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Bio Sustainable Feeds Environmental Audit

Question:

Discuss about the Bio Sustainable Feeds Environmental Audit.

Answer:

Introduction

The environmental audit is the management tool for the environment for the purposes of measuring the effects of the activities on the environment as has been set as against the criteria or the standards. This mainly depends upon the various different standards and the areas on which the audit. Based on this, the enviroThe environmental audit is the management tool for the environment for the purposes of measuring the effects of the activities on the environment as has been set as against the criteria or the standards. This mainly depends upon the various different standards and the areas on which the audit. Based on this, the environmental audit is chosen. There are organisations that recognise the importance of the various matters of the environment and also accept the fact that the environmental audit that has bene conducted shall be reviewed by the parties that are interested in that research foundation or the research firm. This audit helps in the investigation, better understanding and in the identification of the audit.

There are a number of different human activities that help in improving and in reduction of the adverse effects of the activities on to the environment. As an environmental auditor, the effects of the organization’s environment is to determine the adequacy of the maintenance of the various documents that pertains to the environment (Soas, 2016).

An audit of the environment involves various practices and procedures and the collection, collation, analysis, interpretation and the presentation of the information that is used for the purposes of assessing the performance that has been set as against the requirements or the targets that are related with some of the issues that are specific in nature. Further, this is concerned with the complying with the environmental legislations and the corporate policies and also the measurement of the performance as against the requirements of the standard of the environmental management system.

This audit would comprise of a systematic, periodic and a well-documented and the objectives aspects of the environmental auditing that is very basic effectiveness of the audit. This is considered to be fast and the most recent tool when it comes to the corporate environmental assessment and the management toolkit. This is the requirement that repeats the audit and also ensures that there is an ongoing commitment and a systematic process for the process of improving the performance of the environment. The scope of the audit itself repeats and becomes more comprehensive when it comes to experience and also expertise in the accrued or as the new issues or the emergence of the new legislations.

Considerations Before Accepting an Audit Engagement:

When it comes to the assessment, appraisal along with monitoring and reviewing them, then it can be used instead of an audit. Audit helps in the detailed verification with the periodic cycle that takes place between the audits. There is a one off event which is carried out less in detail and with a lesser direct checking of the data.

An auditor has to keep in mind that there are many of the environmental reviews that provides the base of the current effects on the environment or the impacts of the relevant legislations on to the environment along with a statement of existence of the environmental performance. These are the reviews that provides and helps in the management of an action plan. They could become a part of an environmental system of management that helps in the implementation of the plans. When these have been undertaken, then these are considered to be the first in the series of the periodic audits of an environment and are often called the “Baseline Environmental Audit”.

An auditor must ensure that he draws up the required methodologies for the research firm that is able to define its own system which depends upon the size, activities and the corporate culture of the firm. The scope and the style of the audit would vary but would generally include the following stages or the activities:

  • Pre-audit stage: in this stage, there has to be full commitment from the management since it is the one that sets the overall gaols, objectives, scope and the various different priorities. Also, there has to be team in place which ensures the objectivity and the professional competence.
  • Audit stage: this would include the on the site audit, well defined and systematic using the protocols or the checklists along with the review of the various different documents and records, reviewing of the policies, interview and the inspection of the site.
  • Post audit stage: in this stage, an auditor will have to evaluate the findings, report with his recommendations, prepare the action plan and also follow up.

    There would be an increase in the demand of the results of auditing that would be required to be followed. There have been many of the recent European initiatives wherein there is an access to the information pertaining with the information and there are requirements of the Eco-management and the scheme of audit. This is there for publish of the environmental statements that conform to the importance of the same.

Environmental Audit:

There is an Ems tool that has bene designed so as to enable the organization to target, achieve and demonstrate the continuous improvement in the performance of the environment. This is one of the most integrated management processes with a various different number of the stages that includes an environmental audit. There are a number of different standards that have been issued for the purposes of the research firm. The standards includes the British Standard BS7750 (BS11992), the European Eco-Management and Audit Scheme for Industry (CEC, 1993) and the DoE Eco-Management and Audit Scheme for UK Local Authorities (DoE,1995).

