover Story


International Journal of Government Auditing – July 2012

Background is map of the world with no markings.  The title superimposed on the background is 'Environmental Auditing in INTOSAI: 20 Years Later.' The title is to the right of a photo of Mihkel Oviir.
An interview with Mihkel Oviir, Auditor General of Estonia and Chairman of the INTOSAI Working Group on Environmental Auditing (WGEA). Tõnis Saar, Secretary General of the WGEA, interviewed Mr. Oviir in May 2012 to discuss the importance of environmental auditing and the WGEA’s work and progress to date.

Question:

This year the WGEA has reached its 20th anniversary. Would you consider this a short or long time in the life of an organization?

Mihkel Oviir:

INTOSAI has established working groups in different sectors that require serious analysis. By nature, such working groups have been designed to last not forever but for a determined time. In this regard, 20 years is a considerably long time. On the other hand, considering the topic—the environment— we realize that 20 years is just a short time. During these 20 years, the WGEA has undergone an impressive evolution. Under the chairmanship of the Netherlands, then Canada, and now Estonia, the working group has produced over 1,600 pages of guidance materials and conducted numerous smaller and major meetings, workshops, and trainings. Yet there remain many untouched fields, as environmental issues are so wide-ranging, tangled, and interrelated. As natural resources are not infinite, I am certain that in our explosively developing world the environmental questions will remain on the table of decision makers for a long time to come.

Question:

What was your vision when you became the Chair of the WGEA?

Mihkel Oviir:

To date, my greatest dream—that all SAIs would start to conduct environmental audits—has proven to be too ambitious. Nevertheless, we have made a big step forward, and there is clearly a growing trend to undertake environmental audits. Over 100 SAIs have been actively auditing environmental issues and, as a result, we have collected thousands of audits in our web database of environmental audits worldwide. I am not of the opinion that environmental audit is the one and only important type of audit. But I truly believe that one day, national parliaments, governments, and SAIs will require detailed information on natural resources instead of mere annual accounts.

Another vision was establishing a global training center. Environmental audit is a specific skill and most countries cannot afford to maintain such a center. Because learning from experienced environmental auditors has proven to be very efficient, the establishment of an international center where all countries can send their new recruits for training makes a lot of sense. I am particularly grateful to the SAI of India which has kindly offered to set up and host such a center. This center will open its doors next year for the first environmental auditing training course at the beginner’s level. I have seen the outline of the first course and can ensure you that it shows great potential.

Question:

Why should SAIs become involved in environmental audit?

Mihkel Oviir:

I can see several reasons. First, this is an area where the decisions made today will influence the times when today’s government is no longer in power. SAIs are actually the only actors in the public sector who have adequate independence to be able to look farther into the future, even beyond the lifetime of a ruling government. No other institution is positioned in a similar way that enables it to take an interest in the long-term perspective. This is particularly valid when there is a need to make an uncomfortable decision—for example, raising the price of water, restricting logging, introducing taxes on waste, or limiting the use of fertilizers or the scope of tourism.

Second, we live in a globalized world. Resources, energy, and, alas, also waste move with unforeseen speed over national borders. If a country has weak laws, unsustainable policies, little compliance and enforcement, coupled with corruption, shady deals to sell natural resources at below-market prices, that country will undoubtedly be faced with drowning under the waste of others as well as its own.

Third, I suggest looking into the big crises our governments have had to face in the past 100 years. These crises have underscored the importance of economic, social, and environmental factors in addition to the financial realm. Even if the heads of SAIs have managed to avoid the topics of the environment and sustainability to date, they should expect to be faced with them very soon.

Question:

Many argue that one risks getting involved in politics upon proposing practical solutions for environmental problems. Would you agree with this?

Mihkel Oviir:

Oh yes, I see this risk clearly. According to INTOSAI standards, an auditor’s role is not to comment on politics but rather to review institutions’ compliance with policies. But what role should an independent auditor take if a certain policy is not sustainable? For example, if a total forest area is 100 hectares and the policy allows you to cut 20 hectares every year, this forest will not be the same after 5 years. I would find it questionable to sign a report saying that everything has been done in the best manner. I have raised these issues in the work of my office and criticized policies against the sustainability criterion. I have observed my colleagues doing the same elsewhere and I support them in this. Is this interfering with politics? No, to my mind, it isn’t. We should see clear differences between interfering in party politics and commenting on environmental policy. As an Auditor General, I am not positioned to criticize politics for being right- or left-wing, but I cannot keep silent when a policy is not sustainable or when it comes to analyzing environmental, economic, or social values. I believe that SAIs need to be good models in society in these matters, as I cannot see who else would.

Question:

SAIs have gained knowledge about environmental problems and obstacles confronting sustainable development over the years. What are the most crucial issues in these areas for SAIs?

Mihkel Oviir:

These issues obviously differ from country to country. The SAIs of Canada and Brazil developed a paper on this topic for the United Nations Rio+20 Conference. It presents the views of 52 SAIs, listing 10 main governance problems that SAIs have identified in their work (see box below). I believe that one might recognize one’s own government when reading the list.

