Environmental Audit in China

Environmental Audit in China


By Mr. Liu Jiayi,  Chairman of INTOSAI Governing Board, Chairman of ASOSAI Working Group on Environmental Auditing, Auditor General of the National Audit Office of the People’s Republic of China (CNAO)

 

The Chinese government attaches great importance to environmental protection. Back in the 1980s, environmental protection was made a basic national policy. In the 1990s, sustainable development was confirmed as a national strategy. In the new century, the Chinese government has put forward the Outlook on Scientific Development featured as “people-oriented, comprehensive, balanced and sustainable”. At the 18th National Congress of the Communist Party of China (CPC) in 2012, ecological civilization was included in the overall “five-in-one” national layout with Chinese characteristics, and ecological civilization as well as environmental protection was placed in an increasingly important strategic position. In the subsequent plenary sessions of 18th CPC Central Committee, the 3rd one proposed the building of a beautiful China and deepening reform to achieve ecological civilization; the 4th Session called for speeding up the establishment of a sound legal system of ecological civilization to protect the environment; the 5th Session came up with a development concept centering on “innovation, coordination, green, development and sharing”.

CNAO takes an active part in the construction of ecological civilization by promoting good governance through auditing.
As an institutional arrangement as well as an important part of the national governance system, audit is a significant measure to restrain power, and thus constitutes the bedrock and important safeguard for good governance. Since its establishment in 1983, CNAO has actively responded to the call of INTOSAI to “encourage the SAIs in member countries to exert influence on national environmental protection policies through auditing” and engaged in China’s environmental protection as well as contributed to sustainable development through environmental auditing. Meanwhile, CNAO has established an integrated auditing framework of various audits on public finance, banking, state-owned enterprises, environmental resources, foreign investments and accountability of leading officials.

In recent years, CNAO actively carried out environmental audits centering on ecological civilization construction pursuant to the national arrangements. In March, 2016, the 13th Five-Year Plan for National Economic and Social Development of the People’s Republic of China was adopted, calling for the strengthening of ecological environment protection by enhancing environmental quality and emphasizing the solution to critical problems in the field. Major indicators of economic and social development set forth in the Plan include 10 items on resources and environment, all of which are mandatory. CNAO will further push forward environmental audits centering on the targets and main tasks set forth in the Plan.

I. Establish a Framework of Environmental Audit that Adapts to Sustainable Development and Ecological Civilization

A. Institutional Building: Up to now, CNAO has set up specialized units of environmental audit, engaging more than 200 full-time employees. CNAO lays stress on the training to enhance the professional competence of environmental auditors.

B. Legal System: The Audit Law and other laws and regulations, on the basis of the mandate of audit institutions by the Constitution, stipulate a wide range of duties for environmental audits, and entrust to audit institutions many powers, including transfer of important matters, audit sanctions and penalties, administrative coercive measures. CNAO has actively promoted the legal system on environmental audit by various ways as follows:

  • In 2009, CNAO formulated the Opinions on Strengthening Environmental Audit, which put forward the principles, main tasks and development goals for environmental audits.
  • In 2014, the State Council issued the Opinions on Strengthening Audit, setting many specific requirements on environmental audit, for example, to “strengthen audits on natural resources such as land and minerals, the pollution control of air, water and solid wastes, to “explore the accountability audit on natural resources and assets over outgoing officials”, and to “pay close attention to… the weaknesses and potential risks in energy, resources and environmental protection”, etc.
  • In 2015, the General Offices of CPC Central Committee and the State Council issued the Opinions on Improving the Audit Institutional Framework and Other Major Issues and Opinions on the Full Coverage of Audit and other documents, calling for “full coverage of audit on state-owned resources”. Audit institutions, in accordance with the law, shall audit natural resources such as land, minerals, water, forests, grasslands and seas, state-owned intangible assets such as franchises and dumping right, and other state-owned resources stipulated by laws and regulations.
  • In 2015, CNAO issued Opinions on Further Increasing Audit Efforts to Accelerate Ecological Civilization Construction, and put forward major audit tasks aiming to serve the construction of ecological civilization.
  • Guidelines on the system of environmental auditing were improved upon by CNAO. By the end of 2015, it had issued Guidelines on Audit of Water Environment, drafted Guidelines on Audit of Land (draft) and has started the preparation for Guidelines on Audit of Mineral Resources.