The Above Stated Standard Comprises of the Following Elements:

  • Adoption of the policy of environment that confirm and promote the commitment towards the continuous improvement in the performance of the environment
  • Undertakes the review of the environment for the purposes of identifying the most significant environmental issues and the effects
  • Sets up the programmes pertaining to the environment that lays down the objectives targets and the actions
  • It helps in the establishment of the environmental management system that ensures the implementation of all the actions that would be necessary to be undertaken for the purposes of achievement of the stated objectives.
  • Undertaking the periodic environmental audits for the purposes of assessing the performance of the various components
  • Preparation of the environmental statement on the performance of the environment and
  • Obtaining an independent certification of the statement on the environment.

There are a number of companies that have set up some of the internal environmental standards that could be applied across the world. These are stricter than the local legislations (SNH, 2016).

For the purposes of an audit, the nature, extent and the timing of the resources has to be looked into such as the following:

  • There has to be an apt selection of the engagement team wherein there is an engagement quality control reviewer (IFAC, 2016).
  • The team must include the well experienced team members so that the audit risks could be reduced to the minimum.
  • The team must include the well experienced team members so that the errors in the financial statements could be detected in case, there is a material misstatement.
  • Engagement budgeting which includes the consideration of the apt amount of the time for the purposes of setting aside the areas wherein there are higher risks of the material misstatement (ACCA global, 2016).

    Acceptance if audit when the audit risk is high:

Inherent Risk:

Inherent risk is defined as the risk of the material misstatement in the financial statement that could take place due to an error or an omission. This could result in the failure of the controls. These are the factors that could cause the misstatement due to the absence of the lapse of the various controls that have been considered separately when it comes to the assessment of the risk of the controls.

This risk is generally considered to be high wherein there is a high degree of judgement and the estimation included or wherein there are transactions involved are very complex. In order to illustrate, in case, the inherent risk is high in the case of the financial institutions that have been formed newly, and the same has a significant trade that it deals in and is exposed to a very complex derivative instruments that may have to be considered when it comes to an audit.

Control Risk:

This is the risk that the financial statement could be misstated due to the absence of the failure in the operations of all the relevant controls in the entity.

There are organisations that have some adequate internal controls when it comes to prevention and detection of the frauds and errors. The control risk is considered to be high when the entity for which the audit is being undertaken does not have the adequate amount of the internal controls.

Hence, an auditor is duty bound to assess the control risk.

Detection Risk:

The detection risk is the risk that the auditor may not be able to detect the material misstatement in the financial statements. 

As has been stated in the question, the entity has an increased amount of risk exposed to it and hence, has to apply some of the procedures that could result in a material misstatement. An audit could easily be undertaken and is capable of not detect the errors or the frauds due to the presence of the inherent limitations of the audit. And for this, sampling could be used for some of the selected transactions.

The detection risk can be reduced by the help of extending the sampling procedure to the transactions. In case, there is an inappropriate application of the audit procedures then the material misstatements could remain undetected by the auditor. There is some detection risk that is always present when it comes to audit (Pcaobus, 2016). 

The audit risk could be reduced by the auditor by experiencing his judgement and applying his knowledge that he has gained. He has to exercise some reasonable care when it comes to auditing.

As an auditor is duty bound to first undertake the examination of all the inherent and the control risks that pertain to the audit and also gain an understanding of the entity and its environment. He has to list down the procedures that he would undertake when it comes to reducing these risks when he believes that the audit risk is high. In case, he feels that the audit risk cannot be reduced even if he exercises his judgement, professional and reasonable care, then he must refuse to accept the audit engagement (Accounting simplified, 2016). 

