This document is an assignment submitted by a group of students at Green University of Bangladesh on the topic of environmental management accounting. It contains an introduction outlining the objectives and research methodology. The main body defines environmental management accounting, discusses why companies should care about the environment and the uses and benefits of EMA. It also outlines the key approaches and techniques of environmental management accounting frameworks, including input/output analysis, process flow charts, and activity-based costing. The conclusion states that clearly defining environmental costs is important for increased use of EMA.
This is a theoretical presentation describes the history of audit and assurance, definition, process of auditing, objectives, responsibilities, expectation gap, audit evidence and how to report the audit paper. This is mainly the vast knowledge about how an auditor performs audit and how the reporting of audit is done.
This is a theoretical presentation describes the history of audit and assurance, definition, process of auditing, objectives, responsibilities, expectation gap, audit evidence and how to report the audit paper. This is mainly the vast knowledge about how an auditor performs audit and how the reporting of audit is done.
The most comprehensive definition of internal audit is given by the IIA, USA. It is,
"Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes."
The purpose of the presentation is to provide clarification for a better understanding of what internal audit definition, objectives, functions, stages and reporting are all about? What difference does it make in the presence of an external audit? How different is its scope from that of the external audit? How internal audit standards contribute to better performance of internal audit work and its reporting to the Board or Audit Committee?
COSO's Internal Control - Integrated Framework.
Includes:
Objectives;
Components;
Principles relating to the components and
Point of Focus assisting users in determining whether the principles are present and functioning
This presentation is on Environment Scanning In Strategic management
It includes -
Introduction
Need for Environment Scanning
Appraisal of external environment
Dynamics of internal environment
Porter’s Five forces model
BCG Matrix
Porter's Generic Strategies
Value Chain analysis
Types of Adaptive strategies
Mc kinsey 7s model - strategic implementation- Manu Melwin Joymanumelwin
• McKinsey 7s model is a tool that analyzes firm’s organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow organization to achieve its objectives.
Value chain analysis helps only in identifying the strengths and weaknesses of each elements of firm’s value chain. SWOT can not be used to identify external opportunities and threats. It is a situation analysis of the organization. It is a groundwork for matching the strategy both to the external market and internal resources. It is away to analyze a firm’s internal and external situations.
The most comprehensive definition of internal audit is given by the IIA, USA. It is,
"Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes."
The purpose of the presentation is to provide clarification for a better understanding of what internal audit definition, objectives, functions, stages and reporting are all about? What difference does it make in the presence of an external audit? How different is its scope from that of the external audit? How internal audit standards contribute to better performance of internal audit work and its reporting to the Board or Audit Committee?
COSO's Internal Control - Integrated Framework.
Includes:
Objectives;
Components;
Principles relating to the components and
Point of Focus assisting users in determining whether the principles are present and functioning
This presentation is on Environment Scanning In Strategic management
It includes -
Introduction
Need for Environment Scanning
Appraisal of external environment
Dynamics of internal environment
Porter’s Five forces model
BCG Matrix
Porter's Generic Strategies
Value Chain analysis
Types of Adaptive strategies
Mc kinsey 7s model - strategic implementation- Manu Melwin Joymanumelwin
• McKinsey 7s model is a tool that analyzes firm’s organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow organization to achieve its objectives.
Value chain analysis helps only in identifying the strengths and weaknesses of each elements of firm’s value chain. SWOT can not be used to identify external opportunities and threats. It is a situation analysis of the organization. It is a groundwork for matching the strategy both to the external market and internal resources. It is away to analyze a firm’s internal and external situations.
Managerial Accounting Group Project - Written ReportChristie Stevens
*In my Managerial Accounting class in Fall 2014 groups of four to nine people were constructed at random and given the same project, just with different numbers.
Overview of the group project: My group consisting of three students and myself were given 2 alternatives in which the company we are evaluating could switch to. After thoroughly examining both options along with the original situation we wrote up a formal report stating my group's choice for either alternative 1 or 2 and our recommendations. (I personally placed the work together to form the final copy since Word, PowerPoint and Excel come easily to me.)
