Internal Auditing for Compliance & EMS Performance

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Courtesy of ERS Global

Many companies today conduct their own environmental audits to monitor compliance and keep management informed of environmental performance. Why is this important? If you ask these companies, you will generally hear this reason

Risk management

The liabilities resulting from noncompliance with environmental regulations can be severe, and include both monetary penalties and personal exposure at top management levels.

However, industry leaders in both manufacturing and utilities have discovered two other reasons to optimize environmental performance

Internal efficiency

Waste is product lost to the environment, and the cost savings associated with pollution prevention are significant. Companies are reporting saving millions of dollars over a period of a few years.

Competitive advantage

Marketplace conditions have changed. Consumers, customers, and even investors want to know what companies are doing to manage environmental issues and grow a sustainable business. These concerns are a buying influence that are rapidly mounting due to global changes in political structures, societal demand, and deregulation.

One of the most useful elements of an environmental management strategy is a proactive internal audit program that reports how a company’s environmental management program or system is working before regulatory agencies and other stakeholders detect problems.

Companies start auditing themselves to collect objective evidence of meeting their environmental goals related to compliance and EMS performance. Both the U.S. EPA and the International Organization for Standardization (ISO) have policies and guidance related to environmental self-auditing or internal auditing. How are these audits conducted? They are typically performed by trained personnel from within the company, external consultants, or a mixture of both depending on in-house resources and competencies. Regardless of who performs the audit, it is important that the auditors strive for objectivity while conducting the audit. The internal audit typically involves document and data review, followed by on-site interviews and observation of plant activities. Effective communication with the auditee is essential before, during, and after the audit to ensure complete information and results are obtained that are useful for management decisions. While available environmental data may be reviewed, environmental sampling is not a part of the auditing process.

What’s the difference between auditing compliance and EMS performance? Compliance is only one component of environmental performance, and focuses strictly on meeting environmental regulations and requirements of federal, state and local agencies. Compliance is frequently measured in numbers of violations. While compliance auditing is essential to risk management, it does not guarantee optimal internal efficiency or necessarily meet the environmental concerns of consumers and customers. EMS performance requires going beyond being 'in compliance' to consider significant environmental impacts at their source, and targeting these sources for reduction. Optimal environmental performance may eventually involve complete reuse of materials in industrial processes to approach zero waste generation.

According to ISO 14001, the internal audit program should define procedures that cover:

  • The activities and areas to be audited
  • The frequency of audits
  • The responsibilities associated with managing and conducting audits

The communication of audit results
The audit program and schedule are based on the environmental importance of a particular activity and the results of previous audits. For example, a shipping and receiving department may have the potential for significant environmental impacts depending on the procedures followed to handle certain types of cleaning solvents or R&D materials. The rest of the materials received may be inert or non-toxic. If the company’s environmental objective’s were waste minimization and accident reduction, it may be important to audit the department’s procedure for handling these materials, and check records of previous audits to see whether these procedures had historically been followed.


A multi-media checklist has proven to be a valuable tool for conducting internal audits. When designed correctly, the checklist serves the dual purpose of providing a consistent format for evaluating compliance and environmental performance and establishing a baseline to be measured against during subsequent audits to track progress and report results.

Checklists are tailored to industry issues and the facility’s environmental compliance program or management system to be relevant and concise.


The resources required to conduct audits will depend on the company’s size and complexity of operation. The following factors will increase the resources required:

  • an initial audit vs. follow-up surveillance
  • number of employees and departments
  • geographical layout
  • organizational structure and complexity
  • level/type of technology and variety of products the company’s record

Management Commitment

Equally important to resources is the management support demonstrated regarding the importance of the internal audit. Senior managers tend to pay major attention to audit results, given the concerns of customers and other key stakeholders.

Management commitment, resources, and audit tools such as checklists are the keys necessary to running an effective internal audit program. A customized checklist that auditors use to consistently evaluate the environmental management program or system will reduce the time required to conduct the audit and be audited. These checklists vary greatly in content and detail depending on the goals management expects to accomplish via auditing. Some companies believe a very detailed audit is necessary to evaluate their programs. These companies implicitly subscribe to a 'management by inspection' approach to ensure employees are doing what they are supposed to be doing to manage the environmental aspects of the operation. The advantage is a thorough evaluation, but the down side is a significant investment of employee time, both auditor and auditee, to answer the detailed questions. Employees can also be resentful of others 'looking over their shoulder' to ensure work is being done the right way.

Alternatively, a growing number of companies are realizing that environmental performance is enhanced where employees are involved in setting environmental objectives, delegated responsibility and held accountable for meeting environmental targets. Audits then focus on evaluation of the system and procedures to set and meet the objectives. These companies are able to accomplish audits using simpler checklists that reduce auditor and auditee time, shortening the duration and frequency of audits.

One easy-to-use audit checklist was developed by the auto service and body repair industry. A national group, the Coordinating Committee for Automotive Repair (CCAR™) originally developed the checklist, which is currently available at the website.

The checklist is simple and concise, question and answer – two pages broken down into four major categories of environmental impacts:

  • Waste management
  • Wastewater management

Air pollution control

Underground storage tank, spill prevention and emergency response procedures
Each major category is then further subdivided into more specific sources of impacts. For example, waste management impacts are first characterized as hazardous or nonhazardous for compliance estimation; then each waste stream is evaluated. For the auto repair industry, this meant 20 questions regarding the handling of used oil, used oil filters, used antifreeze, used solvents, batteries, rags, tires, and absorbents. Responses were in the form of yes/no or multiple choice to facilitate analysis of results.

The checklist served to estimate compliance and sensitize shop owners to their current environmental management practices. It highlights areas where alternative management practices would enhance environmental performance through pollution prevention.

Internal auditing is beneficial. The biggest expense is employee time, and time can be saved if a systems approach is employed and employees are delegated responsibility for developing and implementing the system.

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