Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles first balance sheet, available data from material accounting and the major elements on the list of balances will determine the scope. Some accounts would require a disproportionate amount of time to determine quantities, so at least an estimate of the purchasing price in order to create a comparison base for subsequent years should be recorded. The greatest potential for improvement is generally in the area of operating materials. Only very few companies record oils, lubricants, chemicals, paints, varnishes, diluting agents, glues, cleaning agents and other operating materials via material numbers and warehouse inventories. In most cases, there are no separate accounts for operating materials and they are not accounted for in production lists or production planning systems. Cost centres assignment can also be improved in many ways. Frequently, operating materials disappear into overhead and cannot be traced in detail. It is therefore advisable to record and classify, to the extent possible, through material numbers or separate accounts, at least those operating materials related to hazardous waste disposal or other waste flows. Large quantities of many of these substances “disappear” into accounts like “other operating materials”. It is very difficult to trace them by quantity later. Repair materials and spare parts, as well as maintenance, are often recorded under entirely different categories. Since the repair and maintenance shop as well as the laboratory are particularly critical parts of the company with regards to environmentally relevant substances and the production of hazardous waste, it would be desirable to ensure that the materials used are disposed of in an appropriate manner and that, without exception, they are recorded in the inventory. This materials use can be kept on file through the special cost centres for shop and lab. A similar approach applies to cleaning agents, which not all firms record in separate accounts. Ecological relevance and quantities will determine the degree of detail of those records. With regard to administrative materials and food services, purchasing values should be used for monitoring, since the composition and amounts of waste are determined by factors independent of production. Detailed quantity determination is not a priority. However, as a result of these factors, types of emission independent of production (such as organic waste, toner cartridges) add to waste production. 5.3.5. Merchandise Many companies buy products for trade without further processing, called merchandise. Often, product parts produced externally are just added to the final product without processing. The distinction to raw and auxiliary materials is whether incorporation into the product without significant process engineering and changes affecting emissions is possible. For a consistent analysis of material flows by weight, information on weight is needed, unless merchandise can be separated as well from product output, so that the material flow balance can be limited to the company’s own production. -48-
Environmental Management Accounting Procedures and Principles 5.3.6. Energy Energy purchases can easily be traced through the respective invoices. For company energy production input values are usually available. Energy consumption is relevant to all businesses and is important for the calculation of various air emissions. Energy input should be quoted in kWh. Conversion factors can be found in the annex. The energy purchased should be adjusted by adding internal production and subtracting energy sold to others (e.g., electricity, steam). 5.3.7. Water Water consumption comprises the sum of all fresh water purchased or obtained from surface and groundwater sources. Water used for cooling purposes should be recorded separately. Water input can be obtained from water supply invoices and must be estimated for supplies from own wells and surface water. 5.3.8. Product The quantity of produced products can usually be determined from production statistics and final stock records; however, sometimes it has to be calculated from turnover. Be aware that turnover is only a part of total production. Once a product is manufactured, there will be losses during warehousing and the company will consume a certain amount itself. All these losses occurring between production and turnover must be assigned to non-product output. In some sectors, kilogram values are not easily available. In such cases, assessment of production, scrap and rejects cannot be done through production planning programmes. At least for pilot project time-frames, a complete listing and recording of the important quantity flows is essential. By-products are all those products produced due to process engineering requirements during the manufacture of the primary product. All products whose sale results in earnings are already entered into the earnings accounts. However, a large portion of waste and emissions are not regarded as separate items in company accounting. The borderline between products, by-products and waste is not well defined and depends partially on how well the company separates by-products and waste, which in turn effects reuse and recycling options. For the roll-over between inputs and outputs it is assumed that all inputs that do not leave the company as product will have to be disposed of as waste or emissions. Output of product packaging is also part of the product subgroup and should be examined for its correlation with the packaging material input. -49-
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