200494 Management Accounting: Issues of EMA in Company Assessment Answer
ENVIORNMENTAL MANAGEMENT ACCOUNTING
The following report contains the topic of EMA or environmental management system. All the aspects of the CMA have been clearly demonstrated in the following file. The EMA can be further classified into three parts which has been discussed in the following report. It is evident that including the EMA can be beneficial for the organization culture and annual figure. The opportunities of the EMA will demonstrate the impact on the expansion of the company. Therefore it can be said that management accounting is a direction that a respective firm can better set the ratio between productivity and sales.
The following report refers to the issue of ‘Environmental Management Accounting’ in short EMA, which is being adopted in company policies. The aim of this report is to showcase the opportunities, challenges and the barriers of the EMA, when it is included in an organization. The accountant has communicated the issues of the EMA application by the help of this report. The management is expected take necessary decisions after the representation of this report. This method accounts for the information of the material and information of monetary decisions of the internal organization. The material information is included with the wastage and usage of the water and the energy. The EMA techniques can be classified into three types. This depends on he functional area of the business. If the EMA policies are efficiently followed, the company will have the benefits in future.
Management of accounting policies barriers, opportunity and challenges
Business have been encouraged by the awareness of general public in the business of green management in terms of taking care of the activities of the issues of the environment and the environment have been considered one of the most important factors in the making of decisions. Over the time the inclination of the public is rising towards the sustainable management of business. As per the general idea in order to achieve the sustainability of business, the needs of the present business have to meet the target without any risk of the environmental needs of the future generations (Shields, 2015). Environmental management accounting is developed through the acknowledgement and approved notions of the management of the green. The process of decision making in an organisation is affected by the quantifying and limiting the issues related to the environment in which Environment Management Accounting is used which is proved to be beneficial in terms of resolving issues. Therefore, firms are being helped by the EMA in terms of the green profile and it also helps in the better cost management (van Helden and Uddin, 2016).
As per the Australian Councils of Superannuation Investors in the top list of the 200 ASX companies, there are more than 90% organisations that are having compulsory reporting factors at a level that helps in the improvement of the business sustainability. The inculcation and implementation of this system of report helps in the improvement of the organisation’s reputation and also attracts the interest of the investors. The point of internal motivation through which organizations of Australia are promoted to use EMA are capable of reducing the cost and also effectively manages the risk while the factors that are external pushes the company in the implementation of the EMA which further helps by attracting more investors and publish the sustainability reports of the business. The common practises of EMA that are being used in the organisations of Australia are energy and carbon accounting which is the production of the carbon footprints and the amount of consumed energy that are being accounted in the organisations. As per the report, 50% of the companies of Australia in the next five years will be occupied in the accounting of carbon (van Helden and Uddin, 2016).
The EMA has been distinguished into two main categories: MEMA and PEMA. MEMA is the units of monetary of the activities of the organisation such as project investment which in turn increases the monetary value and quality of the environment in the assets of environment which is being contained in an organisation, cost of breaking the regulations and laws of the environment. PEMA is referred to as the activities of the physical units that is being done in an organisation affecting the natural environment. It is being expressed in cubic metres, joules and kilograms or the energy of joule measuring per unit production and the kilogram of the served materials per customers. These are the key points that differs MEMA from PEMA and also measures the environment of an organisation respectively (Cooper, Ezzamel and Qu, 2017).
Challenges and barriers
The EMA and the practise of sustainability development in different types of industries offer different types of challenges. If service industries and the manufacturing industries are compared then the industry of service has a vast advantage over the industry of manufacture. Service industry does not create much waste and also it is less impacting to the environment as compared to the industry of manufacture which creates much more amount of waste than the service industry and also it is much more impacting creating a negative impact to the environment. Moreover the amount of energy is utilized and the amount of carbon is produced by the service industry is less comparable to the industry of manufacture. Therefore the EMA application in the industry of manufacture solves the issues of time, challenges of the machination and also the issues of the coast (Maas, Schaltegger and Crutzen, 2016).
