MOOC: Auditing waste management
4.1. Waste audit strategy
Preparing a strategy for an audit addressing waste issues follows the same rules as in other audits. According to ISSAI 3000, performance audit should be directed towards areas where an external, independent audit could add value in promoting economy, efficiency and effectiveness []. In performance auditing, the specific objective of the audit is often achieved by seeking to answer two basic questions: Are things being done in the right way? And are the right things being done? Compliance audits are carried out by assessing whether activities, financial transactions and information comply, in all material respects, with the authorities that govern the audited entity or subject. A compliance audit may also form a component of a performance audit. Environmental audits are often initiated due to particular environmental or health concerns and one of the key lines of investigation is the underlying cause(s) for these (recall Module 1 on the problems caused by the mismanagement of waste).
For more detailed information about the main principles of audit approaches, see MOOC ‘Introduction to Environmental Auditing’.
The audit structure should support the auditor in maintaining focus on the aim of the audit during the long process of field work and report-writing. In this section, an example from NAO Estonia’s municipal waste audit [],is used to present a possible structure of a waste audit strategy. The NAO of Estonia follows its own template for developing audit strategies.
The aim of the audit was to determine whether household waste is recycled.
The audit strategy contained the following aspects:
- Overview of the problem and its materiality
- Standpoint of interest groups and previous audits
- Focus of audit and likely results
- Scope of audit and methodology
- Audit risks
Overview of the problem and its materiality
Real-life problems and impact
Real-life problems and impact can be described relying on information collected according to different aspects covered in Modules 1-3 that are relevant in a context of a given audit topic: backround information (e.g. general waste generation volumes, recycling rates), governance problems and real-life impact of the problem the audit would address.
| Extract from NAO Estonia’s waste audit strategy: Estonia cannot fulfil the goals set by the EU for achieving recycling targets. Local governments are supposed to organise waste collection and recycling, but there are issues with the clarity of the legislation. Also, the government has focused too narrowly (recycling only one type of waste), but there are many opportunities to create demand on the market – for example, putting together organic waste and sewage sludge to produce biogas. This would motivate people to collect biowaste separately and would help to achieve the recycling goals of the country. It is not guaranteed that all waste generators are included in organised waste collection. Public awareness and motivation to sort waste are low and people are still littering. |
Motivation and reasons why it is necessary to audit the issue and how it is related to the strategic goals of NAO Estonia
Audit strategy may contain a section describing why it is important to initiate the audit. The reasoning can rely on information collected according to recommendations in Modules 1-3. For example, the analysis of the pre-study of the audit may present the seriousness of the issues and how these relate to the strategic goals of the SAI.
| Extract from NAO Estonia’s waste audit strategy: Analysis shows that the littering problem and the lack of high-level recycling activities needed assessment and recommendations by the NAO. Also, environmental issues, the circular economy and the preserving of natural resources are priority subjects for NAO Estonia. |
Standpoints of interest groups and previous audits
Standpoints of interest groups
It is important to become familiar with the different aspects of waste management issue(s) under review. This information can be collected during the pre-study by interviewing potential auditees and experts.
| This section in the audit strategy of NAO Estonia gives an overview of the standpoints of different interest groups – auditees (Ministry of the Environment, Environmental Inspectorate and local governments), experts (researchers who have studied waste recycling issues) and waste operators. |
Previous audits and their outcomes
It is wise to review previous audits (if any) and to gain knowledge about reasons behind problems and examine whether there have been any improvements related to the issues pointed out in the previous audits. Interviews with former auditees and experts could also provide useful information.
| In an audit of packaging waste conducted five years earlier, the NAO Estonia had given recommendations to improve the packaging waste collection system. In the 2015 municipal waste audit, it was assessed whether these earlier recommendations had been implemented. |
Focus of audit and likely conclusions
Focus of audit
Clear focus of the assessment is essential to help optimise the field work and other audit activities. Choosing the focus requires good knowledge of subject matter and problems – a synthesis of the information collected based on Modules 1-3 – and is also dependant upon the audit office’s mandate and audit team’s capacity to assess different impacts. Timescale is also important to bear in mind.
| This section in the audit strategy of NAO Estonia describes how the assessment would be conducted and what aspects are being considered. For example: The assessment covers local governments and considers compliance aspects only (NAO Estonia does not have the mandate to audit performance aspects in local governments), like compliance with the national Waste Act and local governments’ waste handling rules (are things being done according to the law?).The assessment of the central government covers both compliance and performance aspects and asks whether things are being done in the right way and whether the right things are being done. |
Assessment criteria
Criteria are established along the lines of audit questions. Audit criteria may be derived from laws or strategies or agreed with the auditee(s) (see 4.2 Audit Design Matrix and the section ‘Criteria’). Mandate of the SAI needs to be kept in mind while establishing criteria.
Likely conclusions/recommendations
It is important for an auditor to be geared towards finding solutions, as this helps the audit from the very beginning. Describing potential results and recommendations in the audit strategy is one possibility to keep this in mind. The content and detail of this section depends on the volume of the pre-study and how much is known about the issues during the planning stage. Nevertheless, one of the reasons for conducting the audit is in many cases to assist the government in improving the situation, helping to find solutions by giving recommendations.
| This section of the audit strategy describes the likely conclusions or recommendations of the audit. For example, in the planning stage it was possible to assume that the NAO Estonia could recommend that the central government review legislation and set clear tasks for local governments related to waste recycling targets. Also, when planning the state budget, it could allocate funds to local governments to ensure the tasks given to local governments would be possible to fulfil. |
Scope of audit and methodology
Scope of audit
Describes what kind of waste and what kind of activities will be assessed.
| The focus of the waste audit of NAO Estonia was municipal solid waste (including packaging waste), recycling plants and capacities and the relevance of the legislative framework. |
Selected auditees
Listing auditees is useful for time-planning, as it for example gives an idea of how much travelling would be necessary.
| In the NAO Estonia’s waste audit, the list of auditees included the local governments, ministries and the Environmental Inspectorate. |
Auditing period
Defining the period under study in the audit helps to keep the focus.
| The waste audit strategy of NAO Estonia defines the period as present situation and, in the context of infrastructure investments, the period from 2002-2015. Such a long period was selected in order to allow for a full analysis of central government actions and funding in the longer term so as to assess whether the central government had a long-term strategic view of developing waste management. |
Audit methodology
It is a good idea to describe the exact methodology for conducting the audit. The best way to do so is to create an audit design matrix (see 4.2).
External experts
External experts can provide added value to the audit. Tight audit timescale can often be an obstacle to obtaining a broad and detailed view of all relevant aspects. It may therefore prove useful to find experts from outside the SAI to help the audit team collect relevant information.
| In NAO Estonia’s waste audit, experts from Tallinn Technical University were used who had developed a methodology for finding waste generators that had not been included in the organised waste collection system by using a geodata database. The external expertise gave NAO Estonia two valuable insights: it was possible to detect the seriousness of the waste collection problem (households missing from the collection system possibly creating a higher risk of littering); and the database created was very valuable for auditees, who found it to be a very good surveillance tool. Other experts involved conducted a poll of citizens to determine whether people are aware of the issues of waste sorting, whether the collection system is user friendly and so on. |
Audit risks
To help with better planning it is always good to think about the risks and obstacles that may arise while auditing.
| For example, in the waste audit strategy of NAO Estonia, the following risks were pointed out:
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