To carry out the diagnosis, the expert method was applied (See annex No. 1) based on a questionnaire, whose main objective was to define the existing conditions in the Provincial Comptroller's Office that limit the design of a procedure for the execution of an accounting audit environmental. (See Annex No. 1)
Next, the insufficiencies of the guidelines for the execution of the environmental audit issued by the Comptroller General of the Republic are exposed.
100 percent of the interviewees consider that the auditors of the Las Tunas Provincial Comptroller's Office do not know how to carry out an environmental accounting audit and that training actions need to be developed to raise the environmental culture of the accounting auditors.
Referring to the questions of whether there is knowledge about the identification of economic facts with an environmental focus in the industrial sector, the environmental accounts and whether the auditors can review the record and control of environmental costs, the totality raised not having knowledge.
When inquiring about whether it is considered that with the implementation of a procedure for the execution of an environmental accounting audit to the industrial sector, decisions can be made for the prevention and mitigation of environmental impacts, 97.3 percent of the answers are affirmative.
76.4 percent state that the lack of knowledge in the environmental accounting treatment in the industrial sector could be gravitating in a greater degree of efficiency and effectiveness of the same and the totality affirms that the environmental repercussions are not currently being considered correctly within accounting regulations.
Regarding whether it is considered that the current structure of the Balance Sheet and the Statement of Financial Performance of the industrial sector favors a better understanding and analysis of the environmental financial results of the industry, the answer was negative in 94.7 percent.
Regarding whether the auditors know general elements of environmental accounting for decision-making purposes, 90.7 percent state that they do not have knowledge and 100 percent indicate that the environmental accounting audit is not recognized in the current accounting regulations.
96.7 states that the environmental accounting audit contributes to improving the performance of the industrial sector.
As a result of the evaluation of the diagnosis, a summary was made, from which it can be concluded that the Audit activity, related to the subject under investigation, presents strengths and weaknesses, demonstrating the need to investigate the subject.
Among the strengths the following stand out:
- The auditors' identification of the causes that affect the effectiveness of the audit activity, as well as the need to design a procedure that serves as a basis for the professional preparation of the auditors in the execution of the environmental accounting audit. in the subject through the improvement and postgraduate courses, to promote the scientific and professional level.
The following were found as weaknesses that negatively influence the audit activity:
- The limited mastery of the auditors in environmental matters and in how to carry out the environmental accounting audit Insufficient methodology on how to execute this type of control action Failure to include aspects related to this type of audit in the study plans.
To evaluate environmental decisions, economists use the "Cost-Benefit Analysis" as the main study tool, where it is concluded that environmental groups are inclined, by benefits and business groups; and they are usually focused on costs. The long-term endorsement of protecting the environment depends on the people in your business understanding that its costs are worth it.
These costs (investment, materials and plant species, costs of damage to the environment…) are incurred by any organization, with the use of a constant Environmental Audit that can be carried out with the implementation of the design of the audit program. The audit should be seen as a mandatory and effective cost, and as a management tool to make decisions; the rational use related to the conservation, defense, protection and improvement of the environment is based on the optimization of information for and by the environment to obtain economic benefits. "Environmental laws and regulations are sometimes very complex and their application in the industry means large outlays of money in investment capital and operational costs…." (Chacón, 2006: 366).
The audit includes a systematic review to assess and assess the level of environmental risk of the facilities to be audited. Therefore, the audit will require the prior definition of the specific objectives to be achieved and will include the use of aids for data processing and analysis (protocols and procedures). The audit is a monitoring instrument that collaborates in decision-making and management and control for any business body that requires it.
The environmental costs that an operation or a business unit (organization or company) may incur are frequently presented as the largest element to take into account in traditional audit scenarios. It is important that in all environmental accounting audit exercises correlations are made in an appropriate way between these nominal costs, with the environmental effects measured or quantified, or at least associated with them.
Rationale for the proposal
The audit procedure has its expression in a series of elements and aspects that give it a particular character, where this institution has legislative powers to comply with it. Similarly, its flexible nature is assumed if the characteristics of this institution are taken into account. Each of the environmental items and the way in which they are accounted for are based on this. The same is detailed below:
OBJECTIVE OF THE PROCEDURE:
- Provide the auditor with the definitions, accounting and financial regulations and the accounting treatment of the main operations carried out by companies in the industrial sector regarding the environment Define the criteria for the recognition of assets, liabilities, income, expenses and assets related to prevention, Reduction and repair of damage to the environment Serve as support to auditors for the execution of the environmental accounting audit Use as a basis for the preparation of the audit program, the preparation of Working Papers and require the documentation or required source.
SCOPE:
- The procedure is applicable to all companies in the industrial sector based in the province in the recognition, assessment and information of operations related to the environment. The terms used in this procedure are based on international financial standards and regulations. Cuban audit.
DEFINITIONS
Environment : is the set of elements of the natural environment harmoniously integrated into a balanced system, including the atmosphere, climate, forests, biodiversity of species including the human species, waters, rivers, seas and oceans, soils, mineral and subsoil resources and nature in general.
