Page 1 of 15

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 04

April 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 204

Effect of Social and Environmental Audit in

Contemporary Economy: Nigerian Experience

Oraka, Azubike O. (Ph.D

Department of Accountancy, Faculty of Management Sciences, Nnamdi Azikiwe University, P.

M.B. 5025. Awka, Nigeria.

Mail:zubbike@gmail.com

Erhirhie Felix Erhinyoja

Department of Accountancy Nnamdi Azikiwe University, Awka.

Mail:felixerhirhie@yahoo.com

Ezejiofor, Raymond A. (PhD)

Department of Accountancy, Faculty of Management Sciences, Nnamdi Azikiwe University, P.

M.B. 5025. Awka, Nigeria.

Email: thaddray4life@yahoo.com

ABSTRACT

This study examines the social and environmental auditing on sustainable development in Nigeria. The

specific objectives are to: ascertain whether social and environmental auditing can be used to determine

the perceptions of society toward the operations of business organizations in Nigerian economy; evaluate

the effectiveness of social and environmental auditing system in investment appraisal of business

organizations in Nigerian economy and determine the level of adoption of social and environmental

auditing among business organizations in Nigeria. Three hypotheses were formulated in line with the

objectives of the study. Survey research design was adopted. Data were obtained from questionnaires and

analyzed with five points Likert scale and the three hypotheses formulated were tested using t-test

statistical tool with the aid of SPSS statistical package version 20.0. From the analysis, the study found

that social and environmental auditing enhanced in determining the perception of society toward business

organizations in the Nigerian economy, also that the effectiveness of social and environmental auditing

system aid investment appraisal in business organizations in Nigerian economy. Another finding is that

the level of adoption of social and environmental auditing has influence on the operations of the business

organization in the Nigerian economy. Based on the findings, the researcher recommends among other

things that manufacturing companies should focus on those environmental friendly policies to enhance

their competitiveness which would subsequently lead to high corporate performance; this will bring about

good environmental sustenance

Key words: Auditing, social and environmental audit and sustainable development and investment

appraisal

INTRODUCTION

The effects of different industrial sector

activity on the environment vary

enormously, but it is an incontrovertible

statement that damage is being done to the

environment worldwide (Enofe, Mgbame,

Obazee & Edeoghon, 2013). The

environment forms an integral part of

development plans, particularly in the third

world countries like Nigeria. The aims of

most corporate entities are not only to

increase their profit but also to achieve their

Page 2 of 15

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 04

April 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 205

economic, social and environmental

objectives (Caraiani, Lungu, Dascălu,

Colceag & Guşe, 2010). The ability of

organizations to achieve environmental

objectives depends heavily on monitoring

the continuous improvement of

environmental performance through

efficient planning of organizational,

economic investments and necessary

technological measures (Enofe, et al, 2013).

Ijeoma (2015) stated that the realization of

sustainable development can only be

achieved through interdependence between

economic growth and environmental quality.

This has compelled some governments to

regard the environment as a valued and an

integral part of economic growth.

Consequently, environmental issues are now

at the vanguard of international and local

governments’ agenda. Environmental

sustainability is seen in the dimension of

began important component on social,

economic and environmental dimensions of

business organizations. In today's global

business environment, businesses are facing

increased competitive, regulatory and

community pressures. There is also pressure

for environment sustainability, which

requires strategies to be put in place to

reduce the environmental impacts caused by

the products and services offered

However, environmental auditing is not a

new discipline, it is a means of assessing

environmental performance and this has

recently increased dramaticalthe ly

(Welford, 2005). The first compliance audits

can be traced back to the United States.

Corporations adopted this methodology

during the early 1970s in response to their

domestic liability laws. The importance of

environmental audits has gained audience

during the last few years, with the launch of

Eco-Management and Audit Scheme

(EMAS) in 1993 and the publication of ISO

14001 in 1996. Recently, more companies

are finding it valuable to audit their

environmental impacts (Welford, 2005).

