Attributes of the environmental management systems of manufacturing firms: The role of the internal auditor in environmental auditing

Sharon Nelms Campbell, Louisiana Tech University


Management has addressed the critical issue of environmental protection by developing environmental management systems. The purpose of this research is to describe three attributes of environmental management systems of publicly-held manufacturing companies: (1) organizational structure for environmental protection, (2) environmental auditing, and (3) the role of the internal auditor in environmental auditing.

Directors of internal auditing were surveyed. Companies included in the survey report their releases of toxic chemicals to the U.S. Environmental Protection Agency's Toxics Release Inventory and operate in the following manufacturing categories: food products, forestry products, chemicals, petroleum refining and plastics, metals, machinery and electronic equipment, and transportation equipment.

Descriptive statistics were reported for the primary data. Factor analysis was used to analyze the underlying dimensions of groups of variables representing characteristics of environmental auditing.

Three commonly reported attributes provide evidence of high-level commitment to environmental protection: written environmental policy statement, corporate-level environmental management function, and Board of Directors' responsibility for oversight of environmental affairs. Companies have educational programs and environmental goals to disseminate environmental management values throughout their organizations.

Over 90 percent of the companies conduct environmental audits. The audits are conducted to achieve three objectives: compliance with external regulations and internal policies, identification of potential environmental liabilities, and evaluation of the environmental performance of other parties.

Over 55 percent of the respondents reported that the internal audit function is involved in environmental auditing. This involvement is greatest in audits of three areas: (1) financial accounting for environmental liabilities, (2) compliance with company environmental policies, and (3) compliance with environmental regulations. The lack of technical knowledge and expertise in environmental areas currently limits the internal audit group's participation in environmental auditing. Over 30 percent of the responding companies are expected to provide training in environmental areas for members of the internal auditing staff.