In this system, the conditions of the environment converge, as well as the action that man generates during his development as a social being. It is the set of biotic (flora and fauna) and abiotic elements - solar energy, water, air and mineral soil - that make up a certain space and that allow the development of ecosystems that are the very support of life.
Natural resources: they are production factors that nature provides in the form of raw materials, fossil fuels, forests and fisheries, clean waters, breathable air, among others. They can be classified as renewable and non-renewable natural resources taking into account their chronological cycle, that is, the time required to replace a given quantity of that resource, when an equivalent quantity has been used for a given application.
- Renewables: these are the ones that can continue to exist, despite being used by economic activity, thanks to regeneration processes. However, they can be depleted, when they are being consumed faster than they regenerate (overexploitation), or by alteration of ecosystems (plants, animals, clean air, fresh water). Non-renewable:are those resources that require long time cycles for their recovery. The most important are provided by the geological sphere of the Earth in the form of raw materials, source of materials, fossil fuels and source of energy. They are generally limited deposits and (or) with regeneration cycles well below the rates of extraction or exploitation. In this sense, any resource can become non-renewable if the demand and rate of use exceed the capacity of its natural cycle.
Environmental impacts: they are defined as any change in the environment, whether adverse or beneficial, that is the result, totally or partially, of the activities, production or provision of services of the entities.
Depletion: it is the process by which chemical substances, created by man, destroy non-renewable resources, including fossil energy resources, forest resources, water resources.
Anthropic: of human origin, humanized, opposite to the natural. Anthropogenic. Anthropic erosion: set of degradation processes of the relief and subsoil, due to human action.
Biodiversity: riches of the life forms that occupy a given space. Variability of living organisms from any source, including, but not limited to, terrestrial and marine ecosystems and other aquatic ecosystems and ecological complexes of which they are part. Understand the diversity within each species, between species and within ecosystems.
Biotic: term for everything living. A biotic association comprises the plants and animals present in a given area.
Deforestation: large-scale destruction of the forest by human action, in this process logging and burning are identified.
Degradation: process in which a system goes from a certain degree of organization and composition to a simpler one with fewer components. Ecosystems: set of living beings that live in a given area, the factors that characterize it and the relationships that are established between organisms and, between them and the physical or chemical environment.
Erosion: dragging or washing of soil from one place to another that causes the loss of soil forever.
Pollution: is the presence in the atmosphere of by-products of human activity that pollute and cause imbalances in natural ecosystems.
Environmental Activity: any economic event whose main purpose is to prevent, reduce or repair damage to the environment.
Environmental item: to be considered as an environmental item it must have a high and direct participation in the impact on the environment by the activity carried out in an organization.
Environmental accounting: it is a field of action of accounting that must reflect the effects that ecological changes produce in organizations, including the quantitative assessment of environmental attributes, the use of natural resources and the incidence of pollution, among others; establishing methodologies to quantify environmental effects and internalize ecological costs in the prices of goods or services. It includes among others:
- The recognition and disclosure of negative environmental effects in conventional accounting practice Separate identification of environmentally related costs and revenues within conventional accounting systems Taking actions to create initiatives in order to consider existing environmental effects in conventional accounting practice development of new ways of measuring, reporting and valuing; to meet internal and external purposes The development of new financial and non-financial accounting systems, information and control systems to take advantage of environmental benefits from administrative decisions.
Environmental information system: it is in charge of distributing information to the different accounting and financial reporting systems, which already exist in the company. Information is needed for accounting purposes to make appropriate cost decisions, capital budgeting, and performance evaluation. In the same way, information is needed to make decisions related to the appropriate accrual of environmental liabilities and the appropriate external disclosures in both corporate annual reports and environmental reports.
Environmental actions: are those actions aimed at preventing, reducing or repairing environmental damage.
Environmental management: set of activities, mechanisms, actions and instruments, aimed at guaranteeing the administration and rational use of natural resources through the conservation, improvement, rehabilitation and monitoring of the environment and the control of human activity in this sphere. It is the field that seeks to balance the demand for natural resources of the earth with the capacity of the natural environment, having to respond to these demands on a sustainable basis. It is defined as the conduction, direction, control and administration of the use of environmental systems, through certain instruments, regulations, standards, financing and institutional and legal provisions. Environmental Management is preceded, therefore, by a decision-making process, based on the various planning scenarios.
Environmental contingencies: they are directly related to environmental risk. To deal with these risks, you can choose to: eliminate, transfer, assume or reduce them. Your accounting treatment (expense, contingency or loss) will depend on the alternative chosen
Prevention actions : are those actions carried out in the organization aimed at avoiding a negative effect on the environment.
Reduction actions: are those actions aimed at reducing or cleaning up the undesirable effect that the organization causes for any cause to the environment.
Repair actions: are those actions aimed at the repair, decontamination or restoration of the damages that the organization causes for any cause to the environment.
Operating activities are the activities that constitute the main source of ordinary income of the company, as well as other activities that cannot be classified as investment or financing.
