The evolving role of supreme auditing institutions (SAIs) towards enhancing environmental governance

ABSTRACT

With accelerating environmental degradation, 21st century governments are expected to govern towards more environmentally sustainable outcomes. Supreme Audit Institutions (SAIs) are increasingly recognised as having a key environmental governance role in holding governments to account by expanding their traditional financial audit mandates beyond the oversight of public-sector budgets and accounts to also include environmental aspects. The aim of this paper is to analyse this evolving environmental governance role of SAIs internationally. The methodology relies on the review of relevant literature and results from survey questionnaires obtained from the International Organisation of Supreme Audit Institutions (INTOSAIs) and their Working Groups for Environmental Auditing (WGEAs). The research results show that there is a steady and meaningful increase in opinion that SAIs legislative mandates should make provision for environmental auditing. In practice an increase in environmental-related audits happened in all three spheres of financial-, compliance- and performance auditing, which supports a shift in emphasis from predominantly financial driven audits.

KEYWORDS:

• Environmental auditing
• environmental governance
• public sector
• methodology
• processes
• supreme audit institutions
• environmental assessment follow-up

1. Introduction and background

A growing body of evidence recognises that we are living unsustainably through the continual depletion, degradation and pollution of natural resources (Steffen et al. 2015; Retief et al. 2016; Richardson 2018). Governments, as an important custodian of the environment, are expected to ensure the protection and sustainable use of natural resources (Cilliers et al. 2020; Roos et al. 2020). Woinarski and Garnett (2015) emphasize that a ‘21st century government must care for our nature and future’, stressing the requirement for governments to not only govern within their financial and economic capabilities and mandates, but also in a manner that sustains and protects natural resources. Internationally, countries make provision for various mechanisms and multiple agencies responsible for environmental management and governance. One such environmental governance mechanism is environmental auditing by Supreme Audit Institutions (SAIs) (ASOSAI 2009:8). Auditing is recognised as a best practice requirement for any well-functioning environmental governance system and directly supports various policy instruments such as strategic environmental assessment (SEA), project-level environmental impact assessment (EIA) and environmental management systems (EMS). In terms of impact assessment, it is mainly covered in the post-decision follow-up literature (Morrison-Saunders et al. 2014; Wessels et al. 2015; Pinto et al. 2019). Essentially auditing serves in different guises as a checking mechanism towards improved accountability and transparency in government performance and decision-making (Bond et al. 2016, 2018; Retief et al. 2020). SAIs are international agencies that conduct both so-called ‘traditional’ external audits (checks on the legality and regulatory form of financial management and accounting) and ‘modern’ performance auditing (evaluations of the effects of public expenditures on public programmes and projects). These audits are conducted against the International Standards of Supreme Audit Institutions or (ISSAIs) as well as a set of guidelines endorsed by the International Organisation of Supreme Audit Institutions (INTOSAI).

SAIs are increasingly recognizing the environmental governance role that they can play, by reforming and expanding their traditional financial audit mandates beyond the oversight of public-sector budgets and accounts to also include environmental matters (UN, 2018; INTOSAI n.d.). Environmental matters refer specifically to biophysical environmental risks and impacts potentially resulting from ineffective environmental governance and weak environmental regulatory regimes. The inclusion of environmental matters when auditing organs of state is important because it investigates and reinforces environmental governance, performance as well as oversight in pursuit of sustainability. The benefits for auditing and reporting on environmental matters within the public sector include strengthening public trust where governments or entities can demonstrate and prove their efforts and means to safeguard and protect the environment. Also, where government institutions are audited and allowed to continually improve their compliance, pro-active and enhanced environmental performance result. Therefore, as SAIs become more conversant in developing and evolving their environmental governance role, it needs to continually ensure that their audit methodologies are aligned to internationally recognised standards and practices, notwithstanding their own country-specific challenges, commitments and goals. Reflecting on the evolution of environmental governance by SAIs is important to inform positive progression and transformation of these institutions.

Therefore, the aim of this paper is to analyse this evolving environmental governance role of SAIs internationally. In so doing, the paper compares public-sector audit methodology processes, and the developments and trends towards enhancing environmental governance. The paper employs a literature review supported by the evaluation, analysis and comparison of data and inputs from INTOSAI and its Working Groups for Environmental Auditing (WGEAs). The next section introduces the potential role of SAIs in enhancing environmental governance. Section 3 describes the methods employed to gather and analyse empirical data from the INTOSAI and its WGEAs, while Section 4 presents the results from the data analysis. Finally, conclusions and recommendations are outlined in Section 5.

