Environmental Auditing: Preparation and

Procedure

Jennifer Calnen

GZA GeoEnvironmental, Inc.

Jennifer.Calnen@GZA.com

Overview – Environmental Auditing

Benefits and Considerations

Audit Preparation

Audit Process

Data Management and Reporting

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Environmental Auditing

Two general types:

Internal Audit Programs

Conducted by a company/business entity

Assess compliance with internal policies and programs as well as regulatory programs

External Audits (Regulatory Agency)

Conducted by regulatory inspectors

Assess compliance with local, state or federal regulations

Either Type can be Planned or Unannounced

Focus Today is on Internal Auditing

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Environmental Auditing – Why?

“ I love being audited.”Not heard by anyone, ever

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Environmental Auditing – Why?Internal Audits

Benefits Assess effectiveness of internal company policies and programs

May provide a ranking system or priority listing of where to focus resources (media/new regulatory issue/business unit)

Identify compliance gaps (and proactively fix them)

Lessen or avoid liability – use of audit privilege

Identify benchmarking opportunities – save costs, share effective compliance support tools

Educational tool for management, raises awareness in company

Meet the requirements of an enforcement order

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Environmental Auditing – Considerations

Consider ahead of time:

Audit may reveal issues that are unknown and/or chronic

Correcting identified audit findings may be costly, and may need to occur immediately

Audit privilege programs often evaluate the timeliness of action. If corrections are not timely it may affect the protections provided under audit privilege

It’s important to work with legal counsel

for these reasons and more!6

Environmental Auditing –Facility Preparation“Failure to Prepare is Preparing to Fail”

Under the direction of Counsel (if possible) verify that any audit notifications have been submitted, as required for Audit Privilege Protection.

Use available resources (on line, internal) to prepare for a pre-audit of your facility

Discuss with peers the findings that arose from audits

If available, use internal “Lessons Learned” documents

Many state agencies will publish support documents listing common types of audit findings.

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Environmental Auditing –Facility Preparation

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Environmental Auditing –Facility Preparation If possible, use the two weeks prior to a scheduled audit at your

facility for focused preparation

List all areas, business units, departments, media, etc. to be audited. Assign a best-guess time frame to conduct your own mini, internal “organizational review”

Divide and conquer - systematically

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Environmental Auditing –Facility Preparation Inform management of any perceived weaknesses, if appropriate.

Transparency is generally appreciated.

Refrain from altering or recreating documentation or supporting data without prior discussion with legal counsel.

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Environmental Auditing –Facility Preparation

Failure to Prepare is Preparing to Fail…but over-preparation is a killer too!

Preparation is key… but don’t “over-prepare”

Let facility conditions reflect your daily set-up so the audit is a reflection of your practices.

If all waste has been shipped off site, auditor can’t review labeling and storage practices, etc.

Staying up all night to collect waste, label containers, or create spreadsheets may have a downfall!

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Environmental Auditing –Auditor Preparation

Auditors must prepare also

Determine what regulatory programs apply (LQG/SQG, Title V, NSR, MACT)

Obtain copies of documentation in advance where possible (permits, NOVs, company policies, blank inspection reports, facility layout)

Develop a checklist; some available on-line (DEQ has RCRA audit templates). Be prepared to make dynamic changes

Draft a schedule and review with facility representative (if possible).

Audit should be representative of the particular circumstances present: size of facility, regulatory programs, etc. and should be timed and staffed accordingly.

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Environmental Auditing – The Process

Audit Day: Facility/Company Representative:

Introduce audit team to environmental team

Review safety protocols for the facility, ensure safety gear available

Review process layout/floor diagram

Explain communication protocol on the plant floor and during record review

Define policies in terms of access, photographs, copies of records, etc.