Accounting policies: are the principles, bases, methods, conventions, rules and procedures adopted by the company in the preparation and presentation of its financial statements.
Ordinary income: is the gross entry of economic benefits, during the year, arising in the course of the ordinary activities of a company, provided that this entry gives rise to increases in equity, other than those from contributions from the owners.
Public aid: these are actions carried out by the public sector in order to provide specific economic benefits to a company or type of companies, selected under certain criteria. For the purposes of this procedure, the benefits that are produced indirectly on companies by actions on the general conditions of trade or industry, such as the supply of infrastructure in developing areas or the imposition of commercial restrictions on the competitors.
Forgivable loans: are those in which the lender agrees to waive the repayment, under certain established conditions.
GENERALITIES
It should be reviewed by the auditors that:
- Activities related to the environment were identified through accounts and subaccounts set up for the real accounts of assets, liabilities and equity, examples of which can be: Environmental cash: they represent the monetary resources and values deposited in the entity's boxes to finance environmental actions Inventories Environmental: they represent the value of the stock of material resources destined for the entity's consumption or their commercialization related to environmental actions Environmental tangible fixed assets: they represent physically tangible properties that have to be used in a relatively long period in environmental activities and that are not normally destined for sale The identification of environmental costs and expenses will be made through the cost center,Expense accounts or elements Environmental taxes are the obligations contracted by law mandates for the use of natural resources or environmental impacts.
ENVIRONMENTAL ASSETS
The auditors should review the:
- Environmental assets: are those whose main purpose is the minimization of the environmental impact and the protection and improvement of the environment, including the reduction, prevention or elimination of future pollution from the company's operations, and will be permanently employed at effects of the company's activities, regardless of whether or not it may increase the benefits provided by other assets, these being understood not only in their monetary aspect but also in the reduction of the social cost that many of these assets report. Includes environmental expenses that may be capitalized: if they provide future benefits or if they have been carried out to avoid or reduce future damage or conserve resources, and they will be used permanently for the purposes of the company's activities, and if in addition,meets one of the following requirements: They extend the life, improve the productive capacity or improve the safety or efficiency of the material assets of the society Costs that reduce or prevent environmental pollution. Not the costs of cleaning up past environmental damage The costs of conditioning the goods for their subsequent disposal The environmental costs incurred after the acquisition, construction and development of the asset, provided that the concept of recoverability is maintained In any case, activation is limited to future recoverability of the costs incurred.they improve the productive capacity or improve the safety or efficiency of the material assets of the society Costs that reduce or prevent environmental pollution. Not the costs of cleaning up past environmental damage The costs of conditioning the goods for their subsequent disposal The environmental costs incurred after the acquisition, construction and development of the asset, provided that the concept of recoverability is maintained In any case, activation is limited to future recoverability of the costs incurred.they improve the productive capacity or improve the safety or efficiency of the material assets of the society Costs that reduce or prevent environmental pollution. Not the costs of cleaning up past environmental damage The costs of conditioning the goods for their subsequent disposal The environmental costs incurred after the acquisition, construction and development of the asset, provided that the concept of recoverability is maintained In any case, activation is limited to future recoverability of the costs incurred.provided that the concept of recoverability is maintained. In any case, the capitalization is limited to the future recoverability of the costs incurred.provided that the concept of recoverability is maintained. In any case, the capitalization is limited to the future recoverability of the costs incurred.
Environmental assets are a resource economically controlled by the entity, as a result of past events, from which it is probable that the entity will obtain future returns.
ENVIRONMENTAL FIXED ASSETS
It should be reviewed by the auditors that:
- Fixed environmental assets are recognized when the entity makes expenditures that lead to the acquisition of new assets or an increase in the initial value of assets previously recognized from the capitalization of expenses, in order to carry out any environmental safety or security action. for environmental reasons and that, although they do not provide future economic benefits, if they are necessary to obtain the rest of the assets. Expenses that meet any of the following criteria will be capitalized: That are related to future economic benefits, that are recognized by the entity, extend the useful life,Increase its productive capacity or improve safety or efficiency That makes it possible to reduce or prevent environmental contamination that could be caused in future operations of the entity Those expenses incurred in the eradication of any environmental impact will not be capitalized, they will be treated as Expenses
Environmental.
- The amounts of expenses incurred in assembly work and materials in the investment process, whether executed with own means or contracted with third parties, are considered as tangible environmental fixed assets if environmental activities are carried out at the end of this investment process. Environmental fixed assets must be shown differently from the rest of the assets that the entity has.
RECOGNITION AND VALUATION OF NATURAL RESOURCES
It should be reviewed by the auditors that:
- Natural resources will be recognized as fixed assets of the entity as long as: The sale of the same is not planned as a final destination It can be valued with sufficient reliability Future economic benefits are obtained from its use When natural resources cannot be valued directly, it should be apply any of the methods provided for the valuation of assets, as long as it is determined that they should not be part of an intangible asset recognized by the entity.When the natural resources have been acquired directly from an initial owner, the value of the assets The same will be constituted by the price paid by agreement in the acquisition. Natural resources that constitute fixed assets must be shown differently from the rest of the assets that the entity has.