2. SAIs environmental governance role

Environmental governance is the way in which government decides upon, manages, regulates and controls human-induced effects and impacts on the environment (Mushkat 2011; Bond et al. 2016; Nel and Alberts 2018; Retief et al. 2020). Good environmental governance typically requires a collective and co-operative approach to address global-, local- and cross-border environmental concerns, with the aim of ‘ensuring inclusive participation, making governing institutions more effective, responsive and accountable, and respectful of the rule of law and international norms and principles’ (Lister 2010:6). The key principles of good governance generally, should also be applied to environmental governance such as: the rule of (environmental) law, compliance to (environmental) legislation and related requirements, as well as (environmental) accountability. SAIs should ideally consider and report on these key principles within its public-sector audit mandates. Orozco (n.d.: 8), refers to mechanisms and processes instituted by governments to manage, monitor and report on the regulatory framework followed on environmental matters and emphasizes the need and role of effective environmental governance towards improved environmental accountability, especially where:

• Government is mandated or in charge of goods and services provision in environmentally sensitive fields;

• Several environmental problems emanate from a lack of or needs of goods and services not covered by the market, but in public interest;

• Government institutions (through regulatory authorities) are mainly responsible for enforcing laws and regulations.

Environmental auditing evolved as an environmental governance and management instrument, which identifies, checks (audits) and reports on the threats and effects that activities have/may have on the environment, against established criteria or applicable standards (Sheate n.d.). From a governance perspective, environmental auditing is interpreted to evaluate commitment to good environmental governance, as well as the conformance to set environmental policies, plans, strategies, practices and standards. It provides a means of assessing and keeping the general public informed on government actions and performance in safeguarding the environment and decision-making processes that may impact or affect the environment. Furthermore, environmental auditing may demonstrate the care and concerns for the environment and subsequent principles towards improved environmental legislative compliance. Van Rooyen (2016) discusses the use of environmental auditing as an environmental governance instrument, within both regulator and regulated scenarios, that will typically seek to ascertain public-sector environmental legislative compliance, whilst also attempting to improve environmental practices and operational efficiencies.

As already explained SAIs are key government agencies responsible to audit and report on how public funds are spent. Dependable and unbiased auditing and reporting is required to achieve accountability and transparency within the public sector (IIA 2012). Financial management, compliance with rules and regulations, as well as performance against pre-determined objectives, form part of the day-to-day regularity audit processes of SAIs, whilst voluntary performance- and other specialised audits may be more theme- or purpose-driven (INTOSAI WGEA 2004). The overall aim of public-sector auditing is to enhance public-sector governance and accountability, improve the management and quality of governance and ultimately to add value or improve the life of citizens (INTOSAI WGEA 2018: 4). Environmental audits conducted by SAIs may assist governments with the improvement of environmental governance and accountability, through formulating environmental legislation; advancing capacity to develop, implement and improve the functioning of environmental policies and programmes; generating environmental indicators, performance measures, evaluating environmental policy; developing and monitoring environmental management systems; and producing environmental reports (INTOSAI WGEA 2019:91). Ultimately, SAIs have notably evolved to play an environmental oversight role, through assessing government’s performance and achievement of set environmental goals, targets and commitments.

2.1. Evolving environmental governance and public-sector auditing trends

Baimyrzaeva and Omer Kose (2014) emphasize the changing role of SAIs over time and their contribution to improving citizen participation in governance. Since the latter part of the 1960s and early 1970s, various environmental and auditing changes occurred which resulted in environmental policy developments, establishing of monitoring and protection agencies, passing of new or groundbreaking environmental acts. . From the mid–1980s a new international environmental agenda emerged with emphasis on collective ways and means to consider and address environmental issues and risks. The 1990s saw the most pertinent global environmental challenges becoming part of major international actions, treaties, plans and other initiatives. These developments also shifted prevailing emphasis and focus on environmental governance and public-sector auditing, with the INTOSAI WGEA being instrumental in fostering and clearing the way for continual growth and development in environmental auditing, since its inception in 1992. The evolution and trends in environmental auditing can be connected to the global environmental changes, stipulated from the 1970s onwards .

