Environmental Audit at State Audit Office of Vietnam Opportunities and Challenges

Environmental Audit at State Audit Office of Vietnam Opportunities and Challenges


The primary and focused concern of every government is to develop an eco-social market economy for the Nation. An environment, clear or polluted, always directly affects the lives of all communities and societies within it not only in the present but also in the future. Therefore, most governments in the world, including Vietnam’s, have been dedicating a large part of their national fund to environmental causes (prevention and treatment of pollution, establishing and managing the environmental protections, measures against environmental changes, etc.)

Environmental activities do not usually provide any tangible results. It’s impractical to measure a clean and clear environment based on expense figures. Recording human resources and other expenses associated to pollution prevention and treatment is a complicated procedure. Environmental audit forms and develops as a new type of audit area as a result of the needs for reviewing and controlling the utilization and management of funds invested into the environment activities. Benefits from implementing environmental audit includes: assessing whether (i) Ensuring environment management systems are compliant with regulations, policies, and required standards; (ii) risks associated with environmental causes are measured and reduced; (iii) company’s awareness of environmental impacts are based on its investigated information; (iv) stakeholders’ awareness related to environmental and economical issues are enhanced; (v) resources and investment funds are effectively utilised.

Environmental audit is a completely new audit area in Vietnam. There are many restrictions in implementing environmental audit. There are not many Environment audits conducted by SAI Vietnam. Even the ones conducted cannot be termed as performed truly to its nature due to absence of any legal framework, procedures and guidance, etc. for environmental audit at State Audit Office of Vietnam. It’s a common practice to audit the financial statements and include assessments of the economy, efficiency and effectiveness of national target programs related to environment. Many emerging concerns related to environment destruction and pollution which affect health and daily life of communities such as air and water contaminations, sound pollution, hazardous wastes, negative effects from society development, etc., are not covered in audit. Only recently, State Audit Office introduced performance audit along with financial statements auditing and compliance audit. In contrast, in the environmental audit area, only compliance audit on managing and utilisation of environmental funds received from national Funds or outside aids is performed.

Strategic Development Plan 2013-17 of State Audit Office has included an important strategic goal “Enhancing values and benefits from assessing the economy, efficiency and effectiveness in using and managing public budget, money, and assets.” This goal aims to push the development of performance audit including in the area of environmental audit. This is a vital legal ground for forming the environmental audit unit and its functions within the State Audit Office.

Realizing the importance and development tendency of environmental audit, in 2008, State Audit Office established a Working group on Environment audit to act as a body to receive global knowledge and experience related to environmental audit for State Audit Office. The working group also provides consultancy and assistance to the managers of State Audit Office in the development of Environmental Audit at State Audit Office. In 2015, Environmental Audit Division in the Department of International Cooperation was created. The division was entrusted with the following tasks; consulting and assisting the Auditor General of the State Audit Office regarding the development of Environmental Audit at State Audit Office (forming policies, planning, strategies, procedures, guidance, training, international cooperation, etc.); conduct performance audit on environment and related topics in order to assess the economy, efficiency, and effectiveness in (1) managing investment resources towards environment, (2) environmental policies and projects, and (3) international cooperation audit followed cooperation agreements. Environmental audit is designed as an independent division with separate personnel and is tasked with performance audit and international cooperation regarding environmental audit. Therefore, Environmental Audit is an important development in State Audit Office’s activities to approach new audit types and areas in accordance with current international trend and general practices.

However, the foundation of Environmental Audit Division also cope with major challenges due to the following:

(i)    In Vietnam, there is still no specific legal framework to assign environment audit function to  State Audit Office. Public awareness and opinion on this audit area is still limited, especially of government authorities related to environment matters;
(ii)    Technically, environmental audit is the combination of financial statements audit, compliance audit and performance audit. Environmental audit is a higher form of performance audit. However, since its inception, the development in the area of performance audit has been not significant (performance audit division formed in 2014, no guidance procedure regarding performance audit has been issued yet, etc.);
(iii)    There’s no national environmental database in Vietnam; an important information source which can assist State Audit Office in performing audits and based on which auditors can give recommendations that can be used in upcoming years;
(iv)    Due to lack of professional environmental auditor, training for personal on knowledge and experience is limited. Besides, there is no specific procedure or method for environmental audit yet;

Apart from time issue and clear orientation from State Audit Office; in order to overcome the adverse challenges when performing environmental audit, it is necessary to obtain technical support from member organizations and SAIs. In 2016, State Audit Office of Vietnam will be taking up environmental audits in “Reducing and adjusting to the change in environmental causes in 2015 project” and “Low-carbon transmission in saving energy topic in Vietnam project” and Management and treatment of industrial waste water in industrialized areas.





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