RECOGNITION OF THE DEPLETION OR DEGRADATION OF NATURAL RESOURCES
It should be reviewed by the auditors that:
- When, for reasons of compliance with the functions approved to the entities, they cause some type of environmental damage, they must record it as an expense of the current period, affecting the final result as long as it is possible to determine its amount. If the natural resources are exploited, their values should be reduced in accordance with what is transferred to the final product obtained from their exploitation, until they are completely exhausted.
10.When the real value of the depletion or degradation that has occurred is not known, a conservative estimate of stocks should be made based on the experience and evidence available for recognition in the accounting.
11.In correspondence with what is stated in paragraph 20 of this procedure, the amount of depletion or degradation will be recognized in a differentiated manner as a regulatory account of Fixed Assets recognized for natural resources.
ENVIRONMENTAL LIABILITIES
It should be reviewed by the auditors that:
12. Environmental liabilities are those amounts expired for environmental activities carried out or to be carried out, for the management of the environmental effects of the entity's operations, as well as those derived from the environmental commitments of the accounting subject.
13. Environmental liabilities are constituted by those debts or losses that the company will probably incur as a result of the impact on its physical environment, although the amount and / or date on which they will occur is not known.
ENVIRONMENTAL PROVISIONS
It should be reviewed by the auditors that:
14.Environmental provisions are those accumulations of expenses, of an environmental nature in the same year or from a previous one, and which, on the closing date of the year, are probable or certain but indeterminate as to the accuracy of their amount or the date on which they are to be done.
15. An estimated provision for environmental action must be established annually based on events that occurred in the past, which must be delimited according to the best possible estimate of the expense necessary to meet a future obligation.
16. For the purposes of calculating the amount of the creation of the provision, the following aspects should be considered as the basis for the estimate:
- The direct marginal costs of repair measures The cost of compensation and allowances for those employees who are expected to spend considerable time directly on restoration measures Post-repair supervision obligations Approved technological advances
17. In the event that there is high uncertainty to determine the best possible estimate, the provision will be recognized for, at least, the minimum assessed corresponding to the expected future expenses.
18. When there are differences between the accumulated amount of the provision and the corresponding amount for its use, an environmental expense must be recognized in the current period, in order to solve the deficit in the estimate.
19. If at the end of the economic period accumulated amounts of provisions for environmental protection are maintained, these amounts must be adjusted for the following period, according to the expectations of occurrence of environmental damage and the accumulated experience of similar events that occurred in the past..
20. If there is a legal or contractual link, by which the entity outsources its environmental risks (for example, environmental liability insurance), it will only recognize the part of the risk not covered when making the corresponding provision.
21.The initial estimate of decommissioning costs.
22. The rehabilitation of the place on which it is based, when they constitute obligations in which the entity incurs during a certain period, for purposes other than production.
23. Reimbursements that may be received from third parties should be recognized as an independent asset, when they are certain to be received.
24 Provisions must be discounted at present value, when the effect of the time value of money is relevant.
ENVIRONMENTAL AID OR SUBSIDIES
It should be reviewed by the auditors that:
25. State or public subsidies or aid take multiple forms, and may vary both in the nature of the aid provided and in the conditions required for its granting. The purpose of these aids may be to encourage the company to undertake a certain action, which it would not normally have undertaken had it not been provided.
26.The financial contributions received from the State for the financing of a certain activity with the purpose of preventing, reducing or repairing environmental damage will be recognized as subsidies.
27. Official grants are sometimes known by other names, such as subsidies, transfers or premiums, in which case it must be related to an environmental activity.
28.The amount received for environmental subsidies will be recorded in accounts set up for this purpose and the balance will be transferred to the entity's income at the end of the economic period.
ENVIRONMENTAL HERITAGE
It should be reviewed by the auditors that:
29. Environmental assets are considered to be those sources of financing that the organization may use to carry out environmental activities.
30. Donations received by third parties are recognized as material or financial resources for carrying out environmental activities.
31. Donations delivered, material or financial, to carry out environmental activities should be considered as an account that increases the assets of the organization.
32.Environmental reserves are those amounts that are created from the profits obtained at the end of the economic period, to face possible environmental damage caused in the fulfillment of the entity's objectives.
33.Business organizations must create a reserve for the financing of environmental activities.
34. Environmental reserves will be created using different methods, all based on a distribution of profits.
35.The environmental reserves created will be destined to finance environmental activities, within them we have: the acquisition of tangible fixed assets, to finance investment processes or for any other destination, all related to environmental activity.
ENVIRONMENTAL COSTS
It should be reviewed by the auditors that:
36. Environmental costs are those environmental expenses that can be objectively expressed in a fixed way in the product, merchandise or service provided either in a tangible or intangible way and therefore increase or decrease in proportion to the volume.
