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Submitted by:
Group Member:
Name ID No
1.See Kim Seng 0805065
2.Chan Wai Hung 0806218
3.Liew Pui Moon 0802158
4.low Yin Wei 0805945
Group Leader: See Kim Seng Contact No: 0179361456
Date of submission: 19 March 2010
4. Marking Criteria
A. This Term Project carries a total of 20 marks.
B. Marking criteria as follow:
Matrix of Skills for Coursework
Name of students Total marks Name of students Total marks
1.See Kim Seng 4.Low Yin Wei
2.Chan Wai Hong
3.Liew Pui Moon
Appraisal of 0%
group members
(as attached)
Total 40%
Group members should be appraised using the following basis :
100% Group member attended all group meetings or if unable to attend, contacted the group
in advance and came to an alternative arrangement that the majority of group members
were happy with.
Group member contributed to group discussion.
Group member always offered to help or volunteered for tasks.
Group member had assigned tasks completed on time.
50% Group member missed group meetings without making alternative arrangements with
other group members.
Group member assigned tasks were only partly completed or poorly completed.
Group member did not contribute to the group effort or volunteer fir tasks.
0% Group member attended few meetings and made no contribution to the assignment.
Instructions:
Place the name of each of the members in your group in the space provided below.
Appraise each of the members in your group by circling one of the totals shown below
(i.e. 100%, 50% or 0%).
In contrast, according to the United Nation (UN) group, EMA is broadly defined to be the
identification, collection, estimation, analysis, internal reporting, and use of physical flow
information (i.e., materials, water, and energy flows), environmental cost information,
and other monetary information for both conventional and environmental decision-
making within an organization. Definition of EMA is similar to the definition of
conventional management accounting, but there has several key differences:
(b) EMA encompasses not only cost information, but also information on physical flows
and fates of materials and energy;
(c) EMA information can be used for any type of management decision-making within an
organization, but is particularly useful for activities and decisions with significant
environmental components and consequences.
EMA covers both physical and monetary procedures which are named as physical EMA
(PEMA) and monetary EMA (MEMA). The former refers to procedures for the
utilization, flows and ultimate disposal of material and energy. Whereas the later involves
procedures for quantifying costs, savings and revenues relate to activities with potential
environmental effects.
CONTENT
On the other hand, in response to increasing concerns by stakeholders, there has been a
trend for many public corporations in recent years to provide more information on
environmental matters both within the management accounting system and the annual
report by implementing EMA. Stakeholders normally supervise firms to comply with
prevailing environmental protection laws. They would also be keen to have a
comprehensive understanding of the firm in terms of not only the conventional
accounting information, such as the firm’s financial position, but also the wider social,
economic and environmental implications of its operation. Therefore, EMA also plays an
important role to help corporation fulfill their corporate social responsibility in the
environmental issues.
Benefits of EMA
Subsequently, EMA has been developed for overcoming the limitations of conventional
management accounting in respect of management activities and regarding decisions
involving environmental issues such as environmental costs and impacts. It has been
acknowledged to deliver many benefits to the users. For instance, internal improvement
such as cost saving, better product pricing, optimal use of resources, innovation, cleaner
production, customer satisfaction by increased shareholder value. These benefits will in
turn improve corporate reputation from launching environmentally friendly products into
the market and performing corporate activities with less harmful affects on surrounded
environment. And, since the range of decisions affected by environmental issues of one
type or another is increasing, EMA is becoming more important not only for
environmental management decisions, but for all types of management activities.
Apart from that, correct costing of products is a pre-condition for making sound business
decisions. Accurate product pricing is needed for strategic decisions regarding the
volume and choices of products to be produced. By using EMA, it converts many
environmental overhead costs into direct costs and allocates them to the products that are
responsible for their incurrence. Consequently, systematic use of EMA will assist
managers in identifying environmental costs often hidden in a general accounting system.
Because when hidden cost exist, it is impossible to know what share of the costs is
related to any particular product or process or is actually environmental. Without isolate
and separate this portion of the overall cost from that of production, product pricing will
not reflect the true costs of its production.
According to Burritt and Saka (2006), one of the benefits of EMA implementation as to
eco-efficiency .An organization's decision makers can use the physical flow information
and monetary information provided by EMA to make decisions that impact both the
environmental and financial performance of the organization. Utilizing material cost flow
analysis enabled them to identify costs of waste processing and losses from processes on
large raw material, thus, there can use the information to reduce environmental costs.
Reductions in environment-related capital investments or annual environmental operating
costs can increase profit margins or allow lower product and service prices, which can
help retain or increase market share. Reductions in potential environmental liability can
reduce legal liability costs, and improve access to financing and customer contracts.
Besides that, EMA is also recognized as being of great value for external reporting
purposes. Companies can use EMA to collect data for external stakeholders for a variety
of reasons, such as to prove compliance with environmental regulations or to illustrate
environmental commitment to improve company reputation. Many external stakeholders,
such as government environmental regulators, environmental NGOs, and local
communities, are primarily interested in the physical flow component of EMA. Other
stakeholders, such as investors, are more interested in environmental cost data.
Challenges of EMA
In spite of EMA provides many benefits over MA, but there are still facing some
challenges and obstacles in order to become a main accounting approach that implement
by worldwide. The main problem is lack of environmental accounting standards. A new
set of accounting standards is being established by the standard setting group during the
recent years. Yet, there are no regulatory standards for the environmental accounting
practice. As a result, the environmental accounting objects and the form of disclosure
cannot be united and cannot be adopted by most companies. The lack of standards has
causes the total neglect of environmental accounting information disclosure or gives rise
to poor unsatisfactory information disclosure.
Decades ago environmental costs were very low, so it seemed wise to include them in the
overhead account for simplicity and convenience by using conventional management
accounting. Recently there has been a steep rise in all environmental costs, including
energy and water prices as well as liabilities. Therefore, conventional management
accounting approaches have been criticized as being inadequate and inappropriate to
meet the needs of environmental and sustainable development. As a result, EMA has
emerged and viewed as the evolution of MA. Furthermore, increasing awareness of
environmental issues by public and stakeholders implies that organizations can no longer
ignore environmental impacts of their activities. EMA may assist managements to
address this issue, particularly by providing related environmental information for
decision making purpose.
EMA has contributed to businesses and environment in many ways such as, improve
corporate reputation from launching environmentally friendly products into the market
and allow corporation performing corporate social responsibility; helps businesses
accurately trace environmental overhead cost in order to assist managers in identifying
environmental costs because environmental costs often hidden in a conventional
management accounting approach; contribute to eco-efficiency by using physical flow
information and monetary information provided by EMA, hence, increase profit margins
by reduce environmental costs.
Nevertheless, EMA still faces some challenges such as lack of proper measurement of
environmental accounting information and lack of environmental accounting standards.
EMA is a relatively new tool and in early stage of conceptual development, therefore, it
is important that government organizations promoting EMA concepts in collaboration
with many nongovernment organizations, including individual firms, industry
associations, financial institutions, accounting associations, universities, research and
consulting firms. Government should employ different policy instruments to influence
companies to enhance their environmental performance.
REFERENCING
Journal articles
Christine Jasch. ( 2006). Environmental management accounting (EMA) as the next step
in the evolution of management accounting. Journal of Cleaner Production, Volume 14,
Issue 14, 2006, Pages 1190-1193.
Burritt, R.L. & Saka, C. (2006), Environmental management accounting applications and
eco-efficiency: Case studies from Japan, Journal of Cleaner Production,
14: 1262-1275