Environmental Management Accounting Procedures and Principles

Environmental Management Accounting
Procedures and Principles
1
S
2 3
4
S
5 5
1 Material purchase
2 Materials consumed for
production
3 Total amount of production
4 Turnover
5 Non-product output (waste and
emissions)
S Stocks
Figure 21.
Differences between material purchase and use for production
It is essential that quantity units are defined or recalculated into the mass unit (kg) in the
material flow balance. Recording units of materials used (such as five boxes of paint) only
makes sense if production planning has a computer program in place that correlates
processed units to the resulting products. Actual monitoring and recalculation of estimated
consumption ratios provides helpful saving potentials. A weight balance in kilograms of
materials consumed and processed and the resulting production output and non-product
output including losses on stock is desired. It has proved helpful to determine the relevant
kilogram data at the same time that a material stock number is assigned to a specific material
within the storage system. In this manner, all relevant data such as price, quantity, conversion
factors and material numbers are recorded when the supplier invoice is recorded.
The material flow balance can be checked for consistency by comparing it, to the extent
possible, to material supply from stock-keeping, sales information and production lists. For
auxiliary and raw materials, packaging materials and final products, this can be done by
adjusting the existent computer software; once this is accomplished, relatively little work is
involved.
The procedure becomes more complicated, however, when the majority of operational
materials affecting the environment, like chemicals, paints and lacquers, cleaning materials,
workshop needs, etc., that affect emissions and proper disposal, cannot be extracted through
material numbers. In this case, the amounts used cannot be traced back. In many enterprises
there are a large number of such materials without material numbers that vanish in stock and
in overhead and whose values and volumes cannot be traced.
Distributing direct costs and general overhead: Many companies include only raw
materials and some packaging materials in direct costs, but not auxiliary and operational
materials, other packaging materials and the cost of disposal. Therefore, checking for
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