C. Integrated Framework: In view of wide coverage of environmental matters and close relation to audits of finance, investment, banking, enterprise, foreign capital and accountability, CNAO has actively built an overall framework for environmental audit.

  • In 2003, CNAO established a leading coordinating group of environmental audit and made it mandatory for all audit institutions at all levels to pay attention to the issues of environmental protection when conducting professional audits.
  • Up to now, an integrated framework has been established in which all professional audits can be carried out from an environmental perspective. All audit departments shall include environmental audit in their plan as an important content. Particularly during real-time audits of policy implementation, in the last two years, attention was paid to the progress of major projects such as energy, water conservancy, energy saving and environmental protection .

All audit departments of CNAO shall analyze the results of environmental audits every year and submit reports to the leading coordinating group of environmental audit to be summarized.
II. Strengthen Environmental Audit to Serve the National Ecological Civilization

In recent years, CNAO actively served the national planning of ecological civilization through environmental auditing centering on “resource development, pollution control, ecological restoration and accountability identification”.

From 2008 to 2015, CNAO organized 21 environmental audits covering land resources, mineral resources, water pollution control, energy conservation and special forestry funds, etc. CNAO submitted more than 200 audit reports or briefings to the State Council, governments at various levels and relevant departments. Audit results showed that environmental audit has played a positive role in preventing environmental pollution and resource destruction as well as promoting the economical and intensive use of resources, and has become an effective player in promoting environmental protection.
A. Audit of Natural Resources as Land and Mines. Since 2002, CNAO has carried out 6 audits on land resources and 4 audits on mineral resources. According to the overall arrangement of the State Council, CNAO organized a nation-wide audit on land transfer payments and the protection of arable lands in 2014, with the participation of 24,000 auditors from 29 provinces, autonomous regions and municipalities. The audit is known as a “comprehensive medical examination” on China’s land inventory, given that it was the first of its kind in terms of scope, input and organization. This audit was aimed at ensuring a minimum 1.8 billion mu (1.2 million square kilometers) of arable land, pushing for the efficient use of land and promoting healthy development of economy. The audit revealed issues as illegal use of construction lands, ultra-scale land supply, idle land, occupation of basic farmlands and degradation of arable land, etc. The State Council held an executive meeting to act upon the report and urged relevant departments and local governments to actively carry out rectifications.

B. Audit of Water Pollution Prevention and Energy Conservation. Since 2003, audits of water pollution prevention by CNAO have covered the country’s key river basins and sea areas. Audit recommendations were adopted in the water pollution prevention plan formulated by environmental protection departments. CNAO has organized 4 audits of energy conservation and emission reduction and, by auditing the performance of special national funds, key projects and objective fulfillment of energy conservation and emission reduction, effectively pushed forward the country’s energy conservation and emission reduction.

C. Audit of Ecological Engineering. CNAO has successively organized major ecological engineering audits such as the audit of the projects of re-converting farm lands to forests, audit of natural forests protection, and audit of sandstorm control in Beijing and Tianjin. Besides the problems revealed, those audits also reflected difficulties in policy implementation, and received great attention from relevant authorities. For example,. the State Forestry Administration paid great attention to the problem of “reserved forest resources being threatened” in the audit reports of natural forest protection, and has taken corresponding measures to promote the construction of major environmental projects.

