4.1. Selecting audit focus

For general information on planning a performance audit, please visit MOOC: Introduction on Environmental Auditing. In this module, emphasis is put on practical examples and recommendations connected specifically to water audits.

In previous modules you have observed the variety and complexity of issues that are all connected to water and water management. Upon starting to plan an audit on water issues, as in any performance audit, the following steps need to be undertaken: selection of a topic, preliminary study and audit design. The exact format and sequence (or overlap) of these procedures may vary in different audit offices.

The first step in planning an audit is selecting the audit topic. The general topic selection process is often connected to the regular monitoring activities of auditors and in-depth preliminary study will already be undertaken to determine the exact focus of the audit. 

It is necessary to know and understand the main water issues in your country. What are the biggest problems? What are the current trends? Maybe the population is increasing in major towns and there is a need for new infrastructure. Or maybe, increasingly, houses are constructed on the shoreline and there is a considerable risk of floods affecting the environment, people and their property. There may also be a risk of conflicting policy goals (e.g. agriculture versus protection of groundwater), poor enforcement (e.g. scarce groundwater resources are poorly managed), accidents (spills) or something else.

THINKING EXERCISE

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Auditor should also find information about the relations between water management/protection and the national budget of the government in order to determine the relevance of a given topic by monetary value. Often this information is not easily available as resources needed to secure different water management and protection functions may be under different budget allocations, externally financed, privatized through concessions and leases etc. The auditor should in this case also determine which institutions (e.g. department, ministry) are responsible for different areas of water management and what proportion of their budget is allocated for these functions; and additionally, consider the cost for citizens.

There are several other stakeholders and interest groups besides state institutions, such as consumer organisations, health organisations, companies (e.g. producers of food and beverages), scientists, NGOs. For mapping the problems, auditor may read their publications, participate in seminars and organize face-to-face meetings.

Methods such as familiarising oneself with relevant legislation, key data, studies and articles in the media as well as conducting several interviews and perhaps focus group discussions, help an auditor to achieve a comprehensive overview of problems and risks as well as their root causes. A thorough preliminary study helps to avoid wasting time at later stages as the audit is better focused.

Tip for auditors

Aspects to consider during the preliminary study of a water audit (recall all previous Modules of this course):

• Have standards for drinking water quality been established in your country? What about the status of water bodies and groundwater?
• Is monitoring data available about the quality of drinking water? What about the status of water bodies? Do the monitoring results indicate any shortcomings? What are the trends?
• Is the legislative framework for water protection and management in place in your country? What requirements and goals are established therein? Are the regulations being implemented?
• Which international and regional agreements has your country signed and what responsibilities ensue from these?
• What about strategic water management documents and goals established therein? Have the targets been achieved?
• What economic instruments are applied for water management in your country? Do they work as intended, e.g. cover all the costs, create incentives for behavioural change or create revenue for environmental investments?
• Which institutions are responsible for water management? Are private companies involved? Are the responsibilities of different stakeholders clear and logical?
  

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It is recommended to focus on a comprehensible topic. An attempt to cover everything within one audit creates a risk of losing focus and wasting time on trying to determine all possible connections. Focusing an audit is also necessary to avoid wasting resources on studying issues which will not be reflected in the audit report. Table 3 provides some examples of possible focuses of a water audit.

Table 3: Examples of both wide and focused audit topics

Wide topic	Focused audit topics
Water quality in rivers and lakes	Effectiveness of preventing pollution from diffuse sources Effectiveness of preventing pollution from farms Effectiveness of preventing pollution from households Appropriateness of river basin management plans Implementation of river basin management plans
Drinking and/or wastewater	Quality (including safety) of drinking water Efficiency of water infrastructure projects and management Price of water management
Groundwater	Effectiveness of managing scarce water resources Protection of groundwater from diffuse pollution
Floods	Readiness of managing flood risk Appropriateness of flood management plans

 

Using the INTOSAI water guidelines, a number of SAIs have audited various water topics. These include:

• The availability of safe drinking water, e.g. whether the drinking water supplies have been effectively managed to meet the likely future demand; the ensuring of access to drinking water; the sustainability of the price of drinking water.
• Competing demands for limited water supplies, e.g. potential impacts of mining activities on water supplies; management of competing demands between supplying drinking water, agricultural and industrial needs and ecological concerns.
• Drought preparedness and management, e.g. management of water shortage during drought; effectiveness of government efforts to mitigate the consequences of droughts.
• Flood management, e.g. performance of flood prevention and protection measures; use of funds for flood prevention and response.
• The quality of surface waters, e.g. effectiveness of efforts to protect a given water body from pollution; examination and assessment of the sources of nutrient pollution.
• The marine environment (often cooperative audits), e.g. management of the impacts of pollution on marine environment; preparedness to compact pollution from ships.
• Planning and financing for water infrastructure, e.g. planning, financing and maintenance of water infrastructure projects, including in view of access to drinking water and sanitation.
• Implementation and enforcement of water laws.
• The challenges of managing water resources shared by multiple nations.
• The adequacy of water-related data; e.g. in the framework of the effectiveness of the management of water resources.
• The impacts of climate change on water resources; e.g. effectiveness of efforts to address or adapt to the water-related impacts of climate change (floods).

After the preliminary study, the auditor is ready to decide the focus of the audit and formulate an audit objective. Below are two examples of audit objectives which actually state the focus of an audit.

• Audit objective A: Evaluate the effectiveness of protecting groundwater from diffuse pollution from agriculture
• Audit objective B: Evaluate the efficiency of management of water infrastructure in municipality X