The evolution of environmental auditing responded to the new legislative enactments and subsequent efforts towards improved environmental governance by governments and organs of state. The emergence of environmental auditing in the late 1970s and the early 1980s saw established companies introducing environmental auditing as part of their quest towards effective environmental-, health- and safety programmes. These programmes further developed into environmental management systems (EMS) in the early 1990s and the groundbreaking ISO 14,001 in 1996, which included guidelines on the design, implementation and auditing of an EMS. ISO 14,001 was revised twice since 1996 and steers environmental management as well as compliance assurance programmes, with monitoring and (certification) auditing at the heart of the system in the pursuit of continual improvement.

Although SAIs are not performing such certification audits, it is providing some guidance and direction towards improved public-sector environmental governance. It also leads to governments becoming more aware of, and improving their environmental management performance, subsequently increasing their environmental budgeting provisions to ascertain and support good governance (INTOSAI WGEA: 2007:16). Van Leeuwen (2004: 163) found that since the late 1980s, SAIs became more aware of their roles and responsibilities towards the environment and checking the implementation of environmental policies and programmes. Governments in most countries adopted some sort of environmental policy, and the SAI is expected to consider and evaluate performance and adherence thereto within their available public-sector audits (Kourtellis 1999:14). United Nations (UN) Resolution 70/1 of 2015, entitled ‘Transforming our world: the 2030 Agenda for Sustainable Development’, with its seventeen Sustainable Development Goals (SDGs) and 169 targets, currently requires countries to develop and implement strategies towards realising these goals (United Nations (UN) 2018). Therefore, SAIs now have a general duty to also protect the environment and enhance environmental governance, hence the inclusion of environmental considerations in most SAI audit scopes and processes. However, SAIs are continually evolving in this role, searching for the best means and options to include within their available mandates and resources. The results of the latest available WGEA Survey 9 are indicative of the SAIs’ evolution towards including environmental issues and risks as part of its auditing mandate, scope and processes (INTOSAI WGEA 2019: 10–11) – see Table 1.

Table 1. Significant developments towards including environmental auditing in audits conducted by SAIs (INTOSAI WGEA 2019:10–11)

Focus	Significant developments (since previous surveys)
Auditing Mandate (Chapter 1)	Almost half of SAIs had legislative mandates specifically referring to environmental auditing. The majority had legislative mandates to conduct performance (93%), compliance (88%) and financial audits (87%) on environmental issues.
Environmental Audits (Chapter 2)	Performance audits were the most common type of environmental audits with almost half of the respondents also conducting financial audits. Nearly half of responding SAIs (48%) indicated plans to increase environmental audits.
UN – SDGs (Chapter 3)	The Sustainable Development Goals (SDGs) were a high priority in strategic work plans of many SAIs (68%). Almost half of SAIs (48%) mentioned the impacts of UN 2030 Agenda for Sustainable Development on their audits and 51% conducted audits thereon.
Impacts of Environmental Audits (Chapter 4)	Almost all SAIs had measured the impact of environmental audits and 72% did follow-up audits and monitored implementation of recommendations/findings. 73% of SAIs tracked implementation of recommendations by follow-up audits.
Environmental Auditing Capacity (Chapter 5)	More than half (55%) of SAIs had specific a department or section working full-time on environmental audits. On average 1.63% of auditors (compared to all employees in each country) worked full time on environmental audits. On average 28% of auditors had an environmental degree with almost 30% having previous environmental experience.
Cooperation between SAIs (Chapter 6)	65% of the SAI respondents indicated experience in cooperation with another SAIs and most SAIs were involved in exchange of information. Lack of resources was the main barrier for other SAIs to get involved in cooperative audits.

2.2 Options for environmental inclusion in public-sector auditing by SAIs

Despite the important role that SAIs could play in strengthening environmental governance, there are debates around how such a role should best be executed (Feris 2010). These debates are centred around what is considered the best options, developments and placement of environmental issues within SAIs mandates and functions. The initial challenges of environmental inclusion centred around SAIs predominantly financial driven audit mandates, with no explicit mandate to audit and report on environmental issues. This was raised at both the 6th and 7th INTOSAI WGEA meetings in 2000 and 2001 (INTOSAI WGEA 2004: I & ii). SAIs were, however, encouraged and guided to use or adapt (and have in some cases already reformed) their current audit mandates in a collective approach to address the myriad of environmental confrontations within global and individual country perspectives. The options for placement of environmental matters within public-sector auditing by SAIs are mostly limited to a mandatory, regularity audit approach, which focusses predominantly on the financial- and compliance applications; or a voluntary, specialized (theme-driven) approach, that includes performance auditing – see Table 2. Many SAIs, however evolved and adapted to a combined or interrelated approach, that cuts across all the available audit types and processes.

