Technical Articles

International Journal of Auditing – April 2004

Getting Started: Iran’s Environmental Auditing Mandate

The Supreme Court of Audit of Iran, like many SAIs, faces the challenge of working within a restricted mandate when performing environmental audits. What paved the way for us to begin these audits was the belief, expressed in earlier WGEA publications, that environmental auditing is not that different from the other types of audits that SAIs perform. So we started environmental auditing in a regularity contex and operated under the assumption that we did not need a new mandate.

As an audit court, we generally look for irregularities and violations of laws and regulations in the activities of governmental entities. Therefore, we began our environmental audits by searching for laws and regulations related to these issues. We found that under a law approved by Parliament, all our state-owned companies are required to spend 1/1000th of their annual budget to improve the environment. Over the past 3 years, we audited more than 100 companies and found both weak and strong practices in their efforts to use these funds for environmental protection.

We became a member of the WGEA in 1999, and our involvement convinced us that there was much to be gained by a greater emphasis on performance audits of environmental activities. Our attendance at WGEA meetings in Canada and Poland gave us valuable opportunities to exchange information and experiences and to share ideas with others involved in a wide variety of environmental audits. The meeting in Poland, for example, included workshops and presentations of over 20 audits and case studies by SAIs in the areas of water management, waste, and sustainable development.

The value of the information obtained from our WGEA involvement to date became clear when our Auditor General asked us to expand a recent report to provide a greater focus on environmental issues. Our Auditor General has a deep interest in environmental issues and has expressed concern over the problems caused by nonsustainable patterns of development. He therefore asked me to prepare a work plan to reflect this additional dimension of our work. Since one of WGEA’s main themes has been freshwater, and many other SAIs have had experiences with water-related audits, I focused my plan on this issue. I selected two staff members for the audit team and began by giving them a short course on performance auditing.

Our effort certainly faces significant challenges. Our legal mandate is restrictive in terms of how far we can go in auditing environmental performance, and we have little experience to date in performance auditing. Nonetheless, our participation in the WGEA showed us that other SAIs have been able to audit environmental issues with a restricted mandate. Also, the resources available through the WGEA have expanded our knowledge of environmental issues and improved our capability to examine these issues in new ways.

If there is one lesson our experience has taught us, it is that SAIs interested in undertaking environmental auditing should join the international community of environmental auditors. In doing so, they will see whether they are on the right track and will come to understand what they need to do to improve. In fact, the community of environmental auditors—through the papers it prepares, the meetings it holds to discuss new ideas, and the training workshops it conducts—will help SAIs in their efforts and push them to improve their performance.