Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles trace materials as completely and consistently as possible, in storage administration, cost centres and in production planning. Tracking matrix for material flow balances Amount in kg., KWh, l Purchase value Raw materials √ √ √ √ √ √ √ √ √ Auxiliary materials √ √ √ √ √ √ √ √ √ Packaging √ √ √ √ √ √ √ √ √ Operating materials √ √ √ √ √ √ √ Energy √ √ √ √ √ √ Water √ √ √ √ √ Product √ √ √ √ Waste √ √ √ √ √ Wastewater √ √ √ √ √ Air emissions √ √ √ √ Figure 20. Tracking matrix for material flow balances Account number Material stock number Stock-keeping Production planning system Direct costs Overhead Assigned to cost centre Other records/measurements Calculation/estimates In order to compile an I/O (input-output analysis) of material flows, it is best to start with the accounts in the list of balances of conventional bookkeeping. Only this list provides a complete overview (in monetary terms) of purchased raw materials, auxiliary and operating materials in a given month or year and what was paid for disposal, repairs, insurance, transportation etc. Each account of the profit and loss statement should be examined to determine whether any environmentally relevant movements or material flows may be recorded there. Personnel costs are not considered in a material flow balance. The focus is on account class 5, which records the quantities of materials used. A second significant factor is costs and earnings in relation to the use and disposal of waste and emissions. The data determination will suggest ways for how to structure the accounts in the list of balances better. Based on the I/O scheme in figure 18 and the accounts of the list of balances, a first breakdown for the I/O should be done and other company information sources identified. After the first breakdown of material flows in monetary terms, the respective kilogram values need to -44-
Environmental Management Accounting Procedures and Principles be identified. For this purpose, the roll-over scheme for material balances shown in figure 19 is helpful. The vertical axis shows a breakdown of the I/O balance sheet for the entire company, which should already have been expanded using the company list of balances. The horizontal axis serves to examine data consistency and the relationship between the material flow balance and existing information systems and documentation. The first round of mass balancing will discover inconsistencies and information gaps, which will enable improvements in the organization of internal data. It should be determined: • which of the substances and materials used in the production process are currently recorded in which accounts; • which accounts cost accounting treats as direct or overhead costs; • which quantities are used per year; • to what extent material stock numbers exist; • whether warehousing is inventory managed; • which materials are already contained in the production lists or formulas; and • in which way cost centres and cost carriers are being broken down. With regard to waste and emissions, additional records (e.g., waste prevention plan) will be necessary to assess material input and output. This roll-over scheme should also enable improvement of existing information systems and closing of information gaps. At the same time, it also serves to correlate data (through data processing). It is important to define quantity units as uniformly as possible and to give preference to kilograms. It does not make sense to determine the units of materials used without an information technology-supported production planning program and formula database because they cannot be correlated with the output side. For optimal data it is preferable to record from original invoices, and to enter not only the value but also the quantities received or used immediately when booking the invoice. Computerized record-keeping should enable tracking of quantities not only of material number assignments and warehouse accounting, but also in the recording of the original invoice in financial accounting. In this way, subsequent needs for information about quantities do not have to go back to the original invoices. With regard to a later evaluation, the ability to enter comments in the text column of the account form is also very important. Such an evaluation may suggest: -45-
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