5.3 Voluntary, mandatory and statutory audits

Environmental and social audits may be undertaken voluntarily or to meet the requirements of regulations or legislation.

Voluntary audits are audits that a mine conducts without compulsion from a regulatory authority and/or audits that are not required to be carried out by law. Examples of voluntary audits are environmental performance audits, compliance audits, EMS audits, energy audits and social audits voluntarily commissioned by the organisation. Most audits conducted by or on behalf of mining companies are voluntary environmental or social audits. In some parts of Australia (and some parts of the United States), legal privilege attaches to a voluntary environmental audit report, or can attach under specified circumstances. This means that the information cannot be required to be provided to an authorised officer in the administration of the relevant Act, or by a court of law.

Mandatory audits are audits that are required by a regulatory consent document such as a licence, permit, consent, authority, approval, order or notice under legal powers held by the regulatory agency requiring the audit. An example of a mandatory environmental audit is a compliance audit required under a pollution control licence, to be commissioned annually by the licence holder and conducted by an independent auditor. It assesses compliance with environmental regulatory and licence conditions and the results are reported to the regulator. Many mining environmental licences, leases, development approvals and agreements contain a similar condition requiring audits from every six months to every three years or longer. Self-incriminatory evidence is not exempt when included in a mandatory audit report. As there are no specific social regulatory requirements, mandatory social audits have generally not been required in consent documents; however, this condition does appear in some enabling agreements signed between a government and a mining company.

In Australia, mandatory environmental audits are becoming much more common as part of the ‘co- regulation’ policies being established by the Australian Government and state and territory governments. It is not only the mining or petroleum regulatory agencies that require these audits, but also the Department of the Environment at the federal level under the EPBC Act and state and territory governments under planning or other legislation. For example, project approvals issued by the Department of Planning and Infrastructure in New South Wales and by the Coordinator-General’s Department in Queensland usually have requirements for independent mandatory environmental compliance audits. The mandatory audit is conducted under the terms of the relevant clauses in the consent document. It is commissioned and paid for by the mine or petroleum operator that chooses the audit organisation, which must be able to demonstrate a sufficient level of independence from the operation. The terms of the audit normally include a requirement for a number of independent experts to be represented on the audit team. The auditors and experts must be approved by the regulator.

Statutory audits are audits that are compulsory under legislation. Examples of statutory environmental audits are compliance audits under the EPBC Act, industrial facility audits or site contamination audits under the Victorian Environmental Protection Act 1970, and ‘environmental evaluations’ under the Queensland Environmental Protection Act 1994. Statutory environmental audits may also be required under the South Australian Environment Protection Act 1993. In New South Wales, statutory compliance audits are conducted under the compliance audit program of the New South Wales Environment Protection Authority (EPA) to assess an enterprise’s compliance with environmental legislation administered by the EPA.

What is a ‘controlled action’ audit?

Under the EPBC Act, actions that are likely to have a significant impact on matters of national environmental significance must be referred to the Minister for the Environment for assessment and approval. As part of the approval process, the action will be designated as one of the following types:

  • controlled action
  • not-controlled action
  • not-controlled action—particular manner.

Approvals for projects with ‘controlled action’ or ‘particular manner’ designations contain conditions with which the project proponent must comply. The Department of the Environment implements a program of compliance audits of such projects. The audit principles include the independence of the auditors, ethical conduct, fairness, and due diligence on the part of the auditors by demonstrating competence, discretion and judgement.

These audits help the Australian Government to ensure that projects affecting matters of national environmental significance are implemented as approved. They also help to build knowledge about how well approval conditions are being understood and applied, and contribute to improving the effectiveness of the department’s operations.

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