Table 2. Environmental inclusion within public-sector audit types (Adapted from INTOSAI WGEA, n.d.)

Public sector audit type	Environmental inclusion focus during audit	Justification for inclusion
Regularity (financial) Audit	Included if: Environmental matters impact on financial statements Compliance with environmental laws and regulations Environmental pre-determined objectives	Obtaining sufficient and appropriate audit evidence to enable the auditor to express an opinion as to whether the financial information includes environmental matters that is free from material misstatements due to fraud and error.
Compliance Audit	Included if: A particular environmental matter is in compliance with authorities identified as criteria Activities, financial- and environmental transactions and information are in all material respects, in compliance with authorities which govern the audited entity.	To ascertain that the environmental rules, laws and regulations, budgetary resolutions, policy, established codes, agreed terms of the general principles governing sound public-sector financial and environmental management and conduct of public officials is conformed to.
Performance Audit Theme-driven focus	Included if: Evaluating the measures instituted by management to ensure that resources have been procured economically and are used efficiently and effectively and in an environmentally friendly manner.	Audit and report on whether interventions, programmes & institutions are performing in accordance with the principles of economy, efficiency, effectiveness, environmental sustainable manner. To answer key environmental questions and to provide recommendations to improve.
Combined audits^a/Other arrangements Particular to mandates, roles and responsibilities to manage and steer environmental governance	SAIs may carry out specific environmental audits or engagements on any subject relevant to the responsibilities of management and those charged with environmental governance and the appropriate use of public resources.	Audits may include reporting on environmental quantitative outputs, outcomes of the entity’s environmental service delivery activities, sustainability reports, future resource requirements, adherence to internal control standards, real-time audits of environmental or other matters.

aCombined audits incorporates financial-, compliance and/or performance aspects

A shift in the discourse around the role of SAIs increasingly emphasise the need to also consider and include the environmental sustainability pursuit within their public-sector audits, thereby contributing towards improved environmental management and sustainability practices. For example, in relation to the role of environmental auditing and sustainability, Boso (2010) states that a concise effort is needed to improve the use of current audit mandates in the fields of environmental protection and sustainable development by SAIs. As the general public becomes more conversant of the need to safeguard and protect the environment and natural resources, so too did their expectations on governments’ roles and responsibilities thereto. In certain countries the contribution of SAIs has been explicitly refined to include drafting environmental legislation; developing environmental policies and programs; developing capacity to develop, implement, improve functioning; generating environmental indicators, performance measures, monitoring systems, policy information to evaluate environmental policy; developing EMS; and produce environmental reports (INTOSAI WGEA 2001; 2003, 2004, 2019: 91). Various international auditing and accounting standards guide the consideration and inclusion of environmental matters in audits. The most relevant include, but are not limited to International Auditing Practice Statements (IAPS) 1010(n.d.) ‘Consideration of environmental matters in the audit of financial statements’, ISSAI 5110 ‘Guidance on conducting audit activities within an environmental perspective’ (INTOSAI 2016), ISSAI 5120 ‘Environmental auditing in the context of financial and compliance audits’ (INTOSAI 2016aa), and ISSAI 5130, ‘Sustainable development: The role of Supreme Audit Institutions’ (INTOSAI 2016bb). Although the audit types, methodologies and processes may differ across SAIs, Jamtsho (2005:21), refers to the ‘XVII 2001 Guidance on Conducting Audit Activities with an Environmental Perspective’ to emphasize that environmental auditing must still fundamentally be considered and included within a comprehensive regularity- and compliance process. Moreover, SAIs may include environmental-related audits within any of their available public-sector audit methodology processes, as defined in the INTOSAI ISAs.

3. Methodology

The aim of this research is to analyse this evolving environmental governance role of SAIs internationally by comparing available public-sector audit methodology processes, and the developments and trends towards enhancing environmental governance. To achieve the research aim, the INTOSAI and its WGEAs were identified as the most reliable and relevant source of SAI information. Since its inception in 1992, the INTOSAI WGEA conducted nine environmental audit surveys, mapped to global- and regional trends in environmental auditing as well as challenges presented to SAIs upon undertaking environmental audits. However, because SAIs awareness and increasing efforts to expand their mandates and environmental audit involvement only gained meaningful momentum from the new millennium onwards, this paper focuses on the period since 2000.

