StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Environmental Analysis - Essay Example

Cite this document
Summary
This paper 'Environmental Analysis' tells us that environmental accounting is now a subpart of accounting proper. There are different branches of accounting such as partnership accounting, corporation accounting, etc. The purpose of environmental accounting is to combine the costs of originally pure economic accounting…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.4% of users find it useful
Environmental Analysis
Read Text Preview

Extract of sample "Environmental Analysis"

Topic: Environmental Analysis (company reporting) - Identification and evaluation of key features of the accounting system of the Germany 25 marks INTRODUCTION Environmental accounting is now a sub part of accounting proper. There are different branches of accounting(Thompson, 1995) such as partnership accounting, corporation accounting, Sole proprietorship and limited companies. The purpose of environmental accounting is to combine the costs of originally pure economic accounting with the new science of economic accounting. This is a new field of accounting such that its focus is on how to measure the amount of investment the company has to put up in order to measure and communicate the costs from the company's use of raw materials and resources such as land, water, air and others. The environmental costs will include the amount the company will have to pay in order to indemnify the victims of the company's water waste victims. The environmental costs will include the amount of money spent to clean up the land and water area that they has been contaminated with dirty water sewage as well as the pollution of the air by the smokestacks with the company's carbon dioxide emissions in violation of the law. The environmental costs includes costs to clean up the company's contaminated sites, penalties for violation of the UK and Germany environmental laws. Environmental accounting also includes the taxes that the company will be able to save because the net income of the business has been reduced by money invested in environment saving devices. BODY According to Wolfgang Ballwieser, there are many major key features of the German Accounting System 1Accounting in Germany. One of which is that it is influenced by the Roman Law system. The German finance financial accounting is regulated by the law from the start to the finish. The start begins with the gathering of business financial data that will be used in the recording of daily business transactions what will be recorded and how it will be recorded. The finish of the accounting in our basic accounting course(Larson,1995) is the part when the financial statements such as the balance sheet and the income statements as well the statement of cash flows are produced. The most important accounting law in Germany is the Handelsgesetzbuch or simply known as the HGB commercial code. This German accounting law is composed of regulations(Sussland, 2000) that are depending on the which of business the German company is involved in. The business could be a sole proprietorship which means that is owned by only one individual or businessman or businesswoman. Another form of business organization is the balance sheet. The partnership is composed of two or more persons who will agree to contribute, money or industry to the partnership in order to generate income. The partners then agree to distribute the profits by dividing such based on a pre agreed profit and loss distribution plan. The last kind of organization is the corporation. The corporation is composed of shareholders who willingly invests their hard earned cash in the business but do not partake in the minor day to day business operations. This same German accounting law gives laws based on the size of the business. This Same German accounting law use the factor of what kind of business the company is engaged in. The German accounting system in all situations, even the predictable events, must be based on the Grundstze ordnungsmiger Buchfhrung or GoB which is described as the principles of regular accounting. The Gob had previously originated from accounting for business transactions. The the Grundstze ordnungsmiger Buchfhrung or GoB is a major factor in accounting for tax purposes because both the commercial accounting(Ross et al, 1996) and the tax computation process are related. The method of accounting will either increase or decrease the amount of taxes that the business enterprise will pay the government of Germany. Therefore, the process of using group accounting is now legally not relevant for the computation of dividend pay outs and it is also, according the accounting law, not relevant for taxation purposes. The business corporations in Germany are financed using many unique characteristic features such as the inclusion of a low rate of visible financing of equity. It also depicts a small number of corporations listed the stock exchange. Another feature is that a few number of private shareholders and this equates to scenario where the private shareholders play only a small part in decision making. The German accounting system displays that the main objectives in this European Union member state are the maintenance of the financial capital through the prudent analysis and proper computation of profits and the generation of business data which will display the net worth and results of business operations. The final output of this German accounting system is a published or unpublished balance sheet. The balance sheet shows the kinds of assets, liabilities and capital of the business. The financial statements such as the balance sheet, the income statement and the statement of cash flows are produced in such a way that the financial information needs of the shareholders, suppliers, creditors, customers, government taxation and regulatory agencies and other affected parties are quenched. One major feature of the German Accounting is system is that the financial statements must be produced in order to protect the creditors of the company. The logical reason for this is that if the creditors' trust of lending their money to the company is destroyed because the balance sheet and the income statement show that the company is making more sales than the total costs and expenses when in fact the total expenses and costs have higher amounts than the total sales figure then many creditors and investors may no longer trust the financial statements of the business. This the reason why the German government requires that the financial statements SHOULD be audited by Chartered accountants or their related counterparts like the Certified Public Accountants. In fact, only the limited companies are required to produce a true and fair view of the balance sheet, income statement, statement of cash flows and others. This is of the features indicated in the Grundstze