Managerial Accounting Group Project - PresentationChristie Stevens
Live presentation was 15 minutes in length and all four of our group members participated. The presentation mirrored our written report and was graded on the following criteria:
• Clearly identified and well-researched demographics.
• Knowledge of the project and information presented.
• Ability to community financial information to a non-financial user.
• Group preparedness (order and flow).
• Professionalism in terms of appearance and style of presentation.
• Quality of visual aids (PowerPoint slides, charts, props, etc.)
• Eye contact, voice projection, time management.
• Responses to panel’s questions.
This report is based on overall Analysis of two American Airlines i.e American Airlines Group Inc. and Delta Airlines, Inc. The team has evaluated and compared the Income Statement, Balance Sheet using Vertical Analysis, Horizontal Analysis and Ratio Analysis (Liquidity Ratio, Profitability Ratio, Solvency Ratio) and landed on a conclusion who should the investor should bet on for earning maximum profit
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Bac STMG – présentation programme de spécialité Marketing (Mercatique) sur w...Super Professeur
Bac STMG – Présentation du programme de la spécialité Marketing (mercatique) en Terminale STMG sur www.SuperProfesseur.com.
Thème I. Mercatique et consommateurs
Thème II. Mercatique et marchés
Thème III. Mercatique et société
http://www.superprofesseur.com/90.html
Bonne préparation et réussite !
L’équipe de www.SuperProfesseur.com
Ronald Tintin, Founder
Préparer et réussir l'épreuve de la spécialité BAC STMG - Marketing (mercatique) en profitant des supports sur le site www.SuperProfesseur.com.et l’application mobile de Super Professeur :aideetreussite.superprofesseur.com.
This case was presented in Fall 2009 and revolves around the decentralization of BP America after BP merged with Standard Oil in 1987. In this presentation, the changing role of staff departments is examined in this newly decentralized organization.
economic impacts.Current costs related to current operatio.docxSALU18
economic impacts.
Current costs related to current operations
How to account for current social, environmental, and economic costs related to current
operations is less controversial; these costs should be reflected in operating activities, processes,
and products. However, the difficulty for many organizations has been to separately identify and
account for those costs as social, environmental, and economic costs. In some companies, social,
environmental, and economic costs related to production are accounted for as manufacturing
overhead costs and are arbitrarily allocated to activities, processes, and products using a cost
driver that does not reflect the relationship between the cost incurred and the activity, process, or
product. Still other social, environmental, and economic costs are accounted for as administrative
overhead costs, and are never allocated to activities, processes, or products. This makes it
difficult to understand the social, environmental, and economic cost impacts of operational
decisions, which again impedes effective decision-making. Tools such as life-cycle costing,
activity-based costing, and full social and environmental cost accounting can help managers to
better capture and assign these costs.
Future costs related to current operations
It can be difficult to accurately predict the future social, environmental, and economic benefits,
costs, and liabilities related to past or even to current production. Estimating future impacts
depends on many factors that may be unclear today, including changing social and legal structures.
It is unlikely that Philip Morris understood, 40 years ago, that changes in the social and legal
climate in the US would result in extensive product liability costs for cigarettes. Recognizing
potential future liabilities may cause a company to modify its strategy, product or production
processes, or its accounting and management decisions.
The difficulty of predicting changes that may occur in the social and legal climate, along with
the inability to reasonably estimate and measure the economic impact of those changes, is one
reason why many future costs are not accounted for in the formal accounting system. However,
there are some future costs that can be reasonably understood and should feature in the decision-
making process, such as post-consumer use and recycling costs, disposal costs, facility
decommissioning costs, natural resource restoration costs, and risk and legal liability costs. Other
costs that are less predictable, such as those related to changing social and legal structures or
reputational costs and the changing costs of technology, also need to be factored into the decision-
making process.