Request a closing meeting, ask for an estimated time

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Environmental Auditing – The Process

Audit Day: Auditor:

Explain objectives of audit

Discuss the scope and schedule of the audit:

Review schedule intentions (plant walk first, records second)

Review the media being audited (air, RCRA, multi-media)

Discuss the areas to be audited (basement, construction, HR/records)

Define (confirm) the time period under review (1-yr, 3-yr, 5-yr look back)

Discuss others that might need to be involved (shifts might impact schedule)

Explain process for reporting findings – verbal, written

Discuss closing meeting, provide an estimated time, identify individuals attending

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Environmental Auditing – Surprise Audits

Surprise/unannounced audits do not afford an Environmental Manager/Specialist time for preparation and scheduling

Consider developing a Surprise Audit Protocol

Basic plan put into place for surprise/unannounced audits (internal or agency)

Who will be notified (priority listing)

“Auditor wears orange” – OR – “I wear orange”

Put thoughtful organization into filing and paperwork. Separate and label files which are privileged and confidential, company confidential, or company policy

Practice your plan!

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Environmental Auditing – The Audit

Generally there are three parts to an Audit: Site Walk

Document Review

Interviews

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Environmental Auditing – The Audit

Site WalkWhere do auditors look?

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Environmental Auditing – The Audit

Auditors look everywhere

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Environmental Auditing – Site Walk

Site Walk

Reconnaissance of facility building(s) and grounds, may include:

Walk through of the entire process flow, points of generation for waste and emissions

Review of areas under construction, restricted areas, low/high traffic areas

Walk (or drive) of Property

Opportunities to investigate container management, storm water impacts, general housekeeping practices

Review of Support Activities

Maintenance operations (painting, woodworking)

Garage and repair areas

Basement and storage areas

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Environmental Auditing – Document Review Document Review

Review of documents may include: Air permits and required records (monitoring, emission calculations,

calibration records, maintenance records), State Fee Emission Reports

Agency Correspondence (NOVs, NSPS/MACT submittals, Inspection Reports, Asbestos notification)

Waste inspection records, waste profiles, manifest logs

Tank inspection records, release detection, integrity tests

Training Records

Wastewater permits, monitoring reports, analytical results

Contingency Plans

EPCRA (Tier II, TRI submittals)20

Environmental Auditing – Interviews

Interviews Planned Interviews

Environmental Manager/Specialist is generally intimately involved in providing institutional knowledge.

May need to schedule time with certain personnel (HR, Maintenance)

Spontaneous Interview

Site walk is generally interactive. Operator input may be needed to determine origin of a waste, storage of a material, etc. Determine a point of contact and understand company policy before interrupting work.

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Environmental Auditing – The Reports An environmental audit can result in an

overwhelming amount of data

Using the data supports the benefits of the audit, but must be presented in a proper manner.

Have a plan for presenting audit findings to management (verbal? written?)

Who will attend meetings? Federal Audit Privilege considers the timing for disclosure of findings to Management.

Be objective and clearly define issues.

State only the facts, not opinions. Don’t make assumptions, the data should support the audit.

Consider noteworthy items, find a positive.22

Environmental Auditing – Written Reports

Mark reports as required to maintain available Privilege

Use auditor language:

“At the time of the audit”

“Records were not able to be reviewed”

Avoid risky words: all, none, never, improperly, knowingly

Clearly define the issue, as well as the regulatory basis (citation)

Recommendations are generally requested (and helpful)

Consider the use of photographs as appropriate

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Environmental Auditing – Written Reports

Include observations

The data was available but not tabulated

Include comments based upon your experience

This finding should be evaluated in the context of the facility’s Title V Permit reporting requirements

Include audit limitations; audit is a snapshot in time.

“Conditions in many of the areas reviewed during site reconnaissance are subject to change, so the compliance status at any given time could differ from the status at the time of our visit”.

Determine mailing list

Correspondence to legal counsel may preserve privilege

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Environmental Auditing – Next Steps

Audit Closure

Most Audit Programs establish follow up procedures

ConsiderationsWho is responsible for responding?

How will responses/actions be documented?

What is the process to close out an audit/audit finding?

Should findings be scored? (Severity? Quantity?)25

Environmental Auditing – Practical Use of Audit Data

Use audit data as a beneficial tool

Identify weaknesses and allocate resources

Identify best practices

Evaluate effectiveness of internal policies

Discuss results as appropriate with environmental staff to enhance awareness

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Environmental Auditing

Overall, it’s not that bad!

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