International Journal of Government Auditing – April 2004

Meeting the Challenge of Environmental Auditing in the 21st Century: An Interview with Sheila Fraser

Editor’s note: For this special edition of the Journal, we are taking a break from our regular format. In place of our regular audit profile of an SAI, we offer the following interview with Sheila Fraser, Auditor General of Canada and chair of INTOSAI’s Working Group on Environmental Auditing (WGEA). Ms. Fraser shares with the Journal her thoughts on environmental auditing in general and on the work of the WGEA in particular.

Journal: Why is environmental auditing so important to you?

Fraser: Environmental auditing is important to me quite simply because it has a direct bearing on the world in which I live and raise my family, as well as on my work as a professional. The environment fits in squarely with the priorities I want to focus on during my term as Auditor General.

Journal: What does the growth of environmental auditing mean to the auditing profession?

Fraser: The auditing profession has always had to adapt to new developments and trends, and it has a history of developing new approaches and expertise to deal with new auditing requirements. Environmental auditing is a good example of how auditors have been called upon to take on a new responsibility as a result of increased public concern and, consequently, a reordering of priorities by both the public and private sectors. And these priorities have changed a lot where the environment is concerned.

When I started out in the profession nearly 30 years ago, environmental auditing didn’t even exist. Public awareness of environmental problems has grown steadily over the last several decades, and governments at all levels are facing increasing pressure to find remedies. Many national governments now have legislation and regulations that require
governments to reduce pollution, protect ecosystems, or foster sustainable development.

As a result, governments face a mounting demand both at home and abroad for better governance and more accountability in relation to environmental policies and programs. With this increased awareness has come a growing demand for environmental auditing services and expertise. So, for auditors, the need is there and the expectations are

Journal: How does Canada’s SAI approach environmental auditing?

Fraser: The Office of the Auditor General (OAG) started doing environmental audits in the early 1990s and dealt with environmental issues and programs through the traditional performance and compliance audit approach. During this initial period, our performance audits focused on economy, efficiency, and effectiveness—what we called the “three Es.” In 1995, modifications made to our legislation added a fourth “E,” for the environment, to this list.

Our environmental mandate was sharpened and expanded as a result. Federal departments were required by law to prepare sustainable development strategies, and the OAG was mandated to review and report on their implementation. Most notable perhaps was the creation of a specialized audit unit within my office led by a Commissioner for the Environment and Sustainable Development.

Journal: Your SAI is probably unique in having its own Commissioner of the Environment and Sustainable Development. How does the Commissioner contribute to the OAG’s overall mandate?

Fraser: Our Commissioner, Johanne Gélinas, leads a team of about 40 specialists. Along with her team, she audits environmental issues and monitors how well the federal government is meeting its commitments relating to the environment and sustainable development.

The Commissioner audits the federal government’s sustainable development strategies and supports environmental auditing efforts throughout the OAG. By the way, our office has also developed its own strategy that covers the next 3 years. We are not under any obligation to do so, but we feel that it is important for the SAI to give an example and exercise leadership in this area.

Both the Commissioner and I report directly to Parliament. We are independent of the government, and we are neutral on all issues of government policy and objectives in our analysis and recommendations. Since we are both part of an audit office, we conduct our work in accordance with recognized auditing standards.

Journal: How does the WGEA help?

Fraser: We live in a highly interdependent and interconnected world. Our environmental problems stretch right across the planet and cannot be dealt with by individual efforts alone. The environmental stakes are already very high, and as our population and consumption levels increase, they are only getting higher. Just look at the number of international treaties, particularly with respect to the environment: they have mushroomed over the past decade.

I think that the role of the WGEA is very important in light of the growing need for specialized environmental auditing skills. The objective of the working group is to develop linkages and relationships through which SAIs can share information and expertise on environmental auditing. The ultimate aim, of course, is to enhance the capacity of SAIs to undertake environmental audits on their own. This is an objective to which my office is deeply committed.

Journal: Where does the WGEA go from here? How do you view its development
in the longer term, and what do you think are the prospects for environmental auditing in general?

Fraser: Let me answer the last part of your question first. I don’t have a crystal ball, but I think it is safe to say that environmental auditing will remain an essential auditing activity at both the national and international levels.

As for the WGEA, our immediate to midterm goals are pretty well defined in our draft work plan for 2005-2007, which will be formally submitted for discussion and approval at our upcoming meeting this June in Brasilia. We intend to pursue some of the same objectives and themes as in the past, notably with respect to water and waste management, but we will also develop newer issues as well, such as biodiversity.

Training is another important way the working group builds environmental auditing capacity, and this is another activity we will be pursuing. Over the last 2 years, we have embarked on a partnership with the INTOSAI Development Initiative in regard to training, and we intend to deepen and expand this collaboration in the years to come.

The WGEA will also build on its recent experience and continue to develop collaborative links with international organizations and institutions like the United Nations Environmental Programme and the World Bank. And, of course, we will further strengthen our relationships within the international community of environmental auditors. One way of doing so is to expand our efforts in the area of concurrent, joint, and coordinated audits. Much of this still lies in the future, but I am confident that the WGEA will succeed in forging new links between organizations.

The WGEA will evolve naturally as the needs and demands of its membership change. But I have no doubt that it will remain the dynamic organization it has been from its inception and that the SAIs and individuals who make up its membership will continue to display the same degree of energetic professionalism and commitment that they have in the past.

If you would like more information about the Office of the Auditor General of Canada and its activities, please see the “News in Brief ” item that appeared in the Journal’s October 2003 issue, which profiled the OAG on the occasion of its 125th anniversary. You can also visit the OAG’s website: www.oag-bvg.gc.ca.