Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles Material flow accounting 15 is used to check the database with respect to its consistency and, on the basis of various calculations, to assign data to the flow model. Material flow accounting comprises the following individual elements: - material flow quantity accounting, - material flow value accounting, and - material flow cost accounting. System cost accounting is based on material flow accounting and is used in a multi-stage procedure to assign system costs to the material flow model. System cost accounting comprises the following individual elements: - system cost delimitation, - system cost allocation, and - system cost apportionment. 16 The results and report forms define the way in which the data in flow cost accounting is edited and made available to staff. The “material flow model with data” is the most important result form. Compared with previous accounting approaches, this shows much more information. For an exemplary material flow model with material flow values and delivery and disposal costs please refer to the annex. The “flow cost matrix” shows the outgoing material flows, e.g., products and packaging, and allocates material losses to the following categories: material costs, system costs, and delivery and disposal costs. The flow cost matrix represents in table form flow cost accounting data in simplified and standardized form at a defined cross-section in the flow model. 15 Cf. also Strobel and Wagner (1999). 16 Cf. especially Hessisches Ministerium für Wirtschaft (1999). -86-
Environmental Management Accounting Procedures and Principles Typical structure of flow costs (e.g. Pharmaceutical Industries) Production costs Material System Delivery / Total ( in US $ m. ) costs costs Disposal costs Product 120 25 0.2 145.2 Packaging 40 25 2.5 67.5 Material loss 21.5 6.4 1.5 29.4 Total 181.5 56.9 3.9 242.3 Eminent High share share of of Material material costs ! ( here : 75 % of production costs ) Considerable share of costs incurred by Material material losses ! ( here : > 10 % of production costs ) Figure SEQARABISCH39. Flow cost matrix (simplified) Source: IMU Augsburg. The structure of the matrix remains constant even if the material flow structure is modified. This makes it a particularly useful and meaningful form for presentation of results and reporting. The flow cost matrix can be used to show the development of a particular company site over several years or to benchmark different sites within the company. It can also be used to compare different companies in the same industry in terms of their respective flow cost structures. The “flow cost report” allows, in addition, compilation of tables as an evaluation tool for particular areas of responsibility. 6.4.4. Experience and the benefits of flow cost accounting The flow cost accounting approach has already been tried in a number of manufacturing companies in Germany of varying size and in different sectors. These trials have been a success. As benefits gained from flow cost accounting in their companies, project participants mentioned the following points 17 : 17 Cf. Fichter, Loew and Antes (1999). -87-
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