Environmental Management Accounting Procedures and Principles

More documents

Recommendations

Info

Environmental Management Accounting Procedures and Principles 2. Seen from the ecological perspective, flow cost accounting systematically focuses cost cutting on attempts to reduce the quantities of materials and energy used, thus leading to positive ecological effects (avoidance of waste, effluent and emissions) and to environmental benefits. Flow cost accounting is thus an important instrument in implementing an integrated environmental management system and in raising ecological efficiency. Indeed, the environment will benefit from the ecological effects of flow cost accounting - even in cases where this may not be the company’s conscious intention. Production-integrated measures to relieve stress on the environment and to cut costs can only be systematically implemented if the material and energy flows – in terms of quantities and the associated values and costs - are transparent end-to-end. 6.4.2. The basic idea of flow cost accounting The instrument of flow cost accounting 12 shifts a company’s in-house material flows into the centre of cost analysis and attempts to make these flows transparent end-to-end in terms of their effects on costs. This transparency can contribute to clarifying the complex relationships of effects operating within the material flow system and thus create a comprehensive database for evaluating measures for improvement and realizing saving potentials. Flow cost accounting may reveal that a measure designed to raise efficiency in a production system leads not only to lower costs in material consumption but also to lower costs in materials handling and waste disposal. Changing to a new colorant for example may lead not only to different absorption levels but also to reduced costs for water treatment. In order to assess the cost effects of planned measures comprehensively and reveal potential savings, the effect of each measure on the whole material flow system must be calculated and evaluated. Previously the evaluation of measures has often been inadequate. This leads, firstly, to environmentally damaging and uneconomical measures being implemented and, secondly, to numerous environmentally positive and cost-cutting measures being dismissed or overlooked because, with previous conventional assessments, the benefits are underestimated. In flow cost accounting, in order to attain this transparency, the values and costs of the material flows are divided up into the following categories: • Material, • System, and • Delivery and disposal. 12 See also Wagner and Strobel (1999), Hessisches Ministerium für Wirtschaft (1999), Strobel (2000). -82-
Environmental Management Accounting Procedures and Principles Company Intermediate products store Quality control Supplier Raw materials store Production Outgoing goods store Customer Material System Waste disposal system Disposal Delivery / Disposal Figure SEQARABISCH37. The basic idea of flow cost accounting Source: IMU Augsburg Material values and costs For the purposes of calculating the material values and costs, one needs detailed knowledge of the physical quantities of materials involved in the various flows and inventories. Usually, the existing materials management systems and production planning systems provide (at least for the product materials) a comprehensive database which has merely to be adapted and expanded. Based on these flow quantities and inventories, one can proceed to make valuations in terms of prices and thus obtain the material values of these flows and inventories. Material costs can then be determined by defining which material flows are cost relevant. The possibility of reporting material purchase values and costs at later stages for material flows and material inventories separately throughout the company is also known as “material value orientation”. 13 Material value orientation is the core of flow cost accounting. The transparency of knowing values and costs for materials already creates, at acceptable expense and effort, new access to the largest costs share. 13 In the U. S., such approaches are termed “Material only Costing” (MOC); see, e.g., Coopers & Lybrand (1997) and Lucent Technologies (1998). -83-
Page 1 and 2:
E C O N O M I C & Environmental Man
Page 3 and 4:
Environmental Management Accounting
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42: Environmental Management Accounting
Page 91: Environmental Management Accounting
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153:
show all

Environmental Management Accounting Procedures and Principles

Create successful ePaper yourself

Delete template?

Save as template?