Many managers find that practices such as life-cycle analysis and full social and environmental
cost accounting are useful in helping them to identify and evaluate the longer-term impacts of
current decisions. Other approaches identified in this book provide ways to measure and in ...
meeting the needs but protecting the environment, Environmental education and training, Environmental degradation and pollution, Resource management, Environmental impact assessment, Environmental Management System, Elements of an EMS, ISO 14001 standard
Environmental Management Reporting and Corporate Performance Evidence from Na...ijtsrd
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Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
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June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
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Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
1. Green University of Bangladesh (GUB)
Assignment
On
Managerial Accounting – (ACC – 305)
Topic: Framework of Environmental Management Accounting: An Overview.
Semester: Summer – 2013
Prepared by: “YOUTH BOOMERS”
Name
ID.
Md. Moazzem Hossain
110106034
Md. Anqur Chowdhury
110106027
Md. Shahidul Islam
110106050
Ms. Nowrin Chowdhury
Signature
110106058
Prepared for:
Md. Kamruzzaman
Lecturer in Accounting,
Department of Business Administration (DBA),
Green University of Bangladesh (GUB),
Dhaka, Bangladesh
Date: 22nd June 2013
Letter of Transmittal
1
2. June 22, 2013
Md. Kamruzzaman
Lecturer in Accounting
Department of Business Administration (DBA)
Green University of Bangladesh (GUB)
Subject: Submission of an assignment.
Dear Sir
We gladly present to you our assignment titled “Framework of Environmental Management
Accounting: An Overview.” We have made the assignment as you give us to do by help of your
article and internet.
We believe the knowledge and experience we gathered during the assignment will be extremely
helpful in our future professional life. We will be grateful to you if you accept the assignment.
Your support in this regard will be highly appreciated.
Thanking you.
___________________
Md. Moazzem Hossain
ID. 110106034
___________________
Md. Shahidul Islam
ID. 110106050
___________________
Md. Anqur Chowdhury
ID. 110106027
___________________
Ms. Nowrin Chowdhury
ID. 110106058
2
3. Table of contents
Serial No.
Topic
1)
INTRODUCTION
2)
• Objectives of the Study
• Research Methodology
CONCEPT OF ENVIRONMENTAL
Page No.
4
MANAGEMENT
5, 6 & 7
ACCOUNTING (EMA)
3)
• Why Care about Environmental Issues?
• Uses and Benefits of EMA
APPROACHES OF ENVIRONMENTAL MANAGEMENT
8
4)
ACCOUNTING FRAMEWORK
ENVIRONMENTAL MANAGEMENT
8
5)
FRAMEWORK
TECHNIQUES OF ENVIRONMENTAL MANAGEMENT
ACCOUNTING
9, 10 & 11
ACCOUNTING
6)
• Input/output analysis
• Process flow charts
• Environmental Activity-Based Accounting
LIFE CYCLE COSTING
•
7)
CONCLUSION
12
Environmental Management as part of Total
Quality Management
13
3
4. 1. INTRODUCTION
The greatest concern these days have been on the effect of environment that these companies
are putting to earn higher revenues and increasing their bottom line. Thus, government, nongovernmental organizations as well as the general public are increasingly putting pressure on
the companies to become responsible towards the environment and invest substantial amount
of money and effort to protect the environment.
•
Objectives of the Study
The central theme of this paper is to illustrate the benefits of environmental management
accounting system and find out how businesses can implement this system to garner
better market value and position. Some of the major benefits of the environmental
management accounting include aiding companies to take responsible decisions relating
to issues such as allocating costs, capital budgeting or designing processes.
Furthermore, companies need to find out the environmental costs from the account sheets
which are often hidden under the overhead accounts, direct labor accounts or direct
material accounts. It has been found that in most cases, environmental costs are hidden in
different parts of the management accounting system.