Accounting on the other hand concerned

with achieving new goals such as measuring

and evaluating potential or actual

environmental impacts of projects and

organizations. These new goals are of great

importance as they enable many users to

take different development decisions that are

economically and environmentally sound

(Bala & Yusuf, 2003).

The starting point that comprised an

organized thought proved on a large scale

the celebrated public action of the club of

Rome entitled “Limits to Growth” that

initiated a worldwide debate on economic

growth at the expense of natural

environment (Shil & Iqbal, 2005).

The production of goods and services

requires inputs from, and has effects on, the

natural environment. In particular, these

effects are the depletion of resources and the

production of wastes which are returned to

the environment. Pollution occurs when

these wastes disrupt or change natural

systems, including those that are important

for human well-being (for example, air and

water) (Enofe, et al, 2013). If the natural

environment is conceptualized as a stock of

natural capital, and if its uses for humans are

regarded as the services that flow from this

stock, then in principle the use of the natural

environment for economic activity can be

accounted for in the same way as the use of

other kinds of capital (for example,

manufactured capital, including machines,

buildings and infrastructure) and the

products to which they give rise.

Basically, social and environmental

disclosures are signals companies give to

stakeholders in order to: increase their

reputation and image (Friedman & Miles,

2001, Toms, 2002), reduce environmental

risks and construct competitive advantage

and promote corporate sustainability

Page 3 of 15

Journal for Studies in Management and Planning

Available at

http://edupediapublications.org/journals/index.php/JSMaP/

ISSN: 2395-0463

Volume 04 Issue 04

April 2018

Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 206

(Kramer & Porter, 2006). Whereas some

studies have examined whether there are

significant differences in the requirements of

corporate social disclosures based on

respondents’ demographics (Panwaar, Han

& Hansen.2010, De Villiers & Van Staden,

2010), there is research gap on whether there

are significant differences on the social and

economic consequences of corporate social

and environmental disclosures based on the

legitimacy theory in Nigeria. As a result,

little or no action was taken to include the

implication of social and environmental

audit in the national accounts. The

difficulties of such inclusion became a

problem to be solved rather than an

insurmountable obstacle. In Nigeria little or

few studies were carried out on social and

environmental auditing and sustainability

development, this creates a gap of which this

study attempts to fill and add to existing

literature.

The broad objective of this study is to

examine environmental auditing and the

effect on sustainable development in

Nigeria. The specific objectives are to:

1. To ascertain whether social and

environmental auditing can be used to

determine the perceptions of society

toward the operations of business

organizations in Nigerian economy.

2. To determine the level of adoption of

social and environmental auditing among

business organizations in Nigeria

influence their operations.

Research Questions

1. To what extent has social and

environmental auditing enhanced in

determining the perception of society

toward the operations of business

organizations in Nigerian economy?

2. To what level has the adaption of social

and environmental auditing influence the

operations of business organizations in

Nigeria?

Research Hypotheses

1. HO: Social and environmental auditing

does not enhanced in determining the

perception of society toward

business organizations in Nigerian

economy.

2. HO: The level of adoption of social and

environmental auditing has not

influence operations of business

organization in Nigerian economy.

CONCEPTUAL FRAMEWORK

1 Audit

You have seen that the reasons for

undertaking an environmental audit are

many and varied. Some audits are carried

out for an entire industry or company, while

others are for a specific site. Some audits

will endeavour to investigate all aspects of

environmental performance, while others are

narrowly defined. An environmental audit is

essentially a process, and the way in which

this process is utilized will depend on what

the organization wishes to achieve from the

audit – this leads to the use of different

„types‟ of audit. One of the problems when

discussing the various uses of environmental

auditing is that different people use different

names to describe the different „types‟. The

list below (after Humphrey and Hadley

2000) will act as a starting point for the

purpose of this unit.

There are lots of different ways of defining

these different types of audits and often

different terms are used for the same sort of

audit. Other terms you may come across

include: health and safety audit,

minimization audit (a form of issues audit

above, site audit, due diligence audit (a form

of liability audit), activity or operational

audit (eg across company departments or

units, such as waste and energy