Independent audit

Independent auditing is a compulsory component of a Voluntary Partnership Agreement (VPA) timber legality assurance system. The purpose of independent auditing is to review and report on the timber legality assurance system and check that components of the system function as described in the VPA. Independent auditing, therefore, contributes to the credibility of a VPA. Auditors reports may identify ways for a VPA's joint implementation committee to improve a timber legality assurance system.

The government of a VPA partner country appoints an independent auditor in consultation with the EU, through a process described in a VPA annex on independent auditing. The annex makes it clear that the auditor must be independent of the organisations and individuals involved in the management of the timber legality assurance system. All signed VPAs require audits to be undertaken by a professional audit organisation working to international (ISO) standards.

VPA annexes on independent auditing define the terms of reference for an independent auditor, including when and how an auditor will conduct the work and produce reports.

Role of the auditor

The role of an auditor varies between countries. It can include:

• Assessing all aspects of a timber legality assurance system to check that the system is doing what it sets out to do according to the VPA
• Identifying possible deficiencies in a timber legality assurance system
• Assessing the effectiveness of corrective measures
• Evaluating that data management is correctly serving FLEGT licensing decisions
• Evaluating EU procedures for releasing licensed timber into the EU market
• Assessing how verification procedures are being followed to ensure compliance with the legality definition requirements
• Assessing the performance of regulatory agencies involved in the verification process
• Assessing how relevant authorities address reporting infractions
• Assessing the functionality of the complaints management mechanism, covering stakeholder grievances about implementation of the legality assurance system and/or independent audit activities
• Evaluating the system in place to track timber in transit
• Cross-checking information in the VPA partner country about FLEGT licences sent to the EU against information held in the EU about FLEGT licences received

Roles for stakeholders

Independent auditors will seek information from private sector and civil society stakeholders affected by the timber legality assurance system. Some VPAs explicitly state that civil society organisations can and should proactively provide information to independent auditors. Some VPAs have also created a role for civil society groups as independent observers. See box ‘Independent auditing versus independent observation'.

Frequency of audits and reports

The EU and a VPA partner country agree on the frequency of audits during negotiations. To date, most VPAs state that audits will take place at least every six months when a partner country is preparing to issue FLEGT licences. After FLEGT licensing begins, audits will usually take place annually. Auditors may also conduct spot checks. Auditors submit reports to the joint implementation committee set up by the EU and the VPA partner country. Summaries of reports are made public.

See the section of VPA Unpacked on the VPA annex on independent auditing.

Note on names

Some VPAs call independent auditing by other names. Ghana calls independent auditing ‘independent monitoring', while in Indonesia, it is called ‘periodic evaluation'. Despite these different names, the principles are the same.