37.The environmental costs must be related to the consumption, duly valued, of production factors related to the natural, material or energy resources necessary for production, the assimilation into the natural environment of wastes from production and consumption activities and the set of natural goods and services that are oriented to the vital needs and quality of life of human beings.
ENVIRONMENTAL EXPENSES
It should be reviewed by the auditors that:
38. All expenses related to environmental activity will be considered as environmental expenses.
39.Its origin can be given in periodic expenses for environmental prevention or remediation, or expenses originated by the ordinary activities of decontamination and environmental restoration.
40. Environmental expenses are considered to be the amount of expenses in environmental activities carried out or to be carried out in the future.
41. Environmental expenses shall be considered as operating expenses.
42. An account will be set up for environmental expenses where those expenditures or payment commitments for environmental activities will be recorded.
43. Those organizations that have staff professionally dedicated to these activities will set up a cost center to reflect the expenses associated with them.
44.The expenses of the environmental activity of the business infrastructure or superstructure for a given level of exploitation and its existence depend on the time elapsed and not on the volumes of sales and productions achieved will be considered environmental expenses.
45.The following are recognized as environmental expenses, among others:
- A payment for the purchase of services related to environmental protection or prevention Expenses of personnel associated and engaged in research and development activities related to the environment Additional costs for the use of clean products (low sulfur fuels, unleaded gasoline, clean vehicles, among others) Expenses in products that protect the environment; as well as expenses for environmental damage (loss due to environmental damage) Payments made by fines or penalties by personnel in charge of compliance with specialized legislation Costs derived from corrective maintenance, accidents, inspection, cleaning, lubrication, checking and replacement of parts of environmental facilities.Cost of management of waste generated and of investments related to the environment Environmental impact assessments Advertising of ecological products or in carrying out environmental plans Environmental training expenses Payment of environmental taxes Environmental insurance Environmental audits
46.The expenses for the creation of environmental provisions will be made as stipulated in paragraphs 27 to 37 of this procedure.
47.The expenses related to subsection (k) of the preceding paragraph shall be considered as environmental expenses and shall be accounted for in the expense account authorized for this purpose.
48. Taxes (taxes, fees and contributions) will be defined in accordance with the provisions of current legislation. Examples of them: geological compensation, forest reforestation fees, etc.
49. Audit expenses, according to subsection (m) of the previous paragraph, evaluations and appraisals and associates contemplate the invoicing of the services received and the expenses of attention to auditors.
50. Expenses incurred in conducting internal environmental audits are considered environmental expenses.
51.The expenses incurred in the audits of other organizations without being invoiced must be assumed by the organization that exercises them and will be considered as environmental expenses.
52. Environmental expenses must be related to the following activities:
- Air and climate protection: includes those expenses incurred in taking measures and activities whose objective is to reduce pollutant emissions to the air or concentrations of atmospheric pollutants, as well as those measures and activities whose objective is to control the emission of gases from Greenhouse effect and gases that negatively affect the stratospheric ozone layer Water management: includes those expenses incurred in taking measures and activities aimed at preventing the pollution of surface waters, reducing the discharge of wastewater into the waters. surface areas and in marine waters. This includes wastewater collection and treatment, as well as regulatory and control activities. Septic tanks are also included Waste management:Included are those expenses incurred in taking measures and activities whose objective is to prevent the generation of waste and reduce its harmful effects on the environment. These include the collection and treatment of waste, including regulatory and control activities, recycling, collection and treatment of low-level radioactive waste, cleaning and collection of solid urban waste Protection and rehabilitation of soils: includes those expenses incurred in taking measures and activities aimed at preventing the infiltration of pollutants into soils and groundwater, cleaning and protecting soils against erosion and other types of physical degradation, against salinization, acidity and poor drainage,as well as the control of soil contamination Reduction of noise and vibrations: those expenses incurred in taking measures and activities whose objective is the control, reduction and elimination of noise and vibrations caused by industrial activity and transport are included. Among others, we can identify activities to reduce noise caused by the neighborhood (soundproofing of dance halls, among others) as well as activities to reduce noise in places frequented by the public (swimming pools, schools, among other places) Protection of the biodiversity and landscapes: includes expenses incurred in taking measures and activities aimed at protecting and recovering animal and plant species, ecosystems and habitat, as well as natural and semi-natural landscapes.It may be that in practice it is difficult to distinguish between the protection of biodiversity and that of landscapes. For example, maintaining or creating certain types of landscapes, biotopes, ecological zones and similar themes (rows of hedges, lines of trees to restore natural corridors) is an activity clearly related to biodiversity Protection against radiation: those expenses incurred in the taking measures and activities aimed at reducing or eliminating the negative consequences of radiation emitted by any source. Among other things, the handling, transport and treatment of waste with a high radioactivity index are identified, that is, waste that, due to its high content of radium nuclides,require shielding during normal handling and transport operations Research and development: includes expenses incurred in taking measures and creative activities undertaken in a systematic way in order to increase the knowledge base and the use of them to design new applications in the field of environmental protection. This class includes all research and development activities and expenses aimed at environmental protection and analysis of sources of pollution, mechanisms of dispersion of pollutants in the environment, as well as their effects on humans, species and the biosphere. environmental protection activities:Included are those expenses incurred in taking measures and activities for environmental protection of the administration and management of the environment, or training or learning activities specifically aimed at environmental protection for the protection of the public.
