Using his theory and trends in current literature, it is safe to assume that environmental auditing is the new social norm in the business community. Those that do not follow this norm will not be able to sustain a competitive advantage in the future (Javernick-Will, 2009).
Accountants and managers are familiar with auditing processes. They conduct audits to examine cash flow efficiency, operational efficiency, and the efficiency of advertising campaigns. The idea of the audit is to get a snapshot of how effectively the company uses its resources. Until recently, environmental concerns were not a part of this process. Recent evidence indicates that the environmental audit can have a measurable impact on the operational efficiency of the organization (Rennings, Ziegler, & Ankele et al., 2006). The amount of literature available on the topic indicates that it is now an important part of the accounting audit.
Environmental auditing is referred to as the environmental impact audit (EIA). In certain industries, it is mandatory and required by law. However, in companies where it is not mandatory, evidence supports the importance conducting one even if it is not necessary. For instance, the pulp and paper industry is required by law to conduct regular environmental impact studies. The Food and Agriculture Organization of the United Nations publishes specific guidelines for conducting an environmental audit (FAOUN, 1996). Although these standards are over 19 years old, they still represent the most recent and widely used guidelines for environmental auditing. They serve as an excellent example for other industries to design their audit practices. These guidelines are key resources in the design of environmental auditing practices.
Globalization has placed increased pressure on nations and individual organizations to make certain that their policies and processes comply with International Standards, such as ISO 14001 (Morrow & Rondnelt, 2002). A number of tools have now been developed to help companies comply with these standards. These tools focus on the use of natural resources and other environmental impacts of the business. Some of the tools are business specific and others are adaptable to different situations (Finweden & Moberg, 2005). Selecting an appropriate tool for a specific business is an element that cannot be overlooked in the development of environmental auditing processes (Hojer, M., Ahlroth, S. & Dreborg, K. et al., 2008). The development of appropriate auditing practices emerged as an important issue in the literature review.
Life Cycle Analysis and the Environmental Audit
Life cycle analysis of tangible assets is already a concept that accountants are familiar with. The life cycle of an asset has both direct and indirect affects on the environment. When something is purchased, it uses natural resources and when its usefulness has ended it generates waste. This impact must now be included in the life cycle analysis (Ekvali, T., Assela, G. & Bjorklund, A. et al., 2007). Research supports the necessity of life cycle assessment becoming an integral part of the EIA (Manuilova, Suibsiri, & Wilson, 2009). Life cycle assessments with an emphasis on specific applications within certain industries are being studied at an increasing rate. One example of these specific applications is the life cycle of coupled solar photocatalytic-biological processes in wastewater treatment (Munoz, Peral & Aylion et al., 2008). Much more literature exists that is industry specific.
Widheden & Ringstrom (2007) demonstrate how life cycle analysis can be used in product development. This is a relatively new concept in relation to environmental concerns, but life cycle analysis for product life has been a part of operational analysis for many years. The inclusion of the life cycle in relation to the EIA is recent development in this area. The use of discarded material is a key issue in life cycle analysis in the EIA (Thomas & McDougall, 2005). Trends in recent literature indicate that many new tools are being developed to assist accountants and operations managers in the conduct of life cycle analysis as a part of the EIA (Winkler & Bilitewski, 2007).
Comparative studies of different processes are an important tool for assessing the environmental impact of the life cycle of the product or process. One example of this type of comparative life cycle analysis is a study of landfilling vs. other forms of waste treatment (Banar, Cokaygil & Ozkan, 2009). This study may appear to only apply to the