The first challenge which is being faced by the EMA in the development in the future is the regulations of the environment. Stringent regulations are being imposed by the regulations of the environment on the companies which implies that special regulations are needed to be followed.
In the recent times of EMA there has been an increasing rise in the manager’s voluntary acceptance dealing with the importance of impact of the business management in terms of the environment. Rising needs in terms of understanding that follows the impact of the monetary organization in terms of successful corporations. The EMA is necessary if the level of penalty caused due to the activities of the business is being wanted to be reduced by the management. EMA leads to the commitment, elimination, assessment and monitoring the undesirable cause of the cost of the environment and also its impacts (Renz, 2016).
EMA is being promoted by a large number of local, national and international government bodies. It is also being used by the different institutes of education on order to manage the environment of business. Maintenance of the operating cost of the business in terms of the activities of the business is also being helped by the EMA. it also helps the business to stay ahead from their competitors (Granlund and Lukka, 2017).
It mainly focuses o on the development of the green products, management of the supply chain, and design of the green service cleaner production, management system of the environment and also the friendly purchase of the environmental value. EMA effectively deals with the internal initiatives management. EMA is a set of broad approaches and principles but it is not the management system if the environment. It helps in providing various types of essential information for the different types of the activities of the management of the environment (Otley, 2016).
Implementing the EMA process can also give the organization opportunity for growing, and improving the few certain areas. This improvement outcome proves to be very beneficial for the organization.
- Attracting the customers by implementing the strategy of EMA is Avery popular marketing strategy of any company. It has been evident that implementation of EMA reduces the extra wastage of the company and also the production line consumes less energy. This type of reductions decreases the product pricing and increases the quality of the product and the company. Customers are usually attracted by this method of the company (Granlund and Lukka, 2017).
- This process also takes part in annual budget making. It has been evident that the annual budget is found to be more efficient by applying this process. Few amount of money is saved by the reduction of the wastage which further can be used for the capital or other expenses for improvement of the company.
- This process explains in investing in welfare of the organization without harming the external environment. The external environment is very important aspect of any company, which definitely poses an impact on the welfare and future profit of The Company. The employees also take interest in investing time for implementation of this process.
- The EMA process also takes parts in calculation of the business costs. After implementing the EMA process it can be noticed that the business cost of the company was reduced and complication in wastage management also reduces. The free environment provides a very healthy workplace for the employees which makes them more efficient the improvement and innovation can be noticed (Otley, 2016).
- This process also provides an impact on accomplishing the quantifiable target of the company. Meeting the targets can be a very positive impact for achieving the long term goals of the company.
- The process also ensures the international expansion of the organization. Getting the business permit in international market gets easy. Implementation of this process gives the company a desirable goodwill which is a very essential achievement of any organization or business.
- Challenges of achieving the future goals and the customer attraction become very easy if the policies of the method are followed correctly. The company gets more disciplined; in further future the company may get a respectful place in the world market trade.
- EMA method also attracts the diversity in the workplace which resulted to be more profitable in company expansion of the company. The workplace diversity gives the opportunity to make the employees more efficient and follow the deadlines of the projects (Nitzl, 2016).
EMA techniques are further classified into three types
First one is the ABC or in activities based on the accounting. ABC takes the account of each and every particular which is involved in the business process. LCA deals with the end from end part of the life cycle of any business. With the help of FCA or flow cost accounting which demonstrates the process turning the raw materials into the products (Messner, 2016).
Therefore, it can be said that without having specific procedure in accounting, it will be difficult for an organization to manage future prediction. Moreover, there should be a balance between production and sales and without having the ratio or margin, there will be impact of profitability. EMA tends to provide an outline how sales and production measures should be followed. Another important aspect of is less protocols that a respective organization can set own guidelines. It is quite undoubted that existing accounting standards like IFRS or AASB have some specifications that most of the organizations fail to meet the same. In this concern environmental supportive accounting solution can improve operational flexibilities by specifying proper guidelines of accounting. This process is applied for appreciating the product pricing, which is very beneficial for the customers and the business sales figure also. The annual sales figure can also improved by the wastage management system. Globalization