A fundamental reason for undertaking an environmental audit is to determine the status of a company’s compliance with central, state, and local environmental laws and regulations.
More than a decade of major environmental legislation regulating air and water pollution, chemicals, hazardous substances and waste disposal has imposed a complete scheme of obligations on business, industry and local bodies.
Environmental compliance represents a significant aspect of doing business- both, in terms of the effort and cost, necessary to achieve compliance and in terms of the fines, penalties and liabilities that may be incurred as a result of noncompliance.
Understanding the applicability and impact of environmental regulation has become necessary for informed corporate planning and decision making. The audit is a vehicle to help management identify environmental problems that could adversely affect an otherwise normal business activity, and avoid or minimize liability for costly remedial work, fines or damage claims before enforcement actions are brought.
Where corporate management does not know of a problem until it becomes serious, of substantial duration, and difficult to clean up, enforcement actions, involving substantial sums, may result. Some cases involving substantial civil and criminal penalties have developed because of concealment of problems, sometimes, by lower-level employees, acting – usually erroneously- the belief that management did not want to hear the bad news.
Possible enforcement actions can be avoided by an environmental audit that identifies “skeletons in the close,” thereby, enabling the company to take steps, in advance of government action, and to focus its efforts on specific problem areas of plant operations.
An environmental audit can also help in maintaining a corporation’s compliance status in an efficient and cost-effective manner. Frequently, facilities can be control technologies including equipment, and management practices may be available control a particular waste or discharge.
The capital and operating costs associated with different options may vary substantially. By identifying the applicable regulatory requirements, an environmental audit can assist the business manager in focusing on potential problems and selecting, in a timely and organized fashion, the most efficient and cost-effective approach.
An audit can also help management recognize if there is a need for change in operating or administrative procedures to improve the company’s system for compliance assurance and internal reporting.