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ACCOUNTING
Learning objectives
Contingent liabilities
Failure to clean up contaminated sites,
Fines and penalties for non-compliance with regulations.
These costs might be indicated in internal company
reports, only if there is a high probability that the
company will be obliged to pay these costs in the future
and if they are material in value.
Tier 4 Relationship and image costs
10
Prevention activities
Appraisal activities
Internal failure activities
External failure activities
Prevention activities
13
These costs may include the costs of cleaning up the plant following a
chemical explosion or leakage, and costs of occupational health and
safety claims.
External failure activities
16
These costs may include the cost of cleaning up polluted sites, fines
for environmental damage, and losses associated with a loss of
reputation (and future sales) due to public awareness of the
organizations failure to engage in environmentally responsible
actions.
Environmental costs information in
decision making
Suppliers
Externalities accounting provide useful information
for gauging a supplier environmental footprint
An organization may be willing to pay more for
supplies that are know to have reduced adverse
impacts on society and the environment.
Long-term contracts stipulating the quality of
supplies, production methods, employment
practices, storage, and delivery practices can
provide vital information to evaluate supplier
performance.
Environmental costing benefits to
Suppliers and customers