Page 56 - DCOM409_CONTEMPORARY_ACCOUNTING

Unit 3: Environmental Accounting

3.4 Summary Notes

Environmental accounting is defined as the accountants’ contribution towards
environmental sensitivity in organizations.

The preparation of environmental accounting is affected by a number of factors such as the
magnitude of the investment required, the objectivity of the data, the ability to compare
different kinds of environmental impacts, and the kinds of policy purposes to which they
may be applied.

The natural resource accounts include data on stocks of natural resources and changes in
them caused by either natural processes or human use.
The concept of emission accounting was developed by the Dutch.

The National Accounting Matrix including Environmental Accounts (NAMEA) structures
the accounts in a matrix, which identifies pollutant emissions by economic sector.
Sometimes data in the conventional accounts are taken apart to identify expenditures
specifically related to the environment, such as those incurred to prevent or mitigate
harm, to buy and install protection equipment, or to pay for charges and subsidies.

Environmental management accounting focuses on material and energy flow information
and environmental cost information.
Environment financial accounting focuses on reporting environmental liability costs and
other significant environmental costs.
National Level Accounting focus on natural resources stocks & flows, environmental costs
and externality costs etc.
Although some countries are using the environmental accounts quite actively, the accounts
are still underutilized, especially in developing countries.

No country has truly comprehensive environmental accounts.
International comparisons are important, but not yet possible because of differences in
methodology, coverage, environmental standards, and other factors.

3.5 Keywords

Environmental Accounting: Environmental accounting is defined as the accountants’ contribution
towards environmental sensitivity in organizations.
Environmental Financial Accounting (EFA): Financial accounting with a particular focus on
reporting environmental liability costs and other significant environmental costs.
Environmental Management Accounting (EMA): Management accounting with particular focus
on material and energy flow information and environmental cost information.

Environmental National Accounting (ENA): National Level Accounting with a particular focus
on natural resources stocks & flows, environmental costs and externality costs etc.

3.6 Review Questions

1. Identify the meaning and scope of environmental accounting.

2. What are the key methods used for environmental accounting?

LOVELY PROFESSIONAL UNIVERSITY 51