D. Accountability Audit of Natural Resources and Assets over Outgoing Leading Officials. Local administrations in China have signed with governments at the next higher level, environmental protection pledges such as the letter of responsibility for controlling major pollutants in order to take key responsibilities for environmental protection and sustainable development. In environmental audits, the fulfillment of duties by leading officials has always been a major concern. Especially after the 3rd Plenary Session of 18th CPC Central Committee, “Audits of accountability on natural resources and assets over outgoing leading officials” has been put forward. CNAO have actively carried out the pilot audit on natural resources and assets, in accordance with the working structure and requirements to “prepare natural resource balance sheet, implement audits of natural resources and assets over outgoing officials and establish a lifelong accountability system for ecological damage”. In 2015, CNAO organized pilot projects of such audits focusing on “what to audit, how to audit and how to identify responsibility”, and has gained experience on the audits of land, mineral resources, forest resources, water resources and air pollution prevention.

III. Participate in Activities of International Environmental Audit

It is the common pursuit of all countries and regions in the world to promote good governance, achieve sustainable development in society, economy and environment, and improve people’s well-being. CNAO has actively participated in international activities of environmental audit, and together with other SAIs, made the contributions in dealing with environmental and sustainable development issues.

A. To Perform the Duties as the Chairman of ASOSAI WGEA

  • Hosted 5 seminars (3 in China) on environmental audit to facilitate the information exchange and experience sharing on environmental audit among member SAIs in the Asian region, focusing on water, biodiversity, air pollution control, energy saving and utilization, etc.
  • Conducted 5 surveys on environmental audit to collect related information from member SAIs.
  • Promoted cooperative environmental audits. For example, CNAO conducted the audit of sandstorm prevention with SAI Korea, and helped SAIs of South-East Asian countries conduct the audit of water pollution control on Mekong River by providing professional support.

B. To Participate in the Activities related to Environmental Audit of INTOSAI. Since 2002, CNAO has served as a member of the Steering Committee of INTOSAI WGEA. Since acting as Chairman of INTOSAI in 2013, CNAO has played a leading role in environmental audit.

  • From 2008 to 2010, CNAO took the lead to draft the papers on “Environmental Audit and Sustainable Development”, Theme II of the 20th INCOSAI. The outcomes won unanimous approval at the 20th INCOSAI and were written into the final documents of 2010 Johannesburg Accords.
  • CNAO participated in many guideline and research projects organized by INTOSAI WGEA, including “Audit Guidelines on Sustainable Use of Energy”, “Audit Guidelines on Solid Waste (updated)”, etc., sharing Chinese cases and technical methods.
  • In 2010, CNAO hosted the 13th meeting of the INTOSAI WGEA.
  • From 2011 to 2013, CNAO led the research work of “National Audit and Governance”. The 21th INCOSAI adopted the Beijing Declaration and defined the role and objectives of SAIs in all INTOSAI member countries, namely, pushing governments to achieve better governance and promote global governance, with environmental audit included. After that, CNAO became the chairman of INTOSAI and took an ever deeper participation in international activities with environmental audits included.

Just as mentioned in the Johannesburg Accord, “We are using the planet our ancestors have left us, but we can never over-use the planet on the sacrifice of future generations. If we run out of resources preserved for future generations, how can human beings reproduce and what will they depend on?” Nowadays, countries pay greater attention to sustainable development. In September 2015, the United Nations Development Summit formally adopted the World that Changes Us: Sustainable Development Agendas in 2030, stressing that “we are determined to prevent the degradation of our planet with efforts including measures such as consumption and production in a sustainable manner, the management of natural resources on earth, and immediate action on climate change issues to make the earth meet the needs of present and future generations”, and proposed 17 sustainable development goals and 169 specific targets. In the next few years, SAIs around the world, in accordance with the roles and objectives specified by the Beijing Declaration, such as “pushing governments to achieve better governance and promoting global governance”, will strengthen their auditing efforts in the fields of environmental protection and sustainable development. CNAO will continue to serve national ecological civilization and promote environmental audits, and work together with SAIs across the world to strengthen cooperation in environmental audit and jointly achieve the goal of sustainable development.





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