GREEN EARTH
R.O.C.K.S
Auditing Sustainability in the Government
ANTHONY A. CATAJAN
Chief Compliance Officer
GHG Lead Verifier
FirstCarbon Solutions Corp.
Sustainability???
• Latin Word – Sustinere
-- Tenere = to HOLD
– Sus = Up
– Maintain, Support, Endure
– Sustainability – Human Sustainability
in the Planet Earth
If the present growth trends in world
population, industrialization, pollution, food
production, and resource depletion
continue to unchanged, the limits to
growth on this planet will be reached
sometime within the next 100 years…..
1972 Report of Club Rome’s Project known as “The Limits to Growth”
Sustainability…..
Establish a condition of ecological and
economic stability that is sustainable far
into the future
it means the ethics in these operations, touching on
all the lives of those in the organization, its
stakeholders, and the planet
or
as long-term viability or the capacity for
continuance into the long-term future
Sustainable Development
Development that meets the needs of the present
development without compromising the ability of
future generations to meet their own needs.
GRI
The Global Reporting
Initiative’s (GRI) 2002
Corporate social responsibility (CSR)
as part of sustainability, and sustainability as
“one of the three ideas that are playing a
pivotal role in shaping how business and
other organizations operate in the 21st
century.
The other two ideas stated by GRI are
accountability and governance
Environmental Conference
June 1972 - UN Conference on Human
Environment
1983 – Gro Harlem Brundtland Chair the World
Commission on Environment and Development (WCED)
1992 – UN Conference on Environment and
Development (Earth Summit in Rio de Janeiro
GLOBAL IMPACT
Principles
• Human Rights
• Labor
• Environment
• Anti-Corruption
3 Dimensions of
Sustainability Reporting
Economic Performance
• Profitability and financial health of the
Organization
• The focus of economic performance is how
on the economic status of stakeholder
changes as a result of the organizational
activities…
• The impact of public sector breaks into taxes
paid, subsidiaries received and donations to
the community…
Environmental
Performance
Aspects:
1. Materials
2. Energy
3. Biodiversity
4. Emissions, effluents and waste.
5. Suppliers
6. Products and Services
7. Compliance, transport and overall aspect
Social Performance
• Labor Practices and
Decent Work
- Employment
- Labor Relation
- Health and Safety
- Training and Education
Diversity and
Opportunity
•
• Society
- Community
- Bribery and Corruption
- Political Contribution
- Competition and Pricing
• Product Responsibility
Human Rights
- Strategy and Management
- Nondiscrimination
- Freedom of Association and
Collective Bargaining
- Child Labor
- Forced and Compulsory Labor
- Disciplinary Practices
- Security Practices
- Indigenous Rights
- Customer Health and Safety
- Product and Services
- Advertising
- Respect and Privacy
Internal Auditor in the
Philippine Government
• Administrative Order No. 70
– Creation of Internal Audit Service
– Conduct of Audit
Definition…
“Internal auditing is an independent,
objective assurance and consulting activity
designed to add value and improve an
organization’s operations.”
Assurance vs. Consulting
Assurance
Parties
1.
2.
3.
Auditor
Audit Client
3rd Party given
assurance
Nature of Work
Assess / evaluate:
•Internal controls
•Risk management
•Governance
Consulting
1.
2.
Auditor
Consulting Client
Assist in:
•Improving efficiency
•Benchmarking
•Design of new controls
Assurance vs. Consulting
Assurance
Primary Client
1.
2.
Output /
Deliverable
Consulting
Internal – Board,
1.
Audit Com, Top Mgt.
External –
Regulators,
Shareholders
Opinion, formal and
explicit report to 3rd party
Internal Operating
Management
Recommendations, often
informal, issue report only as
agreed
Assurance vs. Consulting
Assurance
Consulting
Follow-up
Mandatory
Optional, only as agreed
Responsibility
Mandatory work for IA.
Full competence
required.
Optional. May decline
engagement if IA has no
competency.
Definition continued…
• …It helps and organization accomplish
its objectives by bringing a systematic,
disciplined approach to evaluate and
improve the effectiveness of risk
management, control and governance
processes.”
Accomplish the
Organization’s Objective
• IIA Standard 1210:Proficiency
– Internal Auditors should possess the
knowledge, skills, and other competencies
needed to perform their individual
responsibilities. The internal audit activity
collectively should possess or obtain the
knowledge, skills, and other competencies
needed to perform its responsibilities…
Objectives of a Sustainability
Audit can be based on…..
• Requirements of the sustainability management
system
• Priorities of (top) Management
• The organization’s risk
• Commercial Reasons
• Legal requirements
• Contractual Requirements
• The need to assess suppliers
• Requirements from customers
• The needs of other stakeholders
Auditing SustainabilityGovernance…
• To express an opinion on the adequacy and
effectiveness of the sustainability system in all
phases
– Test the adequacy and effectiveness of relevant
processes
– Review the consistency of action taken in the various
phases of management cycle
• Internal auditors should ensure that the roles
and responsibilities are consistent with the
strategy and policies…
– Check whether the roles and responsibilities are
included in job description and understood by relevant
staff and employees
Risk Management…
• No role, to
• Auditing the risk management process as part of
the internal audit plan, to
• Active continuous support and involvement in
the risk management processes such as
participation on oversight committees,
monitoring activities and status reporting, to
• Managing and coordinating the risk
management process
Risk to be evaluated..
• Organizational reporting structures
• Likelihood of causing environmental harm,
fines and penalties
• Expenditures mandated by government
sectors
• History of injuries and deaths
• Record of losses customers, and episodes
of negative publicity
• Loss of public image and reputation
Risk Management
Framework
Internal Control Objectives
Internal Control
Components
Control Environment
Risk Assessment
Control Activities
Information and Communication
Monitoring
Alberto Bernardo
Office of the Pres.
Control…
• Internal Auditor should check and evaluate
the internal control in place in order to
meet the Organization’s objective
• Controls to address sustainable
development risk
Past
Present
“We’re here to put a dent in the
universe. Otherwise why else even
be here?”
AGIA….ROCKS
•
•
•
•
•
Responsive
Organized
Competent
Knowledgeable
Sensitive
THANK YOU…
Anthony A. Catajan
Chief Compliance Officer/Ghg Lead Verifier
anthonyc@firstcarbonsolutions.com