Page 55 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes Very little disclosure would qualify as information under any normal criteria and
very little of it indeed will contain numbers, financial or otherwise.
4. Environmental reports as contained in the Directors Report of three Indian Companies
are as under:
(i) Asian Paints (India) Ltd., (1993-94): “Ecology and Safety: Samples of treated effluents are
periodically checked for Compliance with standards”
(ii) Goodlass Nerolac Paints Limited (1993-94): “Pollution: The company regularly monitors
measures in force in accordance with the Pollution Control Act for the protection of
environment and for ensuring industrial safety. The company carries out
improvements regularly to ensure full compliance with the statutory requirements.”

(iii) Maruti Udyog Limited (1993-94): “Environment: Modification of the existing effluent
treatment plant was undertaken to take care of additional effluents generated due to
capacity expansion. Data on non–methane hydrocarbons in Paint Shop and Engine
Testing shop, ambient air quality, stack emissions and effluents are being regularly
monitored and the parameters are maintained well within prescribed limits.
Development of green belt around gas turbine and R&D areas was further augmented
by plantation of 3000 additional saplings.
5. It was also revealed that most of the companies disclose the environment information in
descriptive manner rather than to financial type i.e. no account is made for the degradation
of natural capital when calculating corporate profits.

Notes Limitations of Environmental Accounting
EA suffers from various serious limitations as follows:
1. There is no standard accounting method.
2. Comparison between two firms or countries is not possible if method of accounting
is different which is quite obvious
3. Input for EA is not easily available because costs and benefits relevant to the
environment are not easily measurable.
4. Many business and the Government organizations even large and well managed
ones don’t adequately track the use of energy and material or the cost of inefficient
materials use, waste management and related issue. Many organisations, therefore,
significantly underestimate the cost of poor environment performance to their
organization.
5. It mainly considers the cost internal to the company and excludes cost to society.
6. EA is a long-term process. Therefore, to draw a conclusion with help of it is not easy.
7. EA cannot work independently. It should be integrated with the financial accounting,
which is not easy.

Self Assessment

State true or false:
8. Most of the countries have truly comprehensive environmental accounts.
9. It was also revealed that most of the companies disclose the environment information in
descriptive manner rather than to financial type.
10. Very few corporations give adequate information regarding environmental issue.

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