ENVIRONMENTAL INCOME
It should be reviewed by the auditors that:
53. Environmental income is an increase in the entity's economic resources, directly related to the environmental management of its resources, whether they are monetary expression of goods or services of an environmental nature or the reduction in expenses motivated by the savings obtained from efficient management environmental.
54. Environmental income can be obtained through savings from efficient environmental management, reduction of insurance premiums, maintenance costs or reduction of environmental costs, motivated by better waste management that will allow savings and reuse of materials and waste, with lower storage costs, operating savings, due to lower consumption of raw materials, auxiliary materials such as paper, packaging, packaging or lower consumption of energy, water and fuel, savings obtained by improving the public image.
55. Environmental revenue may be justified by:
- Services for studies, diagnostics and analysis, sale of clean technologies, process royalties, trademarks and patents and rentals and usufruct of environmental assets to third parties Sale of waste to third parties or its treatment Awards obtained
INFORMATION TO DISCLOSE
It should be reviewed by the auditors that:
56.The accounting policies used for the presentation of financial statements will be presented as established in NEC No. 5 Proforma of financial statements for business activity, budgeted units with special treatment and the agricultural and non-agricultural cooperative sector.
57. In financial statements it should be presented with respect to the recognition of assets, liabilities, capital, investments, contingencies, expenses and environmental income.
58. Valuation criteria, as well as the allocation to income of the amounts earmarked for the purposes of environmental protection. In particular, the criteria followed to consider these amounts as expenses for the year or as a higher value of the corresponding asset will be indicated.
59. The environmental information that is the object of publication must be located in the different documents used by the traditional accounting model.
60. The use of resources, financed by the entity or by a third party, in carrying out environmental activities, as well as the strategy to be followed in the future period, must be clearly and precisely shown.
INFORMATION TO BE INCORPORATED IN THE STATEMENT OF SITUATION
It should be reviewed by the auditors that:
61.The current values of the environmental reserves, provisions and subsidies available to the entity at the time of issuing the financial statements will be disclosed. (See Annex No. 2)
INFORMATION TO INCLUDE IN THE INCOME STATEMENT
It should be reviewed by the auditors that:
62. The income statement of an environmental nature must be reflected in the income statement. (See Annex No.3)
63. A series of specific subaccounts will be used where said expenses and income are shown, and in this way to be able to know to what extent environmental variables influence the entity's result.
64. In the group of expenses, the entity must identify all the consumption of materials, labor costs, services, amortizations, etc., that are related to the environment. INFORMATION TO INCLUDE IN THE MEMORY
It should be reviewed by the auditors that:
65. With regard to accounting criteria, the allocation of expenses or, where appropriate, the capitalization criteria and amortization policies should be explained.
66. The provision of provisions or the creation of environmental reserves or any other associated with environmental activities.
67. Other information that should be collected would be the reference to:
- Environmental programs carried out by the entity Reports on the result of environmental audits received Movement of provisions or reserves corresponding to environmental actions Contingencies related to the protection and improvement of the environment, including risks transferred to other entities, estimation and evaluation evaluation system factors on which it depends Movement of subsidies corresponding to environmental actions
OTHER INFORMATION
It should be reviewed by the auditors that:
- Those that the entity deems necessary due to their relevance or importance.
Environmental expenses: all expenses related to environmental activity will be considered as environmental expenses, this account is accounted as it appears in table 8.
The aforementioned aspects constitute a methodological foundation, where through the different moments of the procedure the type of environmental accounting information that the entity needs can be inferred.
The proposed procedure for executing the environmental accounting audit is developed using the specific norm 550 of the Cuban auditing norms, which is why the following section is dedicated to this matter.
2.2.1 Logical stages of the audit to enable the implementation of the procedure.
These logical stages allow the procedure to meet the expectations of the information under the following criteria:
- Take into account the characteristics of the industry. This aspect is important because in the case of these there may be differences regarding the conception and handling of the basic information. The control of environmental variables, which is nothing more than the capacity of the industry to maintain through the procedure an item of the trends in environmental resources and decreasing costs What kind of information to disclose, which will also depend on the form, the expectations of the industry in line with the conservation of the environment.
In the execution of the environmental accounting audit, all the phases provided for in the Cuban auditing standards are applied, which are shown in the following figure:
Graph 2. Stages of the environmental accounting audit execution process
Source: Prepared by the author
The following are the stages of implementation of the procedure, taking as reference the Cuban auditing standards.
