Environmental Financial Accounting Analytical Essay by Nicky

Environmental Financial Accounting
A review of the issues involved in the emerging field of environmental financial accounting.
# 150303 | 2,276 words | 12 sources | APA | 2012 | US
Published on Jan 30, 2012 in Accounting (Financial) , Business (Accounting) , Environmental Studies (General)


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Description:

The paper discusses how it is difficult for companies to properly track and record environmental actions and considerations in such a manner that provides for full disclosure and transparency to stakeholders. The paper explains how environmental financial accounting seeks to remedy this by bringing consistency to environmental reporting. The paper looks at the stakeholders involved, the issues with environmental budgeting, the use of material flow activity-based cost accounting and the best way to treat environmental costs.

Outline:
Case Study
Introduction
Stakeholders
Environmental Budgeting
Material Flow Activity-Based Cost Accounting
Assets or Expenses?
Conclusion

From the Paper:

"In the rules-bound world of financial accounting, it can be difficult to properly track and record environmental actions and considerations in such a manner that provides for full disclosure and transparency to stakeholders. Firms wishing to produce environmental accounting reports often find that the regulatory bodies and sets of standards governing financial accounting and reporting give poor guidance with respect to environmental accounting. This in turn creates an environment where companies produce their own environmental scorecards on an ad hoc basis. While this information is valuable, it is inconsistent, which diminishes its value for investors. The emerging field of environmental financial accounting seeks to remedy this by bringing consistency to environmental reporting, so that this information can be used by the investment community and other financial accounting stakeholders.
"There is considerable logical basis for this. Environmental issues are reflected in financial statements already, albeit in aggregated form. On the income statement, environmental transactions can result in revenues and/or expenses. These transactions can also create assets or liabilities as well. For example, if a firm knowingly pollutes some of its surrounding environment, it is likely creating a liability since it will eventually be compelled to deal with the issue. Conversely, we can see the ability of a firm to create assets through environmental transactions as Western governments move towards the implementation of concepts such as carbon credits."

Sample of Sources Used:

  • Rogers, C. Gregory. (2005). Financial Reporting of Environmental Liabilities and Risks after Sarbanes-Oxley. New York, Wiley.
  • Sutherland, Donald. (2002). Europe Tightens Corporate Environmental Accounting Rules. Risk News Report. Retrieved August 11, 2009 from http://www.riskworld.com/news/02q3/nw02a097.htm
  • Edu, Bernard; Esang, Atim & Otonkue, Agba. (2009). Environmental Financial Reporting. Cross River University of Technology. Working paper.
  • Smith, L. Murphy. (no date). Environmental Accounting and Auditing. Texas A&M University. Retrieved August 11, 2009 from http://acct.tamu.edu/smith/env_acct/env_acctg.htm
  • No author. (1997). Environmental Financial Accounting and Reporting at the Corporate Level. United Nations Conference on Trade & Development. Retrieved August 11, 2009 from http://www.unctad.org/en/docs/c2isard2.en.pdf

Cite this Analytical Essay:

APA Format

Environmental Financial Accounting (2012, January 30) Retrieved August 10, 2022, from https://www.academon.com/analytical-essay/environmental-financial-accounting-150303/

MLA Format

"Environmental Financial Accounting" 30 January 2012. Web. 10 August. 2022. <https://www.academon.com/analytical-essay/environmental-financial-accounting-150303/>

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