Environmental Management Accounting Procedures and Principles

Environmental Management Accounting
Procedures and Principles
It is supplemented with the profit and loss accounts, which contain all expenses and earnings
incurred in one year. The annex and the management report give an explanation of figures, a
description of the assessment methods used and an outlook on the economic situation of the
company.
Every accounting transaction is entered into two accounts. The systematic structure of
accounts depends on the so-called chart of accounts, which functions as a requisite
classification and organization system for consistency of bookkeeping. The chart of accounts
is structured in the logic of the balance sheet and the profit and loss accounts. The structure of
the standard chart of accounts in several continental European countries is shown in figure 13.
However, there is no similar stipulation in other countries.
Class of
Content
Allocated to
accounts
0 Fixed sssets
1 Stocks
Balance sheet
2 Other current assets and deferrals
3 Provisions, accounts payable and deferrals
4 Operating earnings
5 Material expenditure and services received
6 Labour costs
Profit and loss accounts
7 Depreciation and other operating expenses
8 Financial earnings and expenses, taxes
9 Equity capital, reserves, closing accounts Balance sheet
Figure 14.
Structure of the chart of accounts
Due to the uniform chart of accounts, expenditure for energy, waste disposal or detergents is
posted by most bookkeepers into accounts with similar numbers. The standard chart of
accounts thus has some resemblance with the periodic table of elements.
Every business transaction is posted into two accounts, e.g., rental expenses paid via the
company’s bank or as a receivable from customers against the revenue account. The account
thus shows all entries posted in the course of a year. The list of balances shows the sum total
of all accounts and gives the best overview, due to the fact that it is not yet an aggregated
representation like the one in the financial statements. The environmental cost scheme in
chapter 4 is based on the determination of annual environmental expenditure and thus relies
mainly on data derived from the profit and loss accounts.
Below is a short representation of the structure of a financial statement from which a
combination with the environmentally relevant data may subsequently be derived. The balance
sheet is a cut-off date comparison of assets and liabilities as at 31 December from which the
annual profit is derived. The debit side of the balance sheet shows the purposes for which the
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