EnvironmentalAud_省略_velopmentinChina_ALL

Environmental Audit

The Role of Financial Auditor in Effective Implementation of Environmental Protection and suistainable development in China

ALLY Abdul Mussa, ISSA, Zubeir Saleh, NGOMUO Sarah Isaac, SUN Xiaonan

Department of Accounting, Dongbei University of Finance and Economics, Dalian, China, 116025

Abstract: This paper analyzes the role of financial auditors in effective implementation of environmental protection and sustainable development in china. Currently china is a prime location for making products which consumed most by all the people in the world. Weng (2005) assert that more than 50% of the world’s cameras 30% of its air conditioners and televisions, 25% of its washing machines, and almost 20% of its refrigerators are manufactured in china and the products list continued to grow. This development causes a serious environmental problem and has reflected a great damage on the economy and quality of life and therefore a need for proper measures to be in place to prevent environmental protection. The findings of this study indicate that financial auditors have a great role to play in this handover through effective implementation of environmental audit.

Keywords: Environmental Protection; Environmental Audit; Financial Auditors; Financial Reporting; Financial statements

1 Introduction

In recent years environmental issues has become an international agenda and it has now draw attention in the mind of different groups; In the past, people have demanded traditional information to make their economic choice in areas such as, value, price, quality, and service but now they have new values such as, the impact of products on the environment, environmental protection, etc. and they need information about those values to express their choice and make the market work effectively (Adams, 1990, pp. 81-83). All these raise the need for proper environmental audit.

According to the historical records, auditing in China originated as early as Western Zhou Dynasty, more than 3,000

years from now. Zaifu was the official position with the audit function at that time. A royal audit court was set up in Song Dynasty in 992 A.D, and after the revolution of 1911, the national government established its Chamber of Audit and issued Audit Law. The Ministry of Finance controlled the practice of audit since China adopted the reform and open policy in late 1970s’. In December 1982 the resolution to practice an independent auditing and supervisory system in China was adopted, which was included in the amended Constitution. With the explicit stipulation of auditing in the Constitution of 1982, in this year Chinese government entered a brand new phase of historical development in auditing.

On September 15, 1983, the National Audit Office was inaugurated. since then, five Auditor Generals were appointed in succession. They are Mr. Yu Mingtao, Mr. Lu Peijian, Mr. GuoZhenqian, Mr. Li Jinhua and Mr. Liu Jiayi, as the supreme audit institution of China. As of January 1, 1995, a special law regulating government auditing entered into force and later on October, 1997, the Implementation rules were promulgated and taken effect.

The development history of China's environmental audit has undergone three major stages namely; Nascent stage: where Chinese government issued "China's Agenda 21" in September 1994, The agenda marking the beginning of Chinese government's emphasis on environmental audit: Initial stage, In 1995 CNAO discussed at great length technique and method of environmental audit at the Cairo Conference held by INTOSAI. In the seminar held by CAS in Huairou district, Peking in 2002 to

Proceedings of the 4th (2012) International Conference on Financial Risk and Corporate Finance Management

enrich the theory and system of China's environmental auditing: Deepening stage: In 2005 ASOSAI held two seminars on environmental audit where water and biodiversity issues were paid more attention and relevant proposals were offered. In 2009, Wen jiabao, China's Premier, emphasized that governments at various levels should consciously accept supervision of the NPC and the CPPCC, and the special supervision such as audit supervision should be enhanced and should follow the trail of financial fund.

of preparing and auditing of financial statements. Collison et al., 1996; Elkington& Jennings, 1991; Gray, 1990; Shields & Boer, 1997, Gray, 1990, pp. 65-69, Collison, Gray, and Innes (1996), Collison and Slornp (2000), ICAEW (2000, p. 1).

Herremans, Akathaporn and Mecinnes (1993) supported by arguing that investors prefer not to deal with companies, which have a bad reputation or do not have social responsibility attitude towards the environment. The professionals individuals and accountancy bodies like CICA, ICAEW, 2009, 1993, 1997; Collison, Gray and Innes, 1996; FEE, 1995, 1999; Gray et.al 1998; Gray, Collison, French, McPhail and Stevenson, 2001; Maeve & Carey, 1992 also raise awareness of the issues amongst accountants and auditors. Sylph, (2005, p. 1) asserting that accountants and auditors have a role in making corporations and governments sensitive to the environmental results of their actions. Similarly, Lickiss (1991), the ex-president of ICAEW asserts that accountants and auditors must measure up to the environmental challenge if they are to fulfill their duty to promote public interest. ICAEW (2000) describes the important implications of environmental matters for businesses, and cautions auditors and accountants not to ignore them.

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