In analysing the evolving role of SAIs contribution to environmental governance, the review of relevant literature (as outlined in Section 2) is supported by empirical data collected by means of survey questionnaires. Online survey questionnaires completed by INTOSAI members from seven regions (AFROSAI, ARABOSAI, ASOSAI, PASAI, CAROSAI, EUROSAI and OLACEFS¹), representing 77 member countries were used to collect data on trends in the evolution of legal mandates as it relates to environmental auditing, as well as preferred audit types and methods. The online questionnaires focussed on the following main areas: (i) mandate or authority of SAIs; (ii) access to WGEA and SAI resources; (iii) environmental policies; (iv) environmental audit activities; (v) environmental audit types; (vi) audit capacity; (vii) activities and future role of the WGEA; (viii) audit planning (3⁺ years); (ix) environmental issues facing countries; (x) environmental auditing barriers; (xi) WGEA role in addressing barriers within its products; (xii) joint international environmental audits; (xiii) participation in regional WGEA audits and (xiv) access to environmental reports.

Structured text from five (of the nine) INTOSAI WGEA surveys conducted during the period 2004–2017 (Table 3) were sampled, which included 455 responses at an average response rate of 49,4%.

Table 3. INTOSAI WGEA environmental audit survey responses selected focusing on the period 2004–2015 (Surveys 5–9)

Survey number and report date	Period covered	Survey distributed to INTOSAI members	Responses by INTOSAI members		Response rate (%)
Survey 9 (2018)	Jan 2015–Dec 2017	192	60		31%
Survey 8 (2015)	Jan 2012–Dec 2014	192	58		31%
Survey 7 (2012)	Jan 2010–Dec 2012	190	112		62%
Survey 6 (2009)	Jan 2007–Dec 2009	189	106		59%
Survey 5 (2006)	Jan 2004–Dec 2006	186	119		64%
Total		949	455
Average response rate				49,4%

The INTOSAI population and response rates compared between the 8th and 9th survey results, indicated that the proportion of core countries that participated in the survey, constitutes 55% of the total survey respondents, with European Organisation of Supreme Audit Institutions (EUROSAI) and Asian Organization of Supreme Audit Institutions (ASOSAI) the main and more consistent contributors. The lowest response rates were from African Organization of Supreme Audit Institutions (AFROSAI) with 15% and the Caribbean Organization of Supreme Audit Institutions (CAROSAI) with 14% for these two survey periods. The Organization of Latin American and Caribbean Supreme Audit Institutions (OLACEFS) showed the most significant increase of 24%. There was however a significant decrease of 43% in respondents from all the Regional Working Groups of Environmental Auditing (except USA-Canada) compared to the respondents in 2011 (7th survey) and before (INTOSAI WGEA, 2019:148). As environmental auditing is still considered a voluntary option within SAIs public-sector audits, as well as responding to the environmental audit surveys being optional, explaining the decrement in responses of INTOSAI membership countries is difficult. However, the overall response rate as reflected in the data does provide a generalizable international sample to address the research aim.

To support the results on responses received from INTOSAI members, questions were also posed to six of the seven regional INTOSAI WGEA secretariats (CAROSAI was excluded, because no regional WGEA exists) and the INTOSAI WGEA training facility (iCED) using a survey questionnaire. The surveys were conducted in 2019 and included five respondents from 22 individual members targeted (at a response rate of 23% from four of the INTOSAI WGEA regions). The questions were aimed at understanding the perceptions around the evolution of trends to include environmental issues and risks within SAIs public-sector audit methodology processes and included questions related to:

• The mandate of SAI to include environmental audits (Question 2);

• Environmental matters or aspects currently included in audits (Question 3);

• The placement of environmental matters in terms of regularity, compliance, performance and other audit types (Question 4);

• The current extent of environmental inclusions in audits (Question 5);

• Whether regularity or performance audits are the best option for environmental auditing inclusion (Question 6) and

• Whether environmental placement is likely to enhance public-sector environmental accountability (Question 7).

The results were collated and interpreted to set the basis for identifying global developments and preference on the placement of environmental matters within SAIs public-sector audit methodology processes and its value towards improved environmental governance.

4. Analysis and discussion

This section outlines the results of the survey questionnaires obtained from the responding INTSOAI members, as well as the results obtained from six of the INTOSAI WGEA secretariats. The section starts by dealing with the evolution of mandates before challenges are discussed.

4.1. Evolution of SAI mandates and preferred placement of environmental matters

The surveys first determined to what extent participants regarded environmental auditing as being part of the legislative mandate of SAIs – see Figure 1. Although the majority of respondents indicated that environmental auditing does not fall within the mandate of SAIs, a comparison of the results over time indicated that there is a steady and meaningful increase in the respondents’ perceptions of the SAIs legislative mandates referring specifically to environmental auditing, from less than 20% in the 5th survey results to 47% in the latest, 9th survey results.

