What is Environmental Accounting? Learn More
The International Accounting Standards Committee or what is known as The International Accounting Standards Committee or IASC developed a concept of international accounting principles in 1990. This includes environmental accounting. This is due to the growing development of businesses and companies so that environmental accounting is required. Identify accounting elements, measure and allocate environmental costs, and integrate costs into business decision making and communicate the results to company stakeholders. The functions of environmental accounting (EA) are divided into 2, namely internal functions and external functions, as the Irena’s Bookkeeping describe are;
This function relates to the internal parties of a company itself such as those who organize a business or parties related to production. In this factor, the most supportive is the company leadership because the company leader is responsible for all decision making and policymaking in the company’s territory.
The external function is a function of EA related to financial reporting. In this function. Companies need to pay attention to disclosure of results from environmental conservation in accounting form. An important function of EA is to present details of costs related to the environment for company officials. The breakdown of these costs can encourage the identification of ways to reduce or avoid unnecessary costs when the company is improving environmental quality
Several reasons make companies need to have environmental accounting, one of which is that it is possible to reduce and eliminate environmental costs. Another important reason is to improve the environmental performance of the company which has harmed human health around the company and the success of the company’s business. With environmental accounting, it is hoped that it can produce more precise cost details or price details for products from environmental processes that are necessary and allows meeting the needs of customers who like products with goods or services that are environmentally friendly.