Seminar On Management Accounting

Seminar on Management Accounting
by Riwayadi, SE., MBA., Ak., CA., CSRS., CPMA., CSRA.
The Reaction Paper by Group 3 :

Naurah Atika Dina
Nisrina Afifah
Rana Syifa Medinda
Meetings 2 : Environmental Management Accounting

1. Definition
Environmental Management Accounting has no single, universally accepted definition

According to IFAC’s Statement Management Accounting Concepts, EMA is “the management
of environmental and economic performance through the development and implementation of
appropriate environment-related accounting systems and practices. While this may include
reporting and auditing in some companies, environmental management accounting typically
involves life-cycle costing, full-cost accounting, benefits assessment, and strategic planning for
environmental management.”
2. Types of EMA Information

According to the UN expert working group:
EMA is broadly defined to be the identification, collection, analysis and use of two types of
information for internal decision making:
• physical information on the use, flows and destinies of energy, water and materials (including
wastes) and
• monetary information on environment-related costs, earnings and savings
3. Benefits of EMA
EMA is particularly valuable for internal management initiatives with a specific environmental
focus, such as cleaner production, supply chain management, “green” product or service design,
environmentally preferable purchasing and environmental management systems. As well, EMA
type information is increasingly being used for external reporting purposes. Thus, EMA is not
merely one environmental management tool among many. Rather, EMA is a broad set of
principles and approaches that provides the data essential to the success of many other
environmental management activities. And, since the range of decisions affected by
environmental issues is increasing, EMA is becoming more important, not only for
environmental management decisions, but for all types of management activities.
4. EMA Challenges
1) Communication/links between accounting and other departments often not well

developed
2) Materials use, flow and cost information often is not tracked adequately
3) Many types of environment-related cost information are not found in the accounting
records
4) Investment decisions are often made on the basis of incomplete information
5. Physical Information
To assess costs correctly, an organization must collect not only monetary data but also
nonmonetary data on materials use, personnel hours and other cost drivers. EMA places a
particular emphasis on materials and materials-driven costs because: (1) use of energy, water and
materials, as well as the generation of waste and emissions, are directly related to many of the
impacts organizations have on their environments and (2) materials purchase costs are a major
cost driver in many organizations.
6. Monetary Information
Organizations define environment-related costs differently, depending on the intended uses of

the cost information, an organization’s view of what is “environmental,” its economic and
environmental goals and other reasons. Two of the most widely used schemes for defining and
categorizing organization-level environment-related costs for EMA purposes are those of the US
Environmental Protection Agency and the Japanese Ministry of Environment, but there are many
other examples.
7. Environmental Cost Category
8. Environmental Cost Report
Subsets of EMA information are disclosed via several other different types of reporting:
• national accounting and reporting;
• financial accounting and reporting;
• reporting on corporate environmental performance to environmental protection agencies and

the public.
The Pros and Cons

Most advantages of environmental management accounting can make increased profitability and
better sales opportunities:
 Better regulatory compliance - running an EMA will help ensure the environmental legal
responsibilities are met and more easily managed on a day-to-day basis.
 More effective use of resources - will have policies and procedures in place that help
manage waste and resources more effectively and reduce costs.
 Marketing - can highlight the business’s credentials as an environmentally aware
operation that has made a commitment to continual environmental improvement through
advertising or annual reporting.
 Finance – it will easier to raise investment from banks and other financial institutions,
which are increasingly keen to see businesses controlling their environmental impact.
 Increased sales opportunities - large businesses and government departments may only
deal with businesses that have an EMA.
 Lighter regulation - even if an EMA is not a regulatory requirement, by showing your
commitment to environmental management, you may benefit through less frequent site
visits or reduced fees from environmental regulators.
Disadvantages of an environmental management accounting. can stem from cost and staff
negativity:
 Cost - the costs involved can vary considerably, however you should be able to find low-
cost opportunities that will produce significant cost savings and offset the cost of
implementing and operating the EMA.
 Time and resources - an EMA should help the business to become more profitable by
reducing energy consumption, waste and, therefore, costs, however it is an investment
which requires you to commit time and resources.
 Management or staff resistance – an EMA can be seen as unnecessary, so we should
explain the basic aims and benefits early on in the process, eg through a presentation to
the management board or through your business’ communications.
 Scope – you can feel overwhelmed at the prospect of implementing an EMA across the
business, however an EMA can be piloted within one part and later rolled out to other
areas.

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Seminar on Management Accounting

by Riwayadi, SE., MBA., Ak., CA., CSRS., CPMA., CSRA.

The Reaction Paper by Group 3 :

Meetings 2 : Environmental Management Accounting

Environmental Management Accounting has no single, universally accepted definition

2. Types of EMA Information

• monetary information on environment-related costs, earnings and savings

1) Communication/links between accounting and other departments often not well

Organizations define environment-related costs differently, depending on the intended uses of

7. Environmental Cost Category

8. Environmental Cost Report

• national accounting and reporting;

• financial accounting and reporting;

• reporting on corporate environmental performance to environmental protection agencies and

The Pros and Cons

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