Figure 1. Percentage responses related to whether environmental auditing falls within the legal mandate of SAIs

Reflecting on SAIs environmental auditing mandate changes since the previous survey, most respondents indicated that their (SAIs) environmental auditing mandates did not change accroding to almost 50% in the 5th survey period to 88% in the 9th survey period – see Figure 2. However, during the 6th and 8th surveys 22% and 15% of respondents indicated respectively that their legal auditing mandates have changed.

Figure 2. Percentage responses related to whether environmental auditing mandate has changed since the previous survey

Where the environment is referred to or included in their mandates, SAIs may be obligated to audit and report on environmental issues and risks. Participants were required to indicate which type of audit they would regard as being suitable to include environmental matters – see Figure 3. The majority of respondents (mid 70% – lower 90%) indicated that both regularity (financial and compliance) and performance audit processes would be suitable to conduct environmental audits. Priority or special audits as an option remained relatively consistent over time (between the 30 and 40%), with ‘other options’ not selected within the last four survey results.

Figure 3. Percentage responses related to audit types used to include environmental matters

Reflecting on the environmental audit types and numbers conducted as shown in Figure 4a and b, most of the environmental audits performed between the 5th, 7th, 8th and 9th surveys were performance driven (upper 70%–mid 80%), followed by compliance (upper 50%–mid 60%). The audit types or methodologies followed were not clearly evident in the 6th survey results, and are consequently not reflected in Figure 4a. Performance audits were indicated as the most preferred option conducted by respondents, with compliance and financial audits also being popular for conducting environmental audits – see Figure 4a and b. The total number of performance audits conducted increased substantially from less than 50 in the 5th survey responses to close to 800 in the 9th survey responses – see Figure 4b. There were also notable increases in the number of compliance audits and financial audits conducted from the 5th to the 9th survey periods. Although financial audits reflect a range between approximately 15%–55% in Figure 4a, the result that financial audits also include a compliance focus could have influenced these responses. Priority (priori) or special audits ranged between 2% and 17% as shown in Figure 4a. It is meaningful that the number of priori (verifying the legality and budgetary allocations for acts, contracts or other instruments that generate infrastructure) or specialised audit opinions, increased from 0 to around 200, between the 7th and 9th survey periods – see Figure 4b. Around two thirds of the environmental audits performed between the 5th and 7th survey periods were included in either the performance- or compliance audit methodologies – see Figure 4b. The significant increase in environmental-related audits performed in all three spheres of financial-, compliance- and performance auditing emphasises the importance thereof and shift in SAIs predominantly financial driven audit focus. These results indicate that environmental inclusion should rather be specific focus-driven, considering the particular risks and impacts.

Figure 4. Percentage responses related to environmental audit types (a) and total number of environmental audits conducted (b) by survey across all regions – average (5th–9th survey results)

Figure 5 provides an overview of the 2019 responses received from the INTOSAI WGEA Secretariats on Questions 2–7 described above. The majority of respondents (80%) were of the view that their audit mandates allow for environmental inclusion (Q2) and or have already performed such audits (Q3). There was consensus that performance auditing is currently the preferred option for placement of environmental audits (matters) (Q4 and Q6), with the extent of inclusion leaning towards selective voluntary audits (Q5). The majority of respondents (40%) agreed or partially agreed (20%) that environmental placement is likely to enhance public-sector environmental accountability.

Figure 5. Inputs from INTOSAI WGEA (Secretariats): Inclusion of environmental issues and risks within SAIs public-sector audit methodologies

The responses emphasize the importance and need for SAIs to audit and report on environmental issues and risks, holding governments accountable for their environmental mandates, roles and responsibilities and to support effective environmental governance.

The evolution and trends in environmental auditing suggest a significant shift in the expectations, efforts and means of government to ascertain or pursue public-sector environmental accountability (INTOSAI WGEA 2007: 13–14). Moreover, audits performed by SAIs and the findings or observations frequent to environmental auditing, but not unique to the environment, included issues such as (i) gaps and weaknesses in government actions, (ii) complexities of, and cooperation required in environmental governance, (iii) inadequate monitoring and enforcement (inspections), (iv) financial management weaknesses, (v) concerns regarding the reliability of data and the lack of detailed information, (vi) environmental governance has broadened in responsibility, (vii) SAIs had to expand the number of audit topics to audit as well as the methods used for these audits and (viii) the need for expansion of environmental audits in the global and INTOSAI community.

