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Environmental accounting-cost classification

Environmental costs

Hansen and Mendoza

External costs

These are costs that are imposed on society at large, but not borne by the company that generates the cost in the first instance.

Internal costs

These are costs that directly impact on the income statement of a company

  • Environmental prevention costs (to prevent the production of waste)
  • Environmental detection costs (to ensure that the organization complies with regulations and voluntary standards)
  • Environmental internal failure costs (from performing activities that have produced contaminants and waste that have not been discharged into the environment)
  • Environmental external failure costs (on activities performed after discharging waste into the environment)

Why does the company need EMA?

Issues of EMA

Environmental Management Accounting (EMA) as an important sustainable development tool

  • Compliance (legacy)
  • Eco-efficiency (usage of scarce resources)
  • Strategic Position (Competitive advantage)

"A company's attitude to the environment is likely to be seen as a benchmark of its commitment to innovation and good management. Companies setting the pace on environmental issues will be seen as the leaders of the corporate sector."

(Lickiss, 1991)

Environmental Management Accounting (EMA) is the identification, collection, estimation, analysis, internal reporting, and use of materials and energy flow information, environmental cost information, and other cost information for both conventional and environmental decision-making within an organization.

The United States Environmental Protection Agency

  • Conventional costs
  • Potentially hidden costs
  • Contingent costs
  • Image and relationship costs

The United Nations Division for Sustainable Development

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for attention!

  • Costs incurred to protect the environment (for example, measures taken to prevent pollution)
  • Costs of wasted material, capital and labor ( inefficiencies in the production process)

Prepared by: Baytsaeva Z.

Levkina S.

Yusifova S.

Tutor: Irina O. Yurasova

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