•
Research Methodology
I propose to use qualitative research methodology for undertaking this thesis, as I believe
that qualitative research is significant for analyzing the concept of environmental
management accounting and how handling of environmental issues inappropriately can
damage the reputation of a business in the market. Furthermore, it is also imperative to
conduct an in-depth secondary research to understand the surrounding world.
4
5. 2. CONCEPT OF ENVIRONMENTAL MANAGEMENT ACCOUNTING (EMA)
According to IFAC’s Statement Management Accounting Concepts, EMA is “the
management of environmental and economic performance through the development and
implementation of appropriate environment-related accounting systems and practices. While
this may include reporting and auditing in some companies, environmental management
accounting typically involves life-cycle costing, full-cost accounting, benefits assessment,
and strategic planning for environmental management.”
A complementary definition is given by the United Nations Expert Working Group on EMA,
which more distinctively highlights both the physical and monetary sides of EMA. This
definition was developed by international consensus of the group members, representing 30+
nations. According to the UN group: EMA is broadly defined to be the identification,
collection, analysis and use of two types of information for internal decision making:
Physical information on the use, flows and destinies of energy, water and materials
(including wastes) and
Monetary information on environment-related costs, earnings and savings.
It makes sense that different countries and organizations would adapt general EMA concepts,
language and practices to suit their own goals. A certain amount of experimentation and
variation is also to be expected because EMA is still a relatively young and emerging field in
comparison to conventional management accounting. The great number of existing guidance
documents has, however, contributed to confusion on the exact definition, benefits and
applications of EMA and on available EMA approaches and tools. This has been exacerbated
by the fact that EMA information is broadly useful for so many different types of
management decisions and activities, as well as for external reporting. With all this in mind,
the Board of Directors of the International Federation of Accountants (IFAC) decided to
commission this guidance document on EMA to bring together some of the best existing
information on EMA and to update it.
5
6. •
Why Care about Environmental Issues?
Why should organizations (or accountants) care about environmental issues? First, many
internal and external stakeholders are showing increasing interest in the environmental
performance of organizations, particularly private sector companies.6 An example of
internal stakeholders might be employees affected by pollution in the work environment.
External stakeholders include communities affected by local pollution, environmental
activist groups, government regulators, shareholders, investors, customers, suppliers and
others. The types and intensities of environmental pressures can vary widely from
country to country and among different business sectors. It is safe to say, however, that
environmental pressure is forcing many organizations to look for new, creative and costefficient ways to manage and minimize environmental impacts. Prominent examples of
environmental pressure relevant at the international level include:
Regulatory control pressures, for example, the RoHS Directive, a European Union
(EU) regulation that restricts the use of certain hazardous substances in electrical and
electronic equipment sold.
Environmental
tax
pressures,
for
example,
various
government-imposed
environments related taxes such as carbon taxes, energy use taxes, landfill fees and
other emissions fees.
6
7. •
Uses and Benefits of EMA
The specific uses and benefits of EMA are numerous, but can be organized into three
broad categories, as illustrated below. The emphasis on Eco-efficiency and Strategic
Position in two of the categories parallel the overall evolution of management accounting
to include not only information provision and management planning and control, but also
a focus on effective resource use and value creation. The strategic focus of EMA can,
however, vary widely among different organizations.
It should be noted that there are no strict dividing lines among these three categories. For
example, a manufacturing firm that reduces water use and, thus, wastewater generation
via eco-efficiency projects might also reduce the load to, and costs of, an in-house
wastewater treatment plant installed primarily for compliance purposes costs that may
best be handled by scenario analysis. This paper provides examples of the use of EMA
perspectives for appraising investment projects related to eco-efficiency improvements in
a manufacturing process, new product development and reduction of long-term
environmental liability.
EMA approaches and information can be used not only to help assess particular
investment projects, but also to help assess the environmental and related cost
implications of particular types of materials and products. The assessment of a particular
product line is often referred to as Life-cycle Assessment (LCA) or Life-cycle Costing
(LCC). Aggregation of EMA-type (and other) information from an organization’s
suppliers and customers can also be used to contribute to better Supply Chain
Environmental Management (SCEM).
