Ha2011 Accounting | Benefits And Assessment Answers

Answer:

Introduction

The environmental Management Accounting or EMA is an accounting technique that is used for describing the various aspects the accounting field. The primary focus of the EMA is to act as a tool of management accounting that would help in taking the businesses internal decisions (Welford 2016). This also initiates the proactive management activities that are related to environment. The development of EMA was mainly developed for the process of recognizing the challenges that were being faced by the traditional approach of the management accounting that used to deal with the environmental costs along with its impacts and consequences (Saeidi et al. 2018). The challenges that were pointed out were the inaccurate cost allocations that cannot be found back to process lines, products or processes. There also exists inaccurate accounting of wasted raw materials during the process of production. The each of the EMA aspect is a general type of accounting that serve as the foundation.

Discussion

Concept of EMA

The accounting tool of EMA offers prospective advantages to industry, that includes the capability managing and track the use and flows of energy and materials more accurately. The international website of EMA reports appropriately the relevant identification, estimation, allocation, and management or reduction of costs (Bennett and James  2017). The Environmental performance can be improved and supported with the help of more complete and relevant information. This information can also improvise the reporting as well as measurement of the environmental information to the public.

The Government can make profit by the utilization of these standards as indicated by the global site of EMA. The expense of environmental protection can be brought down based on financial self-interest by the industries. The Industry data can be utilized for the process of estimation and reporting of the environmental performance metrics as well as environmental and financial benefits to stakeholders of the government. The measurements can likewise be utilized to viably to influence the environmental directions and arrangements in future. On top of that the societal advantages additionally exist in the context of EMA. With the usage of these standards, water, vitality and other characteristic assets can be utilized all the more productively. The EMA global site reports these standards can help diminish outside societal expenses originating from mechanical contamination, for instance, checking, natural control, general wellbeing costs and remediation.

Therefore, it can be said EMA is a developing aspect of bookkeeping with advantages for industry, government, and society comprehensively. As more organizations come to see the ecological effects in their basic leadership, the estimation of EMA will keep on developing.

Benefits and challenges of faced by EMA

The EMA is a part of the Management Accounting process that entails the collection, identification, analysis, estimation and use of cost, or other information that may be utilised for decision-making of the organizations. The Environmental Management Accounting or EMA refers to the management accounting that would focus mainly on the energy and materials flow information, with environmental cost information. The EMA constitutes of a wide range of principles along with approaches that would provide views into the physical costs and flows critical to the thriving end of activities of environmental management and increasingly, routine management activities, that includes product and capital budgeting, process design, cost allocation and control as well as product pricing as per the international website of EMA.

EMA is especially significant for internal administration activities with a particular focus on the environment, for instance it can used for the cleaner generation, administration of supply chain, "green" item or administration structure, organic transaction administration frameworks that are favourable environmentally and so on. In addition to that the concept of EMA is progressively being utilized with the end goal of external reporting. Therefore it can be said that the EMA is not simply one of the environmental friendly management instrument. EMA is a wide arrangement of standards and methodologies that gives the information fundamental to the accomplishment of numerous other environmental administration activities. In addition to that, since the decisions in the businesses at present are being influenced by the natural issues, the concept of EMA is ending up to be more vital, for only for the ecological administration choices, but also for expanding into a wide range of administration activities. However, a few limitations of regular administration of bookkeeping frameworks and practices can make it hard to successfully gather and assess environment related information. These limitations can prompt the management decision making on the basis of wrong, missing, or confused information (Schaltegger,   Burritt and Petersen 2017). Therefore, as a result the management of the business may misunderstand the negative financial results of unfavourable environmental performance and the potential costs and benefits of improved environmental performance. Hence the general management accounting limitations can be pointed out as the primary limitations that are more specific to the environment related information.

Barriers of future development of EMA

The few weaknesses of the EMA that deals with the environmental administration frameworks can originate from staff negativity and cost:

• Cost- the costs that are associated with the EMA may lead to fluctuations impressively. However, the manager needs to have the capacity to find out the minimal effort openings that would provide the critical funds of cost reserve along with the balance expense of actualizing and working on the implementation of the EMA (Jamil et al. 2015). In Addition to that, since the accounting tool of EMA is a new concept, it requires various training and development of the employees that would lead to high cost for the organisations.
• Time and resources- The new accounting concept of EMA shall assist the business in becoming more beneficial by decreasing consumption of energy that would lead to reduction of cost as a consequence saving of costs (Sands, J. and Lee 2015). The EMA is a part of the Management Accounting process that entails the collection, identification, analysis, estimation and use of cost, or other information that may be utilised for decision-making of the organizations. However, the venture of EMA implementation needs the business commit a great deal of investments and time.
• Involves excessive burden– EMA is a wide arrangement of standards and methodologies that gives the information fundamental to the accomplishment of numerous other environmental administration activities. The few organizations might have the capacity to understand the advantages of an EMA that would lead to efficiency of asset and cost saving (Maas, Schaltegger and Crutzen 2016). However with working in EMA it leads a lot of cumbersomeness and critical dealing of the environment accounts.
• Administration or staff resistance– The environmental management accounting can be viewed as pointless by many business organisations, therefore, the manger need to clarify the fundamental points and advantages at an early stage of adaptation of the same (Christ,   Burritt  and Varsei 2016).  It may be done by presenting to the management boards trough presentation of the critical evaluation of the EMA.
• Costs of training- Since the accounting tool of EMA is a new concept, it requires various training and development of the employees that would lead to high cost for the organisations. Some members of the business need to have a knowledge of implementing the EMA (Chan, Wang and Raffoni 2014). By the following and guidance of the standards requirements of such like the ISO 14001. Therefore an EMA can be implemented needs the 'expert' training for its adaptation.