ordnungsmiger Buchfhrung or GoB. The main purpose is, again repeated for emphasis, to protect the creditors of the company. Two examples of creditors of the company could be suppliers or the banks. The creditors will be protected when they see the financial statements and this true and fair view of the balance sheet, income statement, statement of cash flows and others indicate that the limited company generated more revenues or sales than the combined total of cost and expenses that have been used in the same German financial accounting period. This surely fits with the principle of reducing the tax base that will automatically give the shareholders a way to delay the payment of taxes. The loan groups such as the banks are more interested in the limited company's ability to pay loan obligations on time. The company is more interest in the creditors as compared to the stocks or equity of the company. - Evaluation of environmental influences on the accounting system 40 marks In the research spearheaded by the Statistical Commission and Economic Commission for Europe and the Commission of the European Communities, Done during the first week of October, 2001, The research by the Federal Statistical Office of Germany prepared by Dr. Hartmut Hoh, Dr. Karl Schoer and Steffen Seibel entitled ECON-EFFICIENCY INDICATORS IN GERMAN ENVIRONMENTAL ECONOMIC ACCOUNTING they research came up with the findings that "An economic activity involves the environment. At the same time the principle of sustainable development requires to deal with nature as carefully as possible. Therefore it is important to measure how an to which extent nature is used by economy over time. There are three essential classes of input factors from nature into economy that may be distinguished: supply of goods (such as raw materials), the supply of area for the location of economic activity and nature's function as a sink for the discharge of residuals and pollutants. For these classes more detailed input factors can be specified. In addition to the measurement of mere quantities information on the efficiency of the factor use is of major importance. In the German Environmental Economic Accounting or EEA, productivity indicators are used to measure economic efficiency at the national level. This article describes how productivities are defined and which natural input factors are covered by German Environmental Accounting. Two examples (raw materials and carbon dioxide emissions) show in detail how the productivities are calculated." This study shows that in the German company's need to convert the raw materials that it has paid into finished goods by using human beings identified as factory labor in order sell the finished goods to the German public or even outside Germany, the cost to the environment MUST also be equated to monetary costs and expenses. The cost is that if the company produces the finish goods in the factor and they company throws away the sewerage waste to the nearby river or lake, the nearby residents or even the citizens of such locality will suffer when their clean clear water is polluted by the factory wastes. The cost to the citizens will be sickness and in worse situations death. The company will in turn will in turn be violating environmental laws thereby resulting to their prosecution and the high probability of losing their case. The lose will result to their indemnifying the victims of their environment violating river waster disposal system. The amount the company will pay the victims and the German government will be ten times even more than the amount the company will spend to dispose their waste in the alternative but not environment destructive process. Another environmental issue is that the company, in its objective to generate goods could choose the environment violating process of polluting the air through carbon dioxide emissions or the company could invest in smoke treating equipment that will lessen the company's ten times higher environmental cost of indemnifying the victims and the penalties it will have to pay the German government. The money spent to put up environment friendly equipment will reduce the monetary profit of the company. One such environmental expense that will recorded in the accounting books is the setting up of factory smoke stacks that will increase the smoke release height by twenty feet so that the residents and citizens near the factory will not inhale the lung damaging factory smoke. Another environmental cost that will have to be recorded in the German company books is the cost of buying equipment that will recycle the waste water from the factory so that the nearby rivers or lakes will not be dumped with the environmental hazard that was identified earlier as factory waste water. Another environment accounting cost is money spent to smoothen or streamline the factory production process so that water waste and air pollution (carbon dioxide) waste will be reduced by significant amount. Environment, in this study, is an integral part of the German accounting process because the German Accounting system is patterned after the Handelsgesetzbuch or simply known as the HGB commercial code. Just like other law, a violation of the German Accounting law will be sanctioned with penalties, fines or even closure of the business. According to this German research, Nature is part of the production cost of the manufacturing plant. The major natural resources are the land area, the energy such as fossil oil, raw materials such as plants, trees, metal and the Water. The business economic factors are labour and capital. The environment in some instances is used as a sink for residuals and pollutants. The greenhouse gases pushes the environmental air balance to the edge with the emission of mn t CO2 equivalents. The acid gases put pressure on the environment through the emission of mn acidification equivalents. The research showed that production companies produced the highest amount of carbon dioxide gas that polluted the air in the 1991to 1998 study period. - Comparison with the UK accounting system 20 marks The accounting system in the United Kingdom is under the supervision of the Accounting Standards Board of the United Kingdom The UK accounting principles are based on generally accepted accounting principles and international accounting standards and the international financial reporting standards. The generally accepted accounting principles were discussed and approved by UK based accountants and other concerned parties. The International Accounting Standards are were discussed and approved a group of accountants from around the world that includes the United States and others. The New United Kingdom accounting standards are based on international financial reporting standards. The United Kingdom government agency ENVIRONMENT AGENCY2 stated that "The Environment Agency is committed to "develop an environmental accounting system