7
8. 3. APPROACHES
OF
ENVIRONMENTAL
MANAGEMENT
ACCOUNTING
FRAMEWORK
This section outlines the two mainstream environmental management accounting
frameworks:
EMA limited to internal environmental accounting based on monetary measures
EMA as a general term for internal environmental accounting
4.
ENVIRONMENTAL MANAGEMENT ACCOUNTING FRAMEWORK
EMA is the generation and analysis of both financial and non-financial information in order
to support internal environmental management processes. The major areas for the application
for EMA are:
⇒ Product pricing
⇒ Budgeting
⇒ Investment appraisal
⇒ Calculating costs and
⇒ Savings of environmental projects, or setting quantified performance targets.
EMA is as wide-ranging in its scope, techniques and focus as normal management
accounting. Burritt et al (2001) stated: 'there is still no precision in the terminology
associated with EMA'.. Burritt et al developed a multi-dimensional framework of EMA.
Their framework considers the distinctions between five dimensions:
Internal versus external.
Physical versus monetary classifications
Past and future timeframes
Short and long terms and
8
9. ad hoc versus routine information gathering in the proposed framework for the
application of EMA
5.
TECHNIQUES
OF
ENVIRONMENTAL
MANAGEMENT
ACCOUNTING
The main difficulty associated with environmental costs is their identification and allocation.
According to UNDSD (2003), conventional accounting systems tend to attribute many of the
environmental costs to general overhead accounts with the result that they are 'hidden' from
management. Thus, management is often unaware of the extent of environmental costs and
cannot identify opportunities for cost savings. EMA attempts to make all relevant, significant
costs visible so that they can be considered when making business decisions (Jasch, 2003).
UNDSD (2003) identified management accounting techniques which are useful for the
identification and allocation of environmental costs as: input/output analysis, flow cost
accounting, activity-based costing (ABC), and lifecycle costing.
•
Input/output analysis
The input/output analysis is a technique that can provide useful environmental
information, sometimes referred to as mass balance.
This technique records material flows with the idea that 'what comes in must go out - or
be stored' (Jasch, 2003). As shown in Figure-5, the purchased input is regarded as 100%
and is balanced against the outputs - which are the produced, sold and stored goods and
the residual (regarded as waste). Materials are measured in physical units and include
energy and water. At the end of the process, the material flows can be expressed in
monetary units. Process flow charts can help to trace inputs and outputs, in particular
waste.
Flow management involves not only material flows, but also the organizational structure.
Classic material flows are recorded as well as material losses incurred at various stages of
production. Flow cost accounting makes material flows transparent by using various data,
which are quantities (physical data), costs (monetary data) and values (quantities x costs).
9
10. •
Process flow charts
The next step after environmental cost assessment and material flow balances on a
corporate level is to allocate the data from the system boundary of the company fence to
internal processes. Process flow charts, which trace the inputs and outputs of material
flows (solid, liquid and volatile) on a technical process level, give insights into companyspecific processes and allow the determination of losses, leakages and waste streams at
the originating source. This requires a detailed examination of individual steps in
production - again in the form of an input output analysis, but sometimes linked to
technical Sankey diagrams. The process flow charts combine technical information with
cost-accounting data. Experience has shown that such a consistency check provides great
optimization potentials, and has thus become a major tool in environmental accounting.
Therefore it is desirable for the technical and financial bookkeeping to be conducted in a
compatible way.
•
Environmental Activity-Based Accounting
Activity-based costing (ABC) '...represents a method of managerial cost accounting that
allocates all internal costs to the cost centers and cost drivers on the basis of the activities
that caused the costs,' (UNDSD, 2003). ABC applied to environmental costs
distinguishes between environment-related costs and environment-driven costs. The
former are attributed to joint environmental cost centers, for example incinerators or
sewage plants.Schaltegger and Muller (1998) stated 'the choice of an adequate allocation
key is crucial for obtaining correct information'. The four main allocation keys are:
Θ Volume of emissions or waste
Θ Toxicity of emission and waste treated
Θ Environmental impact added (volume x input per unit of volume) volume of the
emissions treated and
10
11. Θ The relative costs of treating different kinds of emissions.