The ISA 210 helps in setting down the preconditions for the audit which follows:

The use of the information by the management of an acceptable financial reporting framework when it comes to the preparation of the financial statements and there is an agreement with the management and the people that have bene charged with governance when it comes to conduct of an audit. An auditor helps in the determination of the acceptability of the framework of the financial reporting when it comes to the preparation of the financial statements. This goes on to include as to whether there are laws, rules and regulations that prescribes the application of the financial reporting framework and this considers the purpose of the financial statements and the nature of the reporting entity.

Further, the auditor must obtain an agreement from the management wherein the management acknowledges the fact that it is it who is responsible for the preparation of the financial statement as per the financial reporting framework. Plus, when it comes to the internal controls, it is the sole responsibility of the management so that the financial statements are free from the material misstatement due to error or fraud. Further, for the purposes of providing the financial statement, the auditor must provide all the information that is necessary for the audit.

In case, the management imposes a limitation on the scope of the work that is being performed by the auditor, then he must decline the audit engagement if there are limitations that could result in disclaim of the opinion on the financial statements (ACCA global, 2016).

Before accepting the engagement, the auditor must agree to the new engagement. There are some of the good information sources that includes the information from the previous auditor and others. Confirmation must be obtained from the other professionals that deal with the company and other such federal regulators. The information must be sought from the online sources as well.  Based on the information that has been gathered, if the auditor thinks that the risk is high, and he is not able to reduce the same, then he must reject the acceptance of the offer (Small business chron, 2016).

Audit Plan:

The duties must be assigned significantly and must include the following job duties:

  • Planning of the various projects and the laying down of the methodology and the procedures.
  • Conducting of the site visits for the purposes of assessing the facilities and the operational procedures.
  • Assessment of the compliances with the regulations and the guidelines as has been laid down by the relevant authorities (Eco careers, 2016).
  • Conduct of the interviews and the meetings
  • Researching down of the environmental regulations along with the reviewing of the publications for the purposes of gathering some additional information that is relevant to the environmental auditing
  • Analyses of the documents related with the audit and the date and the preparation of the findings of the audit.
  • Contribution of the generation of all the recommendations for the purposes of correcting the non-conformance or the improvement in the performance of the entity.
  • Formulation of the plan of action that would be required to implement the recommended changes based upon the audit findings.
  • In the field, the assistants must conduct tour of the various sites and interviews to gain an understanding of the research procedure and how the same is carried out.
  • He must record the various date and the his observations
  • He must present the audit findings to the clients and the stakeholders (Council of Science and Technology Institutes, 1994).

    Research and development environment:

When it comes to the research and development environment, an auditor has to design and develop the verification activities that provides him confidence with respect of the following:

  • All the certifications have been planned and has been performed during the process of design and development
  • The completed design is acceptable and the results are somewhat in line with the initial requirements that have been laid down
  • The design or the development that provides the safety, security and the compliance with the other requirements along with the designing of the various inputs
  • The evaluation of the evidence that is available for the demonstration of the results from the certification and any of the further actions that have been recorded and wherein the actions have been confirmed.
  • All the observations must be fully documented
  • And the records must include the information about any changes and the necessary actions (Isotc, 2016).

    Signing of the declaration whether the entity is socially and environmentally responsible:

An auditor must never sign any declaration without checking the facts of the case.  He must always extend his audit procedures to check and ensure that there is no foul play. The same goes in this case too. If the above goes fine and he is of the view that all the financial statements and other statements and information conform what they represent, only then should ne sign otherwise not.

Patents Audit:

Patents are quite easier to locate when it comes to being compared with the trademarks or the trade dress.

The following have to be undertaken when it comes to the audit of patents:

  • Their validity, enforceability have to be well examined.

When their validity has been examined, then it has to be registered. In case, any problem is discovered during the course of examination of the patents, then the patent has to be re-issued.

An auditor is duty bound to ensure that the patent has not been misused.

This could take place in an anti-trust sense wherein the patent has been set up using the unlawful arrangement of typing. This could take place when the patent number has been placed on to the wrong product or when the product has been marked wrongly with the patent number. There could be a misuse of the patent that generally arises due to the defences to an action for the infringement of the patent. The misuse of the patent could be used so as to preclude the enforcement of the patent that is otherwise valid (Lottfischer, 2016). 