The Top 10 Governance Issues Related to the Environment and Sustainable Development
  • Unclear/overlapping responsibilities
  • Lack of coordination between sub-national levels and the national level
  • Absent or deficient policies or strategies
  • Insufficient assessment of the environmental effects of governmental policies and programs
  • Lack of analysis (economic, social, and environmental) supporting decisions
  • Lack of long-term planning to implement environmental policies and programs
  • Inadequate financial management of environmental policies and programs
  • Lack of enforcement of domestic environmental legislation
  • Deficient monitoring and reporting systems
  • Lack of environmental data for decision-making

Source: Survey of SAIs conducted by the Canadian Office of the Auditor General and the Brazilian Tribunal de Contas.

The main weaknesses of governments are, as you might expect, associated with governance—such as poorly regulated sectors, insufficient analysis, missing long-term plans, incompetent financial management, poor enforcement, insufficient monitoring, and unavailable data. They often reflect the question of political priorities—the economy versus the environment.

Question:

Are more and more SAIs promoting sustainable development?

Mihkel Oviir:

This is a logical development now that environmental audit has become more common. We have had to admit the challenges involved in auditing sustainability due to its comprehensive nature. In the 7th WGEA survey on environmental auditing, about 30 SAIs reported that they have audited some aspects of sustainability.

The 2010 XX INCOSAI in South Africa was largely dedicated to sustainable development. This was the most influential achievement of our working group in recent years. Theme II, environmental auditing and sustainable development, was chaired by the SAI of China, which succeeded in engaging all participating SAIs in discussions on sustainable development. The Johannesburg Accords strongly encourage all SAIs to contribute to the global movement towards sustainable development.

The year 2012 has the potential of becoming a remarkable step on the road to sustainable development. In June, world leaders got together in Rio de Janeiro at the United Nations Conference on Sustainable Development (Rio+20 Conference) to review progress in the field and renew political commitment. I hope that the Rio+20 resolutions will reinforce global efforts towards sustainable development.

SAIs have an important role in investigating whether governments actually practice what they preach. Just prior to the Rio+20 Conference, the World Congress on Justice, Governance and Law for Environmental Sustainability brought together auditors-general, chief justices, attorneys-general, and chief prosecutors to discuss their special roles in putting into place appropriate mechanisms and tools to safeguard and promote environmental sustainability. For the first time, the WGEA was asked to join in partnership with United Nations Environmental Program and cosponsor the preparatory process for the world congress.

Question:

What can each SAI do to support the global movement toward sustainable development?

Mihkel Oviir:

SAIs can undertake a number of activities. First, each SAI can promote sustainable development by including this topic in its audits. Second, I would encourage the SAIs that have not been actively involved in the WGEA activities to become members of our busy family and benefit from our corporate knowledge.

And third, I would encourage the staff of SAIs to get personally involved in addressing an environmental problem. I have personally been involved in clean-up actions that started in Estonia in 2008 and have now become a worldwide campaign with activities taking place from March to September of 2012. The slogan for this year’s campaign is, “Let’s do it!”

Question:

What are the biggest challenges that the WGEA is facing today?

Mihkel Oviir:

The challenges derive from our own success. We have become active cooperation partners with several international organizations that rely on us. Auditors are seen as partners in establishing and enhancing global governance and accountability. This means that we are expected to have an opinion about topics under discussion and need to be ready to express it. Therefore, we need to have not only swift communication within the WGEA but also sufficient representation outside the INTOSAI community.

Another challenge is improving the way we present WGEA products to our members and to the INTOSAI community in general. We live an information age and people often find it a bit boring to use guidance materials for training. We have been playing with an idea of developing web-based guidelines.

Our last, but surely not least, challenge is ensuring a smooth transition of the chairmanship of the WGEA to our good partner, the SAI of Indonesia. The candidacy of Indonesia received unanimous support from the WGEA Steering Committee, and we have proposed that the Governing Board of INTOSAI endorse the SAI of Indonesia as WGEA Chair for 2014–2016.

Question:

Is there anything that remains undone?

Mihkel Oviir:

Actually, there is one area that I am concerned about: the inadequate attention paid to auditing the rapidly expanding environmental investments of international funds. Recently, governments have sought to solve environmental problems by putting together multilateral funds like the Global Environment Fund or the Climate Investment Funds. Nobody seems to realize that these funds also contain taxpayers’ money and that, consequently, SAIs should be able to audit them. Currently, these funds escape auditors’ attention, and I see this non–involvement as a big risk. We have not yet been able to address this topic, but there will no doubt be others who will raise it.

Question:

What has been the greatest surprise for you during your chairmanship of the WGEA?

Mihkel Oviir:

I was pleasantly surprised by the active willingness of the WGEA members to be involved and to contribute. Our biggest concern was how to involve countries and motivate them to take responsibility for different projects, as this working group operates solely on a voluntary basis. But the reality has been amazing, and all cooperative projects, parallel audits, meetings, etc., have achieved success as a result of the members’ constructive support. When I resign my position next year, I will leave behind a caring family where everybody is willing to lend a hand at any time.