3.2 Argument against using
financial auditors
Those who are against using financial auditors in effective implementing of environmental audit argued that the financial auditors are unable to translate their personal views on environmental issues to their professional practice. Their personal beliefs did not seem to impact their professional practice and they did not feel they had the technical knowledge required to audit environmental matters (Chiang 2006). Gray (2000, p. 248) comments that although "accountants are well trained in auditing (as in accounting), universities need to produce "independent critical thinkers", and particularly, "in the field of social, environmental, accounting, reporting and
Proceedings of the 4th (2012) International Conference on Financial Risk and Corporate Finance Management
auditing". Hence, for auditors to become more concerned with environmental matters, as individuals and as a group, their attitude needs to shift to where their boundaries of consideration extend (Bebbington, Gray, Thomson, & Walters, 1994; Deegan, Geddes, & Staunton, 1996).
Chiang (2006, p. 23) also indicates that "the mechanism for translating the consideration of environmental issues into audit practice needs improvement before auditors can become confident and fully engaged in their consideration of environmental matters in financial audits". Salter (1992, p. 21) states that "if accountants fail to grasp this opportunity (i.e. performing environmental audits) there are many other types of organization that will take up the challenge. Maltby (1995, p. 19) points out that accounting firms are not the only organization offering an environmental auditing service, for example the consultants listed in the UK Enviromnental Data Service (ENDS) Directory (1991) exhibit a wide variety of specialists.
prevailing increase in industrial development following opening and deregulation of the economy China has a long way to go in order to be in a better position in environmental protection and sustainable development agenda and therefore a need for the formulation of new national strategy which will be implemented strategically by the CNAO to overcome this problem. This trigger the need to have legal frame work which will empower and mandate financial auditor to conduct environmental audit as they have a great role to play in this handover through effective implementation of environmental audit.
The authors also observed that there is interplay between financial auditors and environmental specialist and that financial auditors can perform well environmental audits with the help of other specialists not only environmental specialist but also other specialist like engineers. Lawyers etc. when deemed necessary. However, the situation is opposite in many countries including China whereby the role of financial auditors in promoting environmental protection through environmental audits is not practically significant. The most important reason to this effect is lack of environmental information disclosure standard which will obligate all auditors to conduct environment audit and report it as stand-alone report or as party of audit of financial statement.
4 Conclusion and Recommendations 4.1 Conclusion
This paper analyzed environmental audit focusing on the competence, relevance, importance and the role of financial auditor in effective implementation of environmental protections and sustainable development in china. The findings of this paper revealed that for many years since 1970s China has been confronted with the dual task of developing its national economy and protecting its environment. Chinese government implemented a good number of polices, reforms, and actions on environmental protection. Although there are significant achievement which has been achieved since then as regards to environmental protections and sustainable development still environmental protection in China have continued to be one of the very serious problem and has reflected a great damage on the economy and quality of life and given this
4.2 Recommendations
It is recommended that Chinese government should put in place strictly legal frame work and issue environmental information disclosure standard which will obligate all auditors to conduct environment audit and report it as stand-alone report or as party of audit of financial statement. Such a standard should emphases the need for disclosure of environmental issues in the financial statements, the disclosure mode, and contents etc.
The legal frame work should require all other relevant and competent authorities to act negatively and imposing severe punishment to all companies which their financial reports are disqualified by the Auditor general or any
Environmental Audit — The Role of Financial Auditor in Effective Implementation of Environmental Protection and suistainable development in China
other competent authority on the ground of non-compliance in environmental issue. This will not only redirect the concerns of environmental matters to the companies but also it will speed up the need to make changes in accounting and auditing education and professional to qualify accountants and auditors to deal with environmental issues.