The feed based technology is the technology wherein the company makes feed from the waste to feed the fishes or the cattle’s.

There have been many of the companies that have got their patents registered by preparing the feed based technology (Phys news, 2016).

But just because, the entity has asserted in a prospectus that the patent values were predicated on BSF Ltd. having exclusive control over the bacteria-based feeds that does not mean that the entity has an exclusive right over the technology of the bacteria based feed.

An auditor must extend his substantitative and analytical procedures to determine the validity of the above statement. If he is sure that the company has the right, only then should he sign the statement to be true and fair. In order to determine the validity of the statement, he will have to examine the books of accounts of the entity. 

References:

Accounting-simplified.com, (2016), Audit Risk Model, Inherent Risk, Control Risk & Detection Risk, [Online] Available at: http://accounting-simplified.com/audit/risk-assessment/audit-risk.html [Accessed 14 Sep. 2016].

ECO Canada, (2016), Environmental Auditor, ECO Canada. [Online] Available at: http://www.eco.ca/career-profiles/environmental-auditor/ [Accessed 14 Sep. 2016].

http://www.accaglobal.com, A, (2016), Acceptance decisions for audit and assurance engagements, P7 Advanced Audit and Assurance, ACCA Qualification, Students, ACCA Global. [Online] Accaglobal.com. Available at: http://www.accaglobal.com/in/en/student/exam-support-resources/professional-exams-study-resources/p7/technical-articles/acceptance-decisions.html [Accessed 14 Sep. 2016].

Isotc.iso.org, (2016), [Online] Available at: http://isotc.iso.org/livelink/livelink/5308362/APG-Design_Development.doc?func=doc.Fetch&nodeid=5308362 [Accessed 14 Sep. 2016].

Lottfischer.com, (2016), How to Conduct an Intellectual Property Audit, [Online] Available at: http://lottfischer.com/general.php?category=Resources&subhead=Articles&headline=How+to+Conduct+an+Intellectual+Property+Audit [Accessed 14 Sep. 2016].

Pcaobus.org. (2016), Auditing Standard No. 8. [Online] Available at: https://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_8.aspx [Accessed 14 Sep. 2016].

Phys.org. (2016), Company patents technology to feed cattle from waste, [Online] Available at: http://phys.org/news/2015-09-company-patents-technology-cattle.html [Accessed 14 Sep. 2016].

Smallbusiness.chron.com, (2016), High Risk Audit Engagement Vs. Low Risk Audit Engagement, [Online] Available at: http://smallbusiness.chron.com/high-risk-audit-engagement-vs-low-risk-audit-engagement-25901.html [Accessed 14 Sep. 2016].

Snh.org.uk. (2016), An introduction to environmental auditing, [Online] Available at: http://www.snh.org.uk/publications/on-line/advisorynotes/45/45.htm [Accessed 14 Sep. 2016].

Soas.ac.uk. (2016), 2.1 What is environmental auditing?,[Online] Available at: http://www.soas.ac.uk/cedep-demos/000_P508_EAEMS_K3736-Demo/unit1/page_14.htm [Accessed 14 Sep. 2016].

www.accaglobal.com, (2016), Specific Asecs of auditing in a Computer- based environment , [Online] Available at: http://www.accaglobal.com/content/dam/acca/global/pdf/sa_jan11_CAATs.pdf [Accessed 14 Sep. 2016].

www.dlsweb.rmit.edu.au, (2016), Environmental Auditing, [Online] Available at: https://www.dlsweb.rmit.edu.au/conenv/envi1128/Reading-CSTI.pdf [Accessed 14 Sep. 2016].

www.ifac.org, (2016), International Standrad on Auditing  0 planing an Audit of Financial Statements , [Online] Available at: http://www.ifac.org/system/files/downloads/a016-2010-iaasb-handbook-isa-300.pdf [Accessed 14 Sep. 2016].

 

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