GREEN ACCOUNTINGACT 4611 SEMINAR IN ACCOUNTINGS GROUP 5

Three types of Green Accounting

Green Accounting (also called Environmental Accounting) This presentation focuses on the application of environmental accounting as a managerial accounting tool for internal business decisions. The process of identification, measurement, accumulation, analysis, preparation, interpretation, and communication of financial information used by management to plan, evaluate, and control within an organization and to assure appropriate use of and accountability for its resources

Green Accounting PracticesImproving environmental performance, Controlling costs, Investing in cleaner technologies, Developing greener processes, and products, and Forming decisions related to their business activities.

Main reasons for Green Accounting Many environmental costs can be significantly reduced or eliminated. Environmental costs (and, thus, potential cost savings) may be obscured in overhead accounts or otherwise overlooked. Environmental costs can be offset by generating revenues

Environmental costs Costs incurred to comply with environmental laws are clearly environmental costs. For example, Costs of environmental remediation, pollution control equipment, and noncompliance penalties

Terms of Environmental Costs Regulatory costs are costs incurred to comply with federal, state, or local environmental laws (also termed compliance costs). Voluntary costs represent costs incurred by a company which are not required or necessary for compliance with environmental laws but go beyond compliance. Gray zone costs refers to costs that are not solely or clearly "environmental" in nature but may also be viewed, in whole or part, as health and safety costs, risk management costs, production costs, operational costs, etc.

Terms of Environmental Costs Upfront costs include pre-acquisition or preproduction costs incurred for processes, products, systems, or facilities (e.g., R&D costs). Operational costs refer to costs incurred during the operating lives of processes, products, systems, and facilities, as opposed to upfront costs and back-end costs. Back-end costs include environmental costs that arise following the useful life of processes, products, systems, or facilities.

Terms of Environmental Costs Conventional costs include costs typically recognized in capital budgeting exercises such as capital equipment, raw materials, supplies, and equipment. Referred to as usual costs in EPA Pollution Prevention Benefits Manual. Direct costs is an accounting term for costs that are clearly and exclusively associated with a product or service and treated as such in cost accounting systems.

Terms of Environmental Costs Hidden costs refer to the results of assigning environmental costs to overhead pools or overlooking future and contingent costs. Overhead is often used synonymously with indirect or hidden costs as comprising all costs that are not accounted for as the direct costs of a particular process, system, product, or facility. The underlying distinction is between (1) costs that are either pooled and allocated on the basis of some formula, or not allocated at all, and (2) costs that an accounting system treats as belonging (directly) to a process, system, product, or facility (i.e., a cost center, in accounting terminology).

Terms of Environmental Costs Manufacturing or factory overhead refers to costs that are allocated using more or less sophisticated formulae as contrasted with "general and administrative (G&A)" overhead costs that remain in pools and are not allocated. General & administrative (G&A) costs are overhead or indirect costs that are not allocated to the costs of goods and services sold. Research and development (R&D) costs can include the costs of process and product design.

Terms of Environmental Costs Exit costs are the costs of proper closure, decommissioning, and clean-up at the end of the useful life of a process, system, or facility. Contingent costs refer to environmental costs that are not certain to occur in the future but depend on uncertain future events (e.g., costs of remediating future spills). Sometimes referred to as "environmental liabilities," "liability costs," or "contingent liabilities." Future (or prospective) costs refer to environmental costs that are certain to be incurred at a later date, which may or may not be known. Sometimes referred to as "environmental liabilities."

Terms of Environmental Costs Environmental liabilities is an umbrella term used to refer to different types of environmental costs including costs for remediating existing contamination, costs of complying with new regulations, future environmental costs of current operations (also known as back-end or exit costs), and/or contingent costs. Less tangible costs refers to expenses incurred for corporate image purposes or for maintaining or enhancing relationships with regulators, customers, suppliers, host communities, investors/lenders, and the general public. Also termed relationship costs or image costs.

Green or Environmental Accountants Green accountants are held responsible to identify and track green costs often times working with site, research and development, and production managers when planning their budgets. Green accountants help management recognize that the tax benefits, rebates and lower costs of being environmentally friendly add up to a real bottom-line reward for doing the right thing.

AT&T and their Green Accounting Approach The company defines green accounting as identifying and measuring AT&T's costs of environmental materials and activities, and using this information for environmental management decisions

A corporate environmental policy

Committing the company to develop and use nonpolluting technologies, minimize wastes, increase recycling, design products and processes with environmental impacts as a critical factor, and raise all employees' awareness of environmental responsibilities.

Formal environmental management systems AT&T have begun or are exploring new business approaches in which environmental accounting can play a part: Activity-Based Costing/Activity-Based Management Total Quality Management/Total Quality Environmental Management Business Process Re-Engineering/Cost Reduction Cost of Quality Model/Cost of Environmental Quality Model Design for Environment/Life-Cycle Design Life-Cycle Assessment/Life-Cycle Costing

Green accounting in AT&T The reason for Green Accounting to control/improve process costs to trace costs to green activities for investment decisions/trade-offs to assess design impacts, now and in the future to prove compliance with environmental standards to respond to customers and other stakeholders to support sustained growth of profitability to make it easier to understand AT&T's impacts on the future.

Two basic accounting activities in AT&T1) Planning, such as predictive analysis weighing environmental impacts on the future (i.e., life cycle analysis, target costing), and 1) Collecting and reporting data.

Group Member

Ms. Ploypatsorn Ms. Khanittha Ms. Nutsuda Ms. Paphawarin Ms. Wilasinee Ms. Wanting Ms. Qian Ms. Passorn

P. S. C. S. T. L. L. J.

ID.4816772 ID.4818658 ID.4911075 ID.4912508 ID.4913963 ID.4935240 ID.4935313 ID.5010401

No. 7 No. 8 No. 14 No. 20 No. 28 No. 39 No. 40 No. 41

THANK YOU FOR YOUR ATTENTION