to support the integration of environmental performance measures into our core financial processes, and to track internal environmentally significant expenditure" (Environmental Policy Statement 12 July 2000)." The United Kingdom environmental accounting procedures is patterned after the United Nations Environmental Management Accounting Procedures and Principles as well as the European Union recommendation dated May 30,2001 on the recognition, measurement and disclosure of the environmental issues in the yearly balance sheets and income statements in order to implement the European Union accounting rules which guides in order to improve the quality, comparability and transparency of environmental data that are included in the United Kingdom companies' yearly balance sheets and income statements and other yearly accounts. The United Kingdom is implementing the environmental accounting standard such as FRS 12 entitled Provisions, contingent liabilities and contingent assets, ASB 1998, ISBN 1857120736 that particularly looks at the accounting procedures that must be put in place in dealing with issues like land that is contaminated with waste water and the like. The United Kingdom financial reporting standards that help in the implementation of environmental accounting policies and procedures are "FRS 10 - Goodwill and intangible assets, FRS 15 - Tangible fixed assets, FRS 11 - Impairment of fixed assets and goodwill and other standards. The United Kingdom government is implementing the two environmental write ups known as The Green House Gas Protocol - a corporate accounting and reporting standard, World Business Council for Sustainable Development and World Resources Institute, September 2001, WRI, ISBN 2940240183. and the Waste Account - count the cost of waste from your business and measure your savings, Environmental Technology Best Practice Programme, November 1999, ET225." This only shows that the United Kingdom is very serious in its drive to implement the environmental laws within its territory. The companies within its territory will be penalized and fined and in worst case situations may close down the company if such company continues to endanger or damage the delicately balanced environment that we live in. CONCLUSION Accounting in Germany is based on law Handelsgesetzbuch or simply known as the HGB commercial code. When a person or a company violates the law, The person or company will been punished with either a fine, a penalty or even imprisonment for individuals or closure if the law breaker is a business company. The above data shows that the German accounting system in all situations including the predictable events should be e based on the Grundstze ordnungsmiger Buchfhrung or GoB which is described as the principles of regular accounting. The Gob had previously originated from accounting for business transactions. For emphasis, the Grundstze ordnungsmiger Buchfhrung or GoB is a major factor in accounting for tax purposes because both the commercial accounting and the tax computation process are related. There are three alternatives to the above scenario. The first alternative is to implement the German or United Kingdom accounting system but not implementing the environmental side because this will entail spending money on devices that eat up the net income of the company. The shareholders of the company of both the German and The United Kingdom companies will be happy due the higher dividend income they will receive if the environmental expenses are not pushed through. The second alternative is or the German company or the United Kingdom company to implement all environmental accounting rules which means that the company must borrow money, if they have no cash on hand at present, in order to avoid the big possibility that the German or United Kingdom company from paying the possibly ten times higher penalties and fines if they are ever charged in any court of law. This will however entail a bigger cost or expense that will decrease the net income of the company. The third alternative is for the German company or the United Kingdom company to spend some expenses which is lower in amount than the amount estimated in the first alternative above. This will save the company thereby the net income will be higher and this will make the shareholders happy for they will be receiving higher dividends. The best alternative of the three is the first alternative. The environment can never be equated as an expense that can be pushed to a later date or disregarded at all. The economic consequences of violating the environmental may result not only to fines or penalties alone but even may result to the closure of the business. The German accounting system is based on law and the priority is the creditors. The United Kingdom accounting system is based on accounting principles discussed and approved by the United Kingdom Accounting Standards Board. Both the German and United Kingdom companies follow the International Accounting Standards and the International Financial Reporting Standards. Therefore, they are on the same plane or equal in terms of comparison. All countries, including the United States and other countries presently follow the International Accounting Standards and the International Financial Reporting Standards. The basic reason is because accounting is the language of business. With the same standard and accounting principles, investors, customers, creditors, suppliers, government regulating and taxation agencies, employees, shareholders, the people living within the environment of the company can easily understand what the company is trying to tell them in technical language. Since the planet is presently suffering from the consequences of many years of some man's environmental selfishness, Time is not on our side as we try to lessen the number of environment damaging activities in our planet especially in both the German and the United Kingdom environment. REFERENCES: Thompson, A., Strickland A., Strategic Management, McGraw-Hill, London, 1999 Sussland, W., Connected, A Global Approach to Managing Uncertainty, London, Thompson, 2000 Ross et al., Essentials of Corporate Finance, Irwin Press, London, 1996 Larson K., Miller P., Financial Accounting, Irwin Press, London, 1995 Wolfgang Ballwieser, Thomson Learning Environment Agency Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Environmental Analysis (company reporting) Essay”, n.d.)
Environmental Analysis (company reporting) Essay. Retrieved from https://studentshare.org/science/1530685-environmental-analysis-company-reporting
(Environmental Analysis (company Reporting) Essay)
Environmental Analysis (company Reporting) Essay. https://studentshare.org/science/1530685-environmental-analysis-company-reporting.
“Environmental Analysis (company Reporting) Essay”, n.d. https://studentshare.org/science/1530685-environmental-analysis-company-reporting.
  • Cited: 0 times

