Applied Mathematicsematics

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By A.I. Mal'cev

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Another example also illustrates the problems that exist with basic terminological issues. UN DSD (2001 p. 5) suggests that cost accounting is also called management accounting, is the central tool for internal management decisions, yet is based on data obtained from financial accounting and the UN DSD acknowledges that financial accounting is mainly designed for meeting the needs of external rather than internal stakeholders. In contrast, Ansari et al. (1997 p. 19) suggest that environmental costs should be measured from the perspective of quality management – based on prevention, appraisal, internal and external failure categories.

Performance management Performance measurement and appraisal systems are described by Gray and Bebbington (2001 p. 59) as the point at which, if the organisation is serious about environmental impact environment, flow into all procedures and policies of a business: CHALLENGES FOR ENVIRONMENTAL MANAGEMENT ACCOUNTING 37 Most critically environmental issues must become a core factor in the design and operation of the financial system and the system of performance appraisal, incentives and rewards. Gray and Bebbington (2001 p.

11 for analysis of 39 cases across a range of industries). 3. Indirect environmental costs are lumped in with general business overheads The academic response: identify and measure direct environmental costs (US EPA, 1995). Revise allocation bases separating out indirect environmental costs using activity-based costing (resources consumed by activities) to reduce cross subsidisation of ‘dirty’iproducts, processes, sites and departments. The response from practice: the focus of most EMA cases (see Figure 3).

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