In general, the paper "Environmental Management Accounting, Activity-Based Costing " is a good example of a finance and accounting assignment. Phase 1 of the case study deals with identifying the existing accounting system and then this system environmental impact is evaluated on the company’ s business. The environmental impact that is associated with AMP’ s operations will include water usage; energy usage; paper usage, and waste management. However, the existing account system at the AMP, the costs that are associated with environmental impacts are taken care of by the overheads and there is no form of responsibility accounting for these costs. Phase 2 of the case study it about identifying revenue and cost opportunities that have not been factored in the existing accounting system at the company.
In addition, this phase also concerns changes that are needed to be made in the company to reflect on the opportunities that are available, and how these opportunities can be used to achieve better environmental outcomes, and improve the profit/revenue in the company. Phase 3 deals with trials made to a different system and then results are being recorded and then compared to an existing system.
The result of this new system - Environmental Management Accounting (“ EMA” ) - is seen to contribute to good management. The objective of this phase is to encourage management not to make bad decisions that will impact negatively on the company’ s operations and to provide the company’ s stakeholders with meaningful information. Question 2: This system has the function for registrations of company’ s clients and suppliers, client records and accounting for the company. In reporting, the system has been noted to have limited outputs. But the principal outputs AMP utilizes are the income statement, trial balance, chart of accounts, general ledger and balance sheet. Capital expenditure has two arms, capital replacements and capital works.
In our cases study, the company will prioritize its lists of capital works, and then these lists are put out to the public tender where the estimated cost of each item is determined. In capital replacement, decisions are made based upon the teacher requests. In other words, each department will priorities the replacements that are required and these replacements are allocated budget for the most pressing issue. Question 3: The environmental impacts that are associated with the company’ s operations include paper usage; water usage; energy usage and waste management.
In the existing management accounting system at the school, the cost that is associated with water and paper usage is lost in ‘ general and administration’ overheads, while waste management is lost under ‘ cleaning and caretaking’ overheads. The costs incurred in the company are coded directly to expense accounts. While income and expenditure reports disclose the expenses under the company’ s overheads. The objective of this system is to identify environmental costs or benefits that have been accrued by the system, and accounting information that meets the need of the stakeholders at the company. Question 4: Limitations in the system are associated with a cost driver basis of allocation.
For example, in the company, allocating power and light to a Responsibility Centre (RC) on the square/metre of floor basis. If there is reduce the usage of power at the Centre, there will be no corresponding reduction in costs that were allocated to it, and this is because of the basis of the allocation at the Centre.
Currently, the existing system in the company does not maintain enough or sufficient records to enable allocation and identification of costs incurred in the company.
The Institute of Chartered Accountants in Australia. (2002). Environmental Management
Accounting, Methodist Ladies College: Perth