The INTOSAI WGEA survey results show a symptomatic voluntary performance audit option (for placement) as the most used and developing type for the inclusion of environmental matters, followed by the mandatory (regularity) options that included both compliance and financial considerations, with special or priority audits also an option, but least preferred (INTOSAI WGEA n.d.). There were, however, also other innovative reforms, movements and developments within a number of SAIs, opting for a rather comprehensive approach placing environmental matters within both the voluntary- (performance) and mandatory (regularity – financial and compliance) audit methodology processes. Notwithstanding the preferred placement by SAIs, it was clear that all the available audit methodologies are suitable for environmental inclusion (INTOSAI WGEA 2019:22). INTOSAI only gives guidance, but is not prescriptive on where to place environmental auditing within individual SAIs audit types and means. There is also no obligation to follow set audit practice standards, rather just guidance when considering and auditing environmental matter, or where it could be placed within the public-sector audit methodology practices. Placement can, therefore, not be generalised and will have to be country and needs specific.

4.2. Challenges for SAIs to include environmental audit and reporting

As already alluded to, most SAIs do not have a specific legislative mandate (or no significant changes in the mandates since 2000), to include or audit environmental issues and risks within their current public-sector audit methodology. The uncertainty, conflicting beliefs, available resources and/or resource constraints, with age-old traditional public-sector audit mandates and trends, allows for slow reforms or progress by SAIs worldwide. This may present challenges in adapting and including significant environmental issues and risks within SAI’s day-to-day public-sector audit methodologies. Many countries involve multiple agencies to manage and/or administer the environmental mandate and it is sometimes difficult to identify accountability or ownership of critical environmental concerns (ASOSAI 2009:8). The ambiguity, uncertainty and differences in SAIs approaches, both within developed- and developing country perspective, on where and how to include environmental matters within their public-sector audits, necessitated further interrogation to better accommodate this uncertainty.

Although the global trend within the International Organization of Supreme Audit Institutions (INTOSAI) suggests a more voluntary or special audit approach, mandatory regularity auditing is also considered ‘well placed’ for continual year-to-year inclusion and follow-ups, within current budgets, manpower and other resources of SAIs. The Consolidated Guideline on regularity audits with environmental focus in a sense supports this suggestion, indicating that 95% of SAIs resources resort within regularity audit and that it will be beneficial to integrate environmental issues with these audit processes (AFROSAI-E 2009). The literature reviewed, and results of empirical data collected for this research support the international trends and habitual adjustments by SAIs to audit and report on environmental matters, although SAI and country-specific challenges may influence the most suitable placement within the available audit methodologies. The general challenges highlighted in the INTOSAI WGEA survey results for the inclusion of effective environmental auditing by SAIs, are the following:

1. Environmental audit mandates and reporting processes, that are predominantly financial focused and driven, will need adaption or reform, to include environmental issues and risks;

2. Environmental knowledge and training needs within SAIs to effectively identify and address significant environmental risks. Most SAIs do not have the necessary environmental audit capacity and resources to audit and report on environmental risks and issues;

3. Governments and SAIs lack environmental audit policies, plans, strategies and procedural developments, to properly plan, perform and report on environmental risks;

4. There are capacity and resource constraints within government structures responsible to administer and manage the environment or establish effective environmental governance. This will ultimately lead to co-operative and supportive challenges when auditing environmental performance;

5. Weak or ineffective environmental regulatory regimes shift more emphasis towards SAIs in fulfilling this oversight gap and reporting on environmental risks and impacts;

6. Lack of or poor environmental data (qualitative and quantitative) result in limited or ineffective environmental audit evidence to substantiate the risks or non-compliances;

7. Country-specific historical and political challenges may result in developmental needs in certain environmentally sensitive areas, outweighing the environmental and/or sustainability implications, which SAIs should be aware of;

8. Government signatories, commitments and agreements (with some onus on SAIs to assess performance and conformance thereto) may exist, with no responsible authorities to implement, monitor and report on the progress towards set goals and targets, may lead to difficulties for SAIs to audit and report on;

9. Certain SAIs work on operating budgets, charging the auditees for audits that are performed, and the additional environmental aspects to audits will result in an increase in audit fees and debtors.

