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Auditors check for the compliance with accounting standards once the environmental risk is identified.
Several regulation regarding environmental issues have been leased recent year,The FASB Emerging Issues Task Force (EITF) was formed in July 1984 to assist the FASB identify emerging issues affecting financial reporting and resolve problems in implementing authoritative pronouncements.
(1) SFAS No. 5 states under "Accounting for Contingencies" that a liability should be recognized in the financial statements if a loss is probable and the amount is estimable. If the loss amount is not estimable which is often the case, the contingency must be described in the footnotes to the financial statements...
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