Stage 1: Planning
At this stage, the planning of the audit is carried out, in which the actions to be followed are addressed, in a chronological and organized order, for the development of each objective that responds to the end pursued. It is also the one that determines the achievement of optimal management levels (economy, efficiency and effectiveness ). At this stage, the audit techniques to be used to obtain sufficient, competent and relevant evidence are described. The stage is structured in four phases that are explained below:
Phase 1 Preliminary Study
The objective of this phase is to carry out the preliminary study or examination before starting the audit in the field to know in a general way the characteristics of the entity to be audited
Phase 2 Knowledge of the subject to be audited
Use this phase to update the aspects obtained in the previous study and establish guidelines on the necessary information that auditors must obtain about the subject to be audited in a logical order. On the other hand, a tour of the different areas and processes of the subject to be audited will be carried out to observe their operation, geographical situation and internal control measures and environmental protection and safety in order to determine if the conditions exist to execute the environmental accounting audit, for it:
- Description of the audited organization, its activities, processes, sub-processes, practices and products or services, as well as the environmental aspects and impacts generated in its production process Description of the types and quantities of natural resources, raw materials and inputs used related to the environment Total and unit consumption of water, energy and materials. Environmental control and accounting recording methods, norms for unit consumption of water, energy, raw materials, materials and supplies.
- Sources of energy used and consumption of energy carriers Existence of flow balances of fundamental materials and product life cycle, Existence or not of an environmental management system implemented or in the process of implementation Identified environmental risks and contingency plans, disaster reduction plan that covers all the hazards to which the entity is exposed. Level of safety and fire protection, endorsed by the corresponding authority Level of knowledge of managers about existing environmental risks and their impact on health Existing environmental problems in the environment with an impact on the environmental performance of the entity Availability in the entity of the most relevant environmental regulations and the existence of a mechanism to periodically update them.Results of state inspections carried out on the entity by the governing bodies during the last two years, as well as compliance with the measures adopted, pending measures and causes of non-compliance.History of accidents and relevant incidents in the entity Identification and quantification of the waste generated and its sources. Existing characterizations of waste and emissions. Environmental monitoring programs in progress. Compliance level Solid waste management practice Hazardous chemicals used and hazardous waste generated.History of accidents and relevant incidents in the entity Identification and quantification of the waste generated and its sources Existing characterizations of waste and emissions. Environmental monitoring programs in progress. Compliance level Solid waste management practice Hazardous chemicals used and hazardous waste generated.History of accidents and relevant incidents in the entity Identification and quantification of the waste generated and its sources Existing characterizations of waste and emissions. Environmental monitoring programs in progress. Compliance level Solid waste management practice Hazardous chemicals used and hazardous waste generated.
Management practices.
- Identification of other agents with a significant potential impact on the environment Incorporation of environmental criteria into the policy for purchasing products, technology and supplies Annual environmental training program and its compliance Results of medical check-ups carried out on workers exposed to environmental hazards.
Phase 3 Planning
The objective of this phase is to ensure that the audit is carried out with quality, as well as to determine and plan its nature, timing, scope, and to design the methodology and program that will allow the proposed objectives to be achieved. In this phase, the general audit work plan is drawn up.
Likewise, actions such as:
- Issue the Presentation Letter that makes official before the highest level of management of the subject to be audited the audit to be executed and the Work Order, authorizing its execution, which will contain: data of the subject to be audited, type of audit, expected business days, objective general audit, program to be applied and designated personnel. The degree of effectiveness of the internal control system is preliminarily evaluated based on the information obtained in the knowledge of the subject to be audited.
Phase 4 Upgrade
The objective of this phase is to make adjustments to the general audit work plan in the execution process and until its conclusion in case of detecting findings not contemplated in the previous phases.
Stage 2: Execution
In the execution stage, the procedure designed in order to achieve the proposed objectives is applied using the generally accepted auditing techniques, defined in the NCA, depending on the objective to be achieved. Activities such as:
- Application of substantive and compliance tests and collection of evidence Determination of deviations: audit findings Working papers are prepared that support the audit findings with sufficient, competent and relevant evidence The partial results of the audit are reported audit.
Stage 3: Report
Its objective is to communicate the results of the audit to the directors, officers and workers of the audited subject; as well as to the persons empowered for its knowledge and pertinent effects. General guidelines for the presentation of the audit report are: form and content, timing and presentation and communication of results, audit techniques to be used are r eview of documents, analysis and evaluation.
To start the reporting phase, the results of the audit and the relevant information must be ordered to express in writing the opinion to which the working group arrives, the fulfillment of the proposed objectives, supported by sufficient, competent and relevant evidence.
When preparing the report, the structure established in NE 1200 ¨Audit report¨ should be considered, where the following sections must be included:
Header, containing the name and address of the auditing organization, the number of the work order that authorizes the execution of the audit, place and date of its issuance, number of the work order, subject to audit, type of audit, in this case environmental accounting, and name and surname of the group leader . Then the document is titled REPORT.
Then the Introduction section begins , where a brief characterization of the entity referred to creation and the main activities that it develops and other aspects that may be of interest will be recorded.
The objectives of the audit are also expressed, that is, the results that the audit should achieve.
