Research On Risk-oriented Auditing Procedures Of Internal Control Over Cleaner Production

Cleaner production (CP) is worldwide employed in response to industrialpollution, energy crisis and ecological damage. CP is a preventive environmentalstrategy continuously applied to production, products and services to improveeco-efficiency and reduce human and environmental risk. As one new preventivestrategy of economic and environmental problems, CP is an important way to achievethe object of sustainable development and coordination of economy, society,environment and resource. With the implementation of cleaner production in theenterprises, managements must change the concept of management, toward to acomprehensive management model based on pollution prevention. As themanifestation of the cleaner production management, internal control over cleanerproduction undoubtedly plays a key role in cleaner production management system.Soundly designed and effectively operated internal control over cleaner productioncan reasonably assure the efficiency and performance of cleaner production, as well asthe compliance with relevant environmental laws and regulations. With thedeveloping of cleaner production system, the function of an audit of internal controlover cleaner production gradually emerged in promoting the construction of internalcontrol over cleaner production. Carrying out an audit of internal control over cleanerproduction will have a profound impact on improving the effectiveness of cleanerproduction, which is also the value of this paper to research the auditing procedures ofinternal control over cleaner production.Based on the relevant literature review, the top-down risk based approach to thecurrent audit of internal control over financial reporting will be drawn to research therisk-oriented auditing procedures of internal control over cleaner production. Themain parts of the risk-oriented auditing procedures of internal control over cleanerproduction are discussed in detail, involving planning the audit, implementing theaudit, reporting on internal control over cleaner production according to the results ofevaluating identified deficiencies. The main conclusions are as follows:The risk-oriented auditing procedures of internal control over cleaner productionmainly include five stages: accepting commission, planning the audit, implementingthe audit, evaluating identified deficiencies, reporting on internal control over cleaner production. In a risk-oriented audit of internal control over cleaner production, theauditor should first of all consider whether or not to accept the commission on thebasis of conditions of enterprises and audit firms. If accepted, in the stage of planningthe audit, auditors should identify high-risk areas according to the impact of relatedmatters on the audit of internal control over cleaner production, and also identifysignificant processes after confirming materiality, to prepare for the next stage. Theauditor should use a top-down approach to the audit of internal control over cleanerproduction to implement the audit.A top-down approach begins at the entity level and with the auditor’sunderstanding of the overall internal control over cleaner production. The auditor thenfocuses on significant processes and works down to specific risk factors of cleanerproduction. The auditor then selects for testing those controls that sufficiently addressthe assessed risk of cleaner production，and tests the design effectiveness andoperating effectiveness of a control by obtaining audit evidence related. The auditormust evaluate the severity of each identified control deficiency and communicate, inwriting, to management and the audit committee all material weaknesses identifiedduring the audit. Finally, the auditor should form an opinion on the effectiveness ofinternal control over cleaner production and report it in writing.The research on the auditing procedures of internal control over cleanerproduction belonging to the audit of internal control over non-financial reporting isthe innovations of this paper, which also draws environmental methods and fully takescharacteristics of the audit of internal control over cleaner production intoconsideration.