Environmental and Material Flow Cost Accounting

by Jasch, Christine; Alvarez-Rivero, Tarcisio

• ISBN13: 9781402090271
• ISBN10: 1402090277
• Format: Hardcover
• Copyright: 2009-02-28
• Publisher: Springer Verlag

Summary

Recognizing the increasing importance of environmental issues, energy prices, material availability and efficiency and the difficulty of adequately managing these issues in traditional accounting systems, several companies all over the world have started implementing 'œEnvironmental and Material Flow Cost Accounting' (EMA and MFCA).'œEnvironmental and Material Flow Costs Accounting' explains and updates the approach developed for the United Nations Department of Economic and Social Affairs (DSD/UNDESA) and the International Federation of Accountants (IFAC) and in addition includes experiences of several case studies and recent developments regarding EMA and MFCA in national statistics and ISO standardization.

Table of Contents

Foreword	p. v
Acknowledgments	p. ix
List of Abbreviations	p. xv
List of Figures	p. xvii
List of Tables	p. xix
Executive Summary	p. xxi
What Is EMA and Why Is It Relevant?	p. 1
The Issues Behind EMA	p. 1
Challenges for Current Accounting Practices	p. 5
Communication Between Accounting and Production Departments	p. 6
Missing Links Between the Production Planning and Financial Information System	p. 7
Hiding Environmental Costs in Overhead Accounts	p. 7
Posting of Inventory Differences	p. 8
Investment Appraisal Based on Incomplete Information	p. 9
Definition of Environmental Costs and Environmental Management Accounting (EMA)	p. 10
Monetary Accounting	p. 16
Physical Accounting	p. 18
EMA Links to Financial, Statistical, Environmental and Sustainability Reporting Requirements	p. 23
The EC Recommendation and the EU Directive on Environmental Issues in Company Annual Accounts and Reports	p. 24
The UN System of Integrated Environmental and Economic Accounting (SEEA) and Classification of Environmental Protection Expenditure (CEPA)	p. 26
The Guidelines of the Global Reporting Initiative (GRI)	p. 30
EMA Uses and Benefits	p. 33
The Input Side of the Material Flow Balance	p. 37
Overview on Material Flow Balances	p. 37
Raw Materials	p. 39
Auxiliary Materials	p. 40
Merchandise	p. 40
Packaging	p. 41
Operating Materials	p. 41
Energy	p. 43
Water	p. 43
The Output Side of the Material Flow Balance	p. 45
Products and By-products	p. 45
Non-product Outputs (Waste and Emissions)	p. 46
Waste	p. 46
Waste Water	p. 47
Air Emissions	p. 48
Environmental Performance Indicators	p. 49
ISO 14031 - Standard on Environmental Performance Evaluation	p. 50
Environmental Performance Indicators of GRI	p. 51
General Requirements for Indicator Systems	p. 51
Relevance	p. 53
Understandability	p. 53
Target Orientation	p. 53
Consistency	p. 53
Comparability	p. 54
Balanced View	p. 54
Continuity	p. 55
System Boundaries for Performance Indicators	p. 55
The Problem of Finding a Meaningful Denominator	p. 56
Specific Consumption/Eco-intensity	p. 59
Eco-efficiency Ratios	p. 59
Percentage Distribution	p. 61
Calculating Savings Based on Performance Indicators	p. 62
Environmentally Relevant Equipment	p. 65
Classification of Environmentally Relevant Equipment	p. 67
End-of-Pipe Equipment	p. 68
Integrated Cleaner Technologies	p. 69
Scrap Producing Equipment and Energy Conversion Losses	p. 71
Environmental Investments According to SEEA and CEPA	p. 72
Monetary Information	p. 75
Overview on the EMA Cost Categories in the Excel Template for Total Annual Environmental Costs	p. 76
Distribution by Environmental Domain	p. 78
Material Costs of Non-product Output	p. 79
Estimating Loss Percentages	p. 80
Calculating Processing Costs of NPO	p. 81
Waste and Emission Control Costs	p. 82
Equipment Depreciation	p. 82
Operating Materials, Water and Energy	p. 83
Internal Personnel	p. 83
External Services	p. 84
Fees, Taxes and Permits	p. 84
Fines	p. 85
Insurance	p. 86
Remediation and Compensation	p. 86
Costs for Prevention and Other Environmental Management Costs	p. 87
Equipment Depreciation	p. 88
Operating Materials, Water and Energy	p. 89
Internal Personnel	p. 89
External Services	p. 90
Other Costs	p. 90
Research and Development Costs	p. 90
Environmental Earnings and Savings	p. 91
Case Study of SCA Laakirchen Pulp and Paper Plant	p. 91
Linking Physical and Monetary Information	p. 97
Environmental Expenditure in the Profit and Loss Statement	p. 97
Improving the Consistency of Materials Inputs and Product and Non-Product Output	p. 100
Tracing Materials in Corporate Information Systems	p. 106
Cost Accounting Basics and Terminology	p. 109
Mapping Costs Centers, Production Planning and Technical Monitoring	p. 112
Activity Based Costing	p. 113
Material Flow Cost Accounting (MFCA)	p. 116
Investment Appraisal and Budgeting	p. 120
Capital Budgeting Basics	p. 121
Calculation Sheet for Environmental Investments and Savings	p. 123
Benchmarking Production Sites	p. 125
Case Study of a Brewery	p. 131
Working with the EMA Excel Templates	p. 131
The Material Flow Balance	p. 132
The Brewery, Its Production Flow and Cost Centers	p. 135
Total Annual Environmental Costs	p. 136
How to Organize an EMA Pilot Project	p. 161
Defining System Boundaries and Sites for Pilot Testing	p. 161
Developing a Project Plan	p. 164
Extracting EMA Data from Enterprise Resource Planning Systems	p. 166
Elements of an Internal EMA Standard	p. 170
Objectives and Scope	p. 173
Definitions	p. 174
Responsibilities	p. 174
Material Flow Data (Input-Output Analysis)	p. 175
Environmental Cost Categories and Assessments	p. 175
Procedure for Data Gathering	p. 176
Internal Reporting	p. 177
External Reporting	p. 178
Appendix: Excel Templates for EMA Assessment by Business Groups	p. 178
Summary of Recommendations from Case Studies	p. 179
Data Collection of Material Purchase by Material Groups in Financial Accounting	p. 179
Estimation and Recalculation of Material Scrap Percentages	p. 180
Depreciation of Projects/Investments Before the First Year of Cost Assessment	p. 180
Distinction to Health and Safety and Risk Management	p. 181
Product Oriented Pollution Prevention	p. 181
New Cost Centers and Accounts	p. 181
Outlook	p. 182
References	p. 185
Index	p. 189
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