In the same way, the scope of the audit will be reflected so that readers can understand the extent of the tasks to be carried out for its purpose, the depth and coverage of the work carried out to meet the objectives and correctly interpret its results.
Statement that the audit has been carried out in accordance with Cuban auditing standards, and if they are not met, the limitations on the objectives and scope that may be related to the entity's own structural or organizational characteristics, with the impossibility of applying a certain procedure foreseen in the designed work program, inadequate primary records of information and accounting, economic and financial policies not in accordance with current legislation.
The methodology used, which may include the programs used in accordance with the specificities of the audit, as well as the fundamental legislation associated with them, must be clearly stated.
It is now up to the preparation of the Conclusions section to summarize the audit, being logical deductions based on the findings of the auditors, they should not constitute a repetition of what is consigned in the Results section of the report itself, but rather a synthesis of the fundamental facts and situation proven. The qualification of the audit is exposed and the direct and indirect causes and consequences that could arise from the findings should be reflected in a general way, when appropriate to quantify the economic damages.
In the Results section, the findings that form the basis of the auditor's opinion should be described based on the sufficient, competent and relevant evidence gathered to meet the objectives of the environmental accounting audit, the comments must be precise and ordered in accordance with the objectives.
Important achievements of the administration regarding the care and protection of the environment should also be included.
Indications related to facts that are not duly verified and collected in the working papers, duly quantified and reflecting in each case the percent that represents the sample of the universe that make up the subject that is verified, are not included.
Next, the Recommendations section is developed. They must be constructive, directing them to attack the causes of the observed problems, referring to specific actions directed at those who must undertake those actions .
Below is the Annexes section that accompanies the report when it is necessary to prepare them.
Finally, the Generalities section is drawn up, where the auditor will specify the term for the auditee to present their discrepancies with the content of the report, if they exist, express the term that the auditee has to consult the proposal of the disciplinary measures to be adopted and to submit the plan of measures to eradicate the deficiencies found during the audit.
When applicable, a note of appreciation must be made to the staff of the audited entity for their collaboration in carrying out the control action. And the name and surname of the chief auditor, signature and number of the Registry of Comptrollers and Auditors of the Republic of Cuba must be included at the end of the report. You should also record your half signature on each page of the report.
The audit report must be complete, accurate, objective and convincing, as well as sufficiently clear and concise as the matters discussed allow and must be communicated in a timely manner to managers, officers and workers so that action can be taken regarding the findings and recommendations..
Stage 4: Follow-up
The objective of this stage is to verify that the audited entity has submitted, within the established terms and deadlines, the consultation of the proposed disciplinary measures and the plan of measures for preventive and corrective solutions to the deficiencies reflected in the audit report which are:
- Within the established term of up to 10 calendar days after receiving the report, the audited organization must consult the audit unit on the administrative measures that it proposes to adopt in the appropriate cases, based on the Regulations of Law No. 107 On the Comptroller's Office. General of the Republic who, considering the criteria of the acting auditors regarding the significance of the findings detected. Simultaneously the audited entity from the report of the control action, prepares the Measurement Plan within the term established in the current legislation of up to 30 days, in order to correct the deficiencies detected and sends it to the organizational unit that carried out the control action, as well as the disciplinary measures taken with the direct and collateral responsible
The acting auditors analyze the Measurement Plan in order to verify whether the measures correspond to the deficiencies detected and were prepared in accordance with current legislation, send the response to the audited entity stating their compliance or not with said plan and the reasons in case it is not approved.
2.3 Application of the expert evaluation method and statistical processing. In the research, the individual characteristics of each expert and the scientific-technical qualification were considered, it was one of the fundamental aspects in the selection and the criteria of personalities from the branch of accounting sciences and environmental management were obtained.
The objective of the evaluation by experts was: to corroborate the design of the procedure for the execution of the environmental accounting audit for the industrial sector, as well as to validate the quality and effectiveness of its design.
We worked with the 35 selected experts, to whom the research project, the procedure and the elaborated questionnaire were delivered.
When processing the response of the experts, the result that is shown in Annex No 4 was obtained.
As can be seen, 100% of the experts consider in all the evaluated variables that the procedure proposal is very adequate and adequate, its validity, objectivity and applicability standing out significantly with 91.7; 87.5 and 87.5% respectively of very adequate, while to a lesser extent but with results of 79.2; 70.8 and 70.8% of very adequate show the agility, specificity and simplicity of the proposed procedure, respectively. To process the data from the two survey applications, the Wilkoxon test (two related samples) was applied, since the sample is small and the data has an ordinal level of measurement.
Hypothesis
H0: There is no significant difference between the answers to the questions before and after the system was implanted.
H 1: The results of the application of the survey after the implantation of the system were superior.
Significance level: α = 0.05, because it is the most used in research.
Significance of the tests in the SPSS-15-0: α 0 = 0.008
Comparison: α 0 <α (0.008 <0.05)
Conclusion. Then the results of the second application of the survey were significantly higher than those of the first for a significance level of 0.05, which proves the relevance of the procedure for the execution of the environmental accounting audit in the industrial sector.
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