When evaluating an organization's social and environmental impact, an internal auditor's primary focus is on the effectiveness of risk management and control processes. Determining how previous incidents were managed and resolved (1) directly tests the efficacy of the organization's controls for mitigating negative impacts. Furthermore, assessing the transparency in reporting (3) is crucial for evaluating accountability to stakeholders, including the local community. Transparent reporting demonstrates a commitment to corporate social responsibility and allows stakeholders to assess the organization's performance accurately. Together, these two steps provide a comprehensive view of both operational control and strategic accountability regarding social and environmental matters.

2) Determine whether a business contingency plan exists. A business contingency plan focuses on ensuring operational continuity for the organization itself, not primarily on evaluating its external social and environmental impact.

4) Determine whether a cost/benefit analysis was performed for all related projects. This is a project management and financial control. The audit's focus is on the management of social/environmental risk and impact, not the financial justification for every project.

1. The Institute of Internal Auditors (IIA). (2022). Global Perspectives and Insights: ESG and Internal Audit

The Auditor's Opportunity and Imperative. This guidance highlights internal audit's role in assessing the management of ESG-related risks (which includes incident response) and providing assurance over the quality and transparency of ESG reporting to stakeholders (see pages 8-10).

2. The Institute of Internal Auditors (IIA). (2010). Practice Guide: Auditing Corporate Social Responsibility. This guide outlines that an audit of CSR should include evaluating "the management of key CSR-related risks" (supporting incident management) and "the effectiveness of the systems and processes for collecting

compiling

and reporting CSR information" (supporting transparency in reporting).

3. Adams

C. A. (2002). Internal organisational factors influencing corporate social and ethical reporting: Beyond current theorising. Accounting

Auditing & Accountability Journal

15(2)

223-250. https://doi.org/10.1108/09513570210435836. This academic article emphasizes that internal audit functions are key drivers for enhancing the credibility and transparency of social and environmental reporting (supporting option 3).