CHECK THESE SAMPLES OF Environmental Analysis

Methods and Techniques for Analyzing Business Competition

Environmental Analysis Paper Date Environmental Analysis Paper Introduction They Hershey Company is the largest North American manufacturer of quality sugar and chocolate confectionary products, headquartered in Hershey, Pennsylvania in the United States.... This paper will seek to conduct an environmental scan and economic analysis on Hershey's, including the remote, industry, and operating environments.... Like other businesses in the world, the Hershey Company operates with business environment that is pre-disposed with business environmental factors such as legal-political, socio-cultural, economic, and technological factors....
6 Pages (1500 words) Essay

Novartis Environmental Analysis

As a result of this Novartis has also adopted and implemented information and communication technologies to foster its business activities such as marketing, management of its global business and research (Novartis AG SWOT analysis 5).... The pharmaceutical business in characterized by inevitable implication from the social environment which includes the beliefs of a society on the use of conventional drugs as opposed to the religious traditional approaches to healing (Novartis AG SWOT analysis 7)....
4 Pages (1000 words) Case Study

Environmental Analysis HTC

This report entails the Environmental Analysis of HTC Corporation and formulating a strategic plan for the company.... The Environmental Analysis depicts some of the key strengths, weaknesses, threats, and opportunities having an impact on the company.... Environmental Analysis of HTC Corp.... SWOT analysis can be used as an effective strategic tool to analyze the internal and external factors associated with the organization (Williams, Champion, and Hall 108)....
7 Pages (1750 words) Essay

ARAMARK: An Environmental Analysis

nbsp; ARAMARK: An Environmental Analysis (Fill in with your information etc ARAMARK: An Environmental Analysis An organization's external environment has three components: the remote environment, the industry environment, and t he operating environment.... The author answers the following questions: what is ARAMARK?...
2 Pages (500 words) Research Paper

Environmental Analysis of Disney

The main challenges faced by Disney will be changing technology and constant need for technological innovations, strict environmental laws and regulation demanding safe and clean production.... Disney is one of the leading companies in media and entertainment industry.... External environment determine strategic planning and long-term goals selected by the company, its cause of action and new approaches to business....
3 Pages (750 words) Case Study

Macro & Micro Environmental Analysis

This report stresses that considering the analysis of the above five industry forces, the hotel industry holds moderate to high level of attractiveness as three out of the five forces are in beneficial state and the threat of new entrants is also not high but moderate.... Organisations can assess the conditions of its macro environment through application of SPECTLE analysis while the microenvironment can be assessed through stakeholder analysis or Porters five force concepts....
15 Pages (3750 words) Essay

South Korea's Environmental Analysis

ts free market system is not controlled by monopolies or South Koreas Environmental Analysis Affiliation: Key characteristics of the market South Korea has one of the most improved and free economy not only in Asia but in the whole world as well.... Its economic success has surpassed expectation and continues to flourish....
2 Pages (500 words) Essay

Macro Environmental Analysis: Nestle

The paper contains PESTLE analysis of Nestle Company.... This analysis template provides macro-level environmental information for Nestle in the United States.... Testimonials from global farmers can illustrate the environmental improvements in the global food supply and build a positive eco-minded reputation in its desired target consumers....
10 Pages (2500 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us