5. Conclusion

In this paper the evolving environmental governance role of SAIs is analysed based on the outcome of international surveys over time. The surveys included views on how environmental auditing needs to be incorporated and what public-sector audit methodologies are best fit to serve the purpose for improving environmental governance. From an international perspective, we have specifically drawn from INTOSAI and its WGEA guidelines, trends and developments. The survey results contributed to a better understanding of the options for including environmental matters within global SAIs audits, while the available literature highlighted its potential contribution to strengthening environmental governance and accountability in the public sector. The results show that the overall trend and preference of environmental placement are within the voluntary performance audit methodologies of SAIs worldwide. With the impacts and challenges on the environment increasing at an alarming rate, there seems to be agreement on the need for SAIs to audit and report on significant environmental matters. Suggestions are also made to including environmental issues and risks within a co-operative financial, compliance and performance audit approach. Environmental risks and issues should be excluded from neither the mandatory nor the voluntary public-sector audit methodologies, as it can impact on both of these auditing mandates. In line with the aim of the paper we make the following key conclusions from the data:

• There is a steady and meaningful increase in perceptions that SAIs legislative mandates could and should make provision for environmental auditing.

• SAIs environmental auditing mandate has not changed significantly over time, which highlights the difficulties with, and slow rate of change, at such institutions.

• Both regularity (financial and compliance) and performance audit processes would be potentially suitable to conduct environmental audits. However, the majority of environmental audits over time were performance-driven followed by compliance.

• The total number of environmental performance audits conducted increased substantially from less than 50 to close to 800 over just more than a decade. The significant increase in environmental-related audits performed in all three spheres of financial-, compliance- and performance auditing emphasises the importance thereof and shift in SAIs predominantly financial driven audit focus.

• Overall there seems to be agreement that environmental auditing and reporting within SAIs are likely to enhance public-sector environmental accountability, thereby holding governments accountable for their environmental mandates, roles and responsibilities and to support effective environmental governance.

Going forward it is recommended that environmental legislation, mandates, roles and responsibilities be clearly defined to guide public-sector auditors and government’s (auditees) in terms of their environmental governance obligations. Furthermore, SAIs need to develop and implement an environmental strategy, that clearly articulate how environmental issues and risks will be considered, included, developed and inter-linked within all their available public-sector audit- and reporting methodology processes (and resources pertaining). The capacity and effectiveness of regional and country-specific environmental regulatory regimes need to be better understood, that could then guide SAI’s specific level of environmental auditing involvement. For example, INTOSAI represents both developed- and developing countries where skills and resources are bound to differ. Future research could consider more context-specific and comparative research on the best suited environmental placement within different countries. It needs to be established why and how the traditional financial audit mandates of SAIs can or need to be expanded or changed to ascertain the inclusion, auditing and reporting of significant environmental risks within the public sector. Although this paper only broadly considered the evolution and changes within SAIs, more detailed context-specific research is required to determine the effectiveness of environmental auditing and the value it adds towards improved environmental governance. However, there seems to be general consensus from this research that SAIs can strengthen weak environmental governance, caused by ineffective environmental regulatory regimes, by utilizing or expanding their current public-sector audit mandates, methodology processes, resources and means, to include environmental issues and risks.

The environmental assessment follow-up literature has identified post-decision monitoring and enforcement to which auditing relates as a particular area of weakness (Morrison-Saunders et al. 2014; Wessels et al. 2015; Pinto et al. 2019; Alberts et al. 2020). Effective environmental reporting and audit practice in the public sector can assist with strengthening monitoring and enforcement by enabling better oversight, accountability and governance of legislative environmental assessment processes. This is especially relevant to country contexts where governments are driving mega-scale public-sector infrastructure developments such as roads, railways, ports, mining, energy and services infrastructure as part of national and even regional scale development plans. Many of these mega projects are typically public sector and/or lender funded with significant potential environmental implications, which places a significant responsibility on governments and funders to demonstrate that they act responsibly. Therefore, this research provides a positive message that shows strengthening of international public-sector environmental auditing arrangements, which also expectantly suggests improved and potentially more effective environmental assessment follow-up outcomes.

Acknowledgements

We gratefully acknowledge the contributions made by the various respondents participating in the surveys.

Notes

1. AFROSAI: African Organization of Supreme Audit Institutions; ARABOSAI: Arab Organization of Supreme Audit Institutions; ASOSAI: Asian Organization of Supreme Audit Institutions; PASAI: Pacific Association of Supreme Audit Institutions; CAROSAI: Caribbean Organisation of Supreme Audit Institutions; EUROSAI: European Organisation of Supreme Audit Institutions; OLACEFS: Latin American and Caribbean Organization of Supreme Audit Institutions.