Chapter 4 - Environmental Management Accounting Flashcards
What is environmental management accounting
Environmental management accounting focuses on the efficient use of resources and disposal of waste and affluent
What ways can be impacted if a company is wasteful
There is a direct cost to the company of spending more than is needed on resources or having to spend money to clean up the pollution
There is the damage to the reputation of the company as consumers are becoming more and more environmentally aware
There are possible fines or penalties as a result of breaking environmental regulations

 What are some typical environmental costs
As well as dealing with costs relating to waste which most people think of all the costs also
For example the amount of raw material used in production haps a publisher should consider ways to use less paper or maybe recycle paper
Transportation costs consider alternative ways to delivering goods
Water and energy consumption. Environmental management accounting may help to identify inefficiencies and wasteful practices and therefore opportunities for cost saving
What are the four different methods of accounting for environmental costs
Inflow/outflow analysis
This approach balances the quantity of resources that is input with the quantity that is output Either as production or as waste measuring these in physical quantities and in monetary terms focus is the business to focus on environmental costs. Remember that resources don’t just mean raw materials but also energy and waste
Flow cost accounting
This is really just info/outflow analysis but instead of applying simply to the business as a whole it takes into account the organisation structure. Resources import into the business are divided into three categories
Material – the resources used in storing raw materials and production
System - the resources used in storing production and quality control
Delivery and disposal-resources to use in delivering to the customer and then disposing of any waste
As in inflow/outflow analysis the aim is to reduce the quantities of resources used which saves costs for the company and leads to increased ecological efficiency
Life-cycle costing
This has been discussed in an earlier chapter the relevance of environmental management accounting is that it is important to include environmentally driven costs such as the cost of disposal of waste it’s maybe possible to design out these costs before the cost is launched
Environmental activity based costing
Activity based costing has been discussed in an earlier chapter its application to environmental costs is that those costs that are environmentally related for example costs related to a sewage plants are attributed to join‘s environmental cost centres as with the activity based costing in general this focuses more attention on these costs and potentially leads to greater efficiency and cost reduction
