MANAGEMENT ACCOUNTING



Contemporary Management Accounting

Issues with implementing & integration of environmental management accounting

The major issue with environmental management accounting comes in the form of lack of existence towards the standard definition of the cost associated with environment. Based on the relevant interest, numerous costs such as investment and disposal cost and external cost such as the cost outside the domain of business and affecting the wider community is taken into account. The opposite holds true for environmental activities which bestows a firm with profitability. It's very hard to trace environmental cost, due to which they are most of the time put into the category of the overhead cost. As the environmental cost is not recorded properly, there is limited opportunity for Bega Cheese to learn from its operations (Spence C, 2009, pp.76-89).

The use of raw materials which are less harmful for the environment is not generally implemented. People are not aware that producing waste as opposed to waste disposal is more harmful. Managers don't have proper access to the cost incurred by the company and only gets to know partially about the environmental cost inflicted by the Bega Cheese's actions. The accountants are primarily concerned with the real cost incurred by Bega Cheese, thus ignoring the external cost imposed on the society as a result of the firms activities. Many believe that it's the government's responsibility to make the firms liable for the external cost inflicted by them.

Benefits of Environmental Accounting

The environmental management accounting gives us a collective mechanism which incorporates the financial and cost accounting to increase operational efficiency, while making sure that environment is not exposed to the risk associated with the Bega Cheese operations. The ingredients required in a successful environmental management system incorporates a sound mechanism which takes into account the full environmental cost borne by ...