Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles products and work in process. The monthly earnings statement thus leads to a more explicit operating result than the cost-categories-oriented format in which the changes in inventory are not recorded during the year although it is more sophisticated and time-consuming in terms of the cost-accounting system used. The cost-of-sales format is structured differently and distinguishes between production costs of sales, and chronologically separates distribution costs, administrative costs and other operating expenses. The profit for the year is identical in both formats. In the following figure, we examined which items of the profit-and-loss account must be analyzed for the roll-over of environmental costs and under which items of the environmental cost scheme they are allocated. The cost-categories-oriented format is better suited for this purpose as the list of balances of the bookkeeping department contains all the necessary information. In the cost-of-sales format, an analysis of both the accounts of the bookkeeping department and of detailed cost evaluations must be performed in order to determine the environmental costs. -38- Cost-categoriesoriented format Turnover/net sales - Change in inventory - Work performed and capitalized Other operating income To do Determine actual quantities produced, sales figures, loss in storage, spoilage, returns etc. Establish actual product output and loss of products between production and sales The quantities of non-product output between finished goods storage and sales department are posted at their material values (3), pro-rata production costs (4) and disposal costs (1.4) May be relevant for production costs of in-house facilities for the removal, treatment and prevention of wastes and emissions Revenue from subsidies, grants and sales of non-product output - Materials Determine share of non-product output of raw, auxiliary and operating materials and assess at material purchase costs; Energy and water supply costs should also be shown in this category, but are often posted under “other operating expenditure” - Services (other external costs) External services for maintenance of treatment facilities and cleaner technologies, general environment research and consultancy services, auditors, seminars, external information and communication etc. are scattered across a variety of accounts Shown under item 1.4, 3, 4 1.1, seldom 2.3 5 3 1.3, 2.1
Environmental Management Accounting Procedures and Principles -39- Cost-categoriesoriented format - Personnel expenses To do Determine work hours of staff in emission treatment facilities, cleaner technologies, general environmental management activities and labour pro rata cost for non-product output in the various phases of processing. Assessment is not derived from expense accounts of bookkeeping unit but according to work hour rates as established by the internal calculation procedures. - Depreciation Define waste and emission treatment equipment. Search cleaner technologies and determine if they have been significantly more expensive in relation to state of the art; Determine related pro rata production costs and pro rata administrative costs for non-product output - Other operating expenses Transport expenditure for wastes, disposal and collection fees, licenses, printing costs for environmental reporting, registration fees, eco-sponsoring, penalties, insurance premiums, provisions etc. are scattered across a variety of accounts. The checklists included in the annex are designed to assist the user in tracing and assessing costs; Also purchases of power, fuel and water can sometimes be found in this category, even though they belong under “materials” - Other taxes Environmental taxes, disposal and connection fees should be posted under this item = Operating profit, EBIT earnings before interest and tax +/- Financing Not relevant; if environmental costs are assessed instead of expenditure, pro rata financing cost for depreciation of fixed assets may be calculated = Profit (loss) on ordinary activities (after financial items and before tax) +/- Extraordinary results - Taxes on income and earnings = Net earnings /Profit after tax Figure 16. Not relevant, except in the case of breakdowns and accidents and sudden discoveries of contaminated sites Not relevant Cost-categories-oriented format Shown under item 1.3, 2.2, 4 1.1, 2.3, 4 1.4, 1.5, 1.6, 1.7, 2.3, 2.4 1.4 1.4, 1.5
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Environmental Management Accounting Procedures and Principles

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