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Our written Compliance Assurance Program establishes types of assessments and audits, reporting results to management, corrective actions, tracking status of open items, confidentiality of information, record retention, and roles and responsibilities. Results of the audit are reported directly to the responsible executive management and at least annually to the Board of Directors.
Officers receive annual reports on audit activities and trends in audit findings. Additionally, facility managers and EHS professionals are provided with quarterly EHS Checkpoints on EHS audit exceptions for incorporation into their EHS self-assessment activities.
In order to assure every effort is made to maintain compliance in our complex and diverse operations, the following four-tier process is established by our Compliance Assurance Program management practice.
Tier I — Ongoing Self-Assessments
The Tier I process is relatively informal and involves routine checks of EHS programs to ensure the program elements and standards are being accomplished. Each business unit or facility creates and maintains a plan describing how their Tier I process is implemented. Typical program elements include:
- Reviews of mandatory training progress reports
- Reviews of monthly trend reports
- Field observations and walk-downs
- EHS data review
- Review of company/industry event reports/lesson learned, critiques and the use of the department’s performance indicators
Tier II — Focused Self-Assessments
Company EHS professionals conduct more formal and focused self-assessments annually in each business unit/department. Tier II assessments are structured, comprehensive reviews of program performance across the facility or department and/or the company. The Environmental Advisory Team and the Safety and Health Advisory team develop the Tier II assessment plan at the beginning of each year.
In 2007, APS facilities completed 70 Tier II self-assessments.
Tier III — Audit Program
Our EHS audit program is managed by a dedicated corporate EHS Audit Group, which reports organizationally to the PNW director of Audit Services, while maintaining lines of ongoing communication to the Vice President & Chief Sustainability Officer. The director of Audit Services reports directly to the Chairman and CEO of Pinnacle West and the Audit Committee of the PNW Board of Directors.
The corporate EHS Audit Group is responsible for conducting interviews with Executive Management, Management and EHS professionals as part of a risk-base scheduling process, in order to create a schedule of audits at the beginning of each year In addition, the EHS Audit Group facilitates the auditing process so that each audit is completed. Cross-functional teams are used to conduct detailed annual compliance audits of EHS programs where appropriate. These teams can include technical and operational experts from operations across the company. Our audits incorporate applicable environmental, health and safety regulatory requirements and internal EHS policies, procedures and management practices.
The Tier III process also includes a review of the Tier I plans and to verify that a Tier II corrective action process is in place according to the APS EHS Best Management Practice.
The EHS Audit Group conducted 21 formal Tier III audits at APS facilities in 2007.
Tier IV — Periodic Compliance Reviews
Periodically, a detailed review of the compliance status of EHS programs are conducted. These reviews are used to establish the baseline of compliance within the EHS programs and identify areas for future Tier II assessments. The reviews are completed either by an independent third party, by internal teams of EHS professionals or by a combination of internal and external professionals. Such reviews may also be done at the direction of the Pinnacle West Law Department, utilizing an independent third party or an internal team of EHS professionals.
In 2007, a Third Party Review was conducted of the EHS Compliance Audit Program. The purpose of this review was to determine PNW compliance audit program conformance with selected reference standards, audit procedures and program requirements, and to identify strength and opportunities for improvement. The review did not identify any gaps between the requirements of the external standards and the design of the PNW program.
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