Internal environmental costs are often treated as overhead costs and divided equally
between all cost drivers. A common example is that the costs of treating toxic waste of a
product are included in the general overhead costs, and the overhead is allocated in equal
parts to all products. However, “dirty” products cause more emissions and require more
clean-up facilities than “clean” products. Equal allocation of those costs therefore
subsidizes environmentally more harmful products. The clean products, on the other
hand, are “penalized” by this allocation rule as they bear costs that they did not cause.
Many terms are used to describe this correct allocation procedure, such as
environmentally enlightened cost accounting, full cost accounting or activity-based
costing (ABC). ABC, activity-based costing, “is a product costing system, ... that
allocates costs typically allocated to overhead in proportion to the activities associated
with a product or product family” . ABC represents a method of managerial cost
accounting that allocates all internal costs to the cost centers and cost drivers on the basis
of the activities that caused the costs. The activity based costs of each product are
calculated by adding the appropriate share of joint fixed and the joint variable costs to the
direct costs of production. The strength of ABC is that it enhances the understanding of
the business processes associated with each product. It reveals where value is added and
where value is destroyed.
The environmental impact is calculated by multiplying the volume of waste by the
toxicity of the emissions. However, this allocation key, too, is often inappropriate, as the
costs of treatment do not always relate to the environmental impact added. Thus the
choice of allocation key must be adapted to the specific situation, and the costs caused by
the different kinds of waste and emissions treated should be assessed directly.
11
12. 6.
LIFE CYCLE COSTING
•
Environmental Management as part of Total Quality Management
The pursuit of environmental quality management via the development of an
Environmental Management System (EMS) can only be achieved if 'environmental audit'
is a concomitant feature of such a system. It is arguable that the two are inextricably
linked insofar as good environmental management is increasingly recognized as an
essential component of TQM. In common with TQM, the focus is upon 'continuous
improvement' and the pursuit of excellence. Such organizations pursue objectives that
may include zero complaints, zero spills, zero pollution, zero waste and zero accidents.
Information systems need to be able to support such environmental objectives via the
provision of feedback - on the success or otherwise - of the organizational efforts in
achieving such objectives.
This approach to environmental quality management requires the development of
environmental performance measures and indicators that will enable a comprehensive
review of environmental performance to be undertaken. Many - if not all - total quality
management accounting techniques can be modified and effectively adopted to help
manage environmental issues.
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13. 7.
CONCLUSION
It can be said that most companies do not know about the extent of their environmental costs
and tend to underestimate them. This leads to distorted calculations of improvement options.
For example, Amoco Yorktown Refinery estimated their environmental costs at 3% of noncrude operational costs. Actually they comprised 22% of non-crude operating costs as the
case study of Ditz et al (1998) revealed. However, the study also discovered a large
proportion of environmental costs were caused by other processes that had not been
identified by Amoco.
EMA can solve these problems. The above-mentioned accounting techniques are useful for
EMA to identify and allocate environmental costs. In addition, there are alternative
techniques to estimate environmental costs such as the 'environmental cost decision tree' as
described by Rimer (2000). The most significant problem of EMA lies in the absence of a
clear definition of environmental costs. This means it is likely that organizations are not
monitoring and reporting such costs. The increase in environmental costs is likely to
continue, which will result in the increased information needs of managers and provide the
stimulus for the agreement of a clear definition. If a generally applicable meaning of
environmental costs is established, the use of EMA will probably increase with positive
effects for both organizations and the environment in which they operate. In the future it will
not only be large companies which can afford to implement EMA but also small and
medium-sized enterprises which have fewer available financial resources.
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