Briefly outline the reasons why social and environmental issues are of interest to an external auditor.
Harness Co is a wind-farm situated on an island in the North Sea. Harness was set up a number of years ago by an energy fanatic who was also a millionaire. It is predominately owned by the millionaire Brewster Billings, who continues to loan it money, despite a history of loss-making.
Harness owns and operates 15 wind turbines which are situated on the island. The windmills are connected to a generator, which converts the wind power to electricity. The electricity is mainly supplied to Brewster's mansion on the east coast of Scotland, but some is sold to various power supply companies. One of these companies, Scot Power, has a small stake in Harness Co.
The company has suffered some problems this year. Firstly, the erosion, which has badly affected the island during the course of the company's occupation, has finally struck some of the windmills. One fell into the sea at the end of the year, and the foundations of another three appear to have been affected. The generator lies within 10 metres of the cliff.
During the year, Harness invested in a stake in an oil pipeline which runs near the island. The co- owners of the pipeline have just advised Brewster, as a director of Harness, that they have discovered a substantial crack in the pipeline.
Required
Comment on the implications of the above on the audit of Harness Ltd for the year end June 20X8.