Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles Input Output Raw materialextraction Product- Life cycle Transport Raw, auxiliary operational materials Energy Water Production input-output balance at corporate level Process flow charts Product balances Products Waste Emissions Site Assessment Transport Trade Transport Transport Use by consumer Recycling Disposal Figure 26. Product life cycle assessment -66-
Environmental Management Accounting Procedures and Principles 6. ONE STEP FURTHER DOWN – PROCESS FLOW CHARTS AND COST ACCOUNTING 6.1. Cost accounting basics There is a continuous exchange of data and information evaluation between financial accounting, cost accounting, budgeting and statistics. Aside from this information and data exchange, cost accounting has the following main objectives: • Identification of price floors and ceilings; • Calculation of planned and past production costs; • Evaluation of internal services, finished and unfinished products for sales or tax purposes; • Improving economic efficiency; • Providing basic data for company policy and decision-making; • Short-term performance evaluation; • Operating comparisons. Cost accounting is clearly distinguished from financial accounting by its calculating procedures. Its primary objectives are realistic cost assessment, cost projections and planning, and controlling and monitoring of company processes. When trying to assess environmental costs, one will find that not every company does cost accounting. More often, especially small and medium-ized companies (SMEs), work with data from the profit and loss account. It is up to management to decide whether the company should use cost accounting, and if so, which system it should use and how it should be designed. In contrast to financial accounting, this decision is not influenced by tax and commercial law. Important terms: • Fixed Costs are costs independent of employment and production volume, such as rent, interest on bank loans, etc. • Variable Costs are directly related to production volume, e.g., raw materials and production labour hours. • Individual Costs are directly attributed to the corresponding cost centres (process steps) and cost carriers (products). They include at a minimum raw materials and production wages. • Overhead Costs are costs that cannot be directly attributed (true overhead) or costs that are not directly attributed for reasons of economic efficiency (untrue overhead), e.g., -67-
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Environmental Management Accounting Procedures and Principles

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