The International Accounting Standards Committee / IASC developed a concept of the principles of international accounting in 1990. This includes environmental accounting. This is due to the growing business and companies that need to be held in environmental accounting. The definition of environmental accounting is the identification, measurement, and allocation of environmental costs and the integration of costs into business decision making and communicating the results to the company stakeholders. On the other hand, if you are more interested in standard bookkeeping instead of this, we recommend you visit Richard Darcy Gold Coast Bookkeepers.
The function of environment accounting (EA) is divided into 2, namely internal functions and external functions.
1. Internal functions.
This function is related to the internal parties of a company itself such as those who run a business or parties related to production. In this factor, the most supportive is the leadership of the company because the company leader is responsible for all decision making and policymaking in the company’s area.
2. External function.
The external function is a function of the EA that deals with financial reporting. In this function. Companies need to pay attention to the disclosure of the results of environmental conservation in the form of accounting.
According to the United States, Environmental Protection Agency (US EPA) an important function of the EA is to present the details of costs associated with the environment for company officials. These cost details can encourage identification of ways to reduce or avoid unnecessary costs when companies are improving environmental quality
There are several reasons why 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 company’s environmental performance that has had a negative impact on human health around the company and the success of the company’s business. With environmental accounting, it is expected to produce more detailed cost or price details for products from environmental processes that have necessary and enable the fulfillment of the needs of customers who like products with goods/services that are environmentally friendly.