Opportunities of future development EMA

The primary opportunities of the EMA deals with increasing consistency of the business and reducing the environmental waste:

The EMA has the motive and opportunities of improvising the revenues of the business along with prevention of sales erosion. The accounting tool of EMA offers prospective advantages to industry, that includes the capability managing and track the use and flows of energy and materials more accurately. The implementation would take place with the process of consumer awareness of products and services that would have an environmental effect. This would increasingly influence the buying preferences behaviours more sustainably. In addition to that the implementation of the EMA would also enable the organisations to reduce and sustain the associated costs (Schaltegger, Burritt and Petersen 2017). The reduction process of the consumption of input of the resourses has an impact on cost reduction. In addition to this also, EMA improves the process to cut down the cost. The EMA also helps in reducing the cost of failure, this includes investing in the processes that would lead to reduction of cost effect of failure, such as the need to process waste or clean up environmental effects. The concept of EMA also helps in improvising the goodwill of the businesses as this procedure may be able to attract better talent, reduce talent attrition and charge more prices. The opportunity of EMA development in future has proposed to deliver many advantages to the users (Gunarathne and Lee 2015). This includes better product pricing, cost saving, optimal resources utilisation, cleaner production, innovation, increased value of shareholder and enhanced reputation. The EMA also includes a green public profile in the business organisations.

Conclusion

In various organisations there exists a dynamic as well as detailed technique of processing the data related to environmental costs which the organisation issued mistakenly for the purpose of environmental management accounting or EMA. At present the various organisations does not utilise an extensive options range that is been provided by the environmental management accounting. The EMA also initiates the proactive management activities that are related to environment. The development of EMA was mainly developed for the process of recognizing the challenges that were being faced by the traditional approach of the management accounting that used to deal with the environmental costs along with its impacts and consequences. The challenges that were pointed out were the inaccurate cost allocations that cannot be found back to process lines, products or processes. However there are several weaknesses of the EMA that includes more cist in implementing the process, more time and resources, burden for the business and training for employees. The primary opportunities of the EMA deals with increasing consistency of the business and reducing the environmental waste. The concept of EMA also helps in improvising the goodwill of the businesses as this procedure may be able to attract better talent, reduce talent attrition and charge more prices.

References

Bennett, M. and James, P., 2017. The Green bottom line: environmental accounting for management: current practice and future trends. Routledge.

Chan, H.K., Wang, X. and Raffoni, A., 2014. An integrated approach for green design: life-cycle, fuzzy AHP and environmental management accounting. The British Accounting Review, 46(4), pp.344-360.

Christ, K.L., Burritt, R. and Varsei, M., 2016. Towards environmental management accounting for trade-offs. Sustainability Accounting, Management and Policy Journal, 7(3), pp.428-448.

Gunarathne, N. and Lee, K.H., 2015. Environmental Management Accounting (EMA) for environmental management and organizational change: An eco-control approach. Journal of Accounting & Organizational Change, 11(3), pp.362-383.

Jamil, C.Z.M., Mohamed, R., Muhammad, F. and Ali, A., 2015. Environmental management accounting practices in small medium manufacturing firms. Procedia-Social and Behavioral Sciences, 172, pp.619-626.

Johnstone, L., 2018. Environmental management decisions in CSR?based accounting research. Corporate Social Responsibility and Environmental Management.

Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment, management accounting, control, and reporting. Journal of Cleaner Production, 136, pp.237-248.

Saeidi, S.P., Othman, M.S.H., Saeidi, P. and Saeidi, S.P., 2018. The moderating role of environmental management accounting between environmental innovation and firm financial performance. International Journal of Business Performance Management, 19(3), pp.326-348.

Sands, J. and Lee, K.H., 2015. Environmental and sustainability management accounting (EMA) for the development of sustainability management and accountability [Guest editorial]. Issues in Social and Environmental Accounting, 9(1), pp.1-4.

Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for sustainability. Routledge.

Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for sustainability. Routledge.

Welford, R., 2016. Corporate environmental management 1: systems and strategies. Routledge.