History of Environmental Accounting: Advantages and Disadvantages
According to author Pahlen Acuña there are 3 great periods in which we can divide the evolution of accounting: the period that covers from ancient times to the Middle Ages considered as "simple or empirical game";the period of the "double game" that begins approximately from the year 1200 until the middle of the 19th century;and the "period of scientific accounting" initiated in the second half of the 19th century and until today.
We will concentrate specifically in this last period mentioned, in which empirical research arises in accounting. Until the 60s, the financial statements had an administrative and economic approach, the objective was to know and expose the results of the entity’s operations. The accounting doctrine begins to establish changes in these objectives, a look towards user information needs begins, thus emerging a paradigm shift.
Tua Pereda points out that: “The utility paradigm guides the content of the financial statements to the user’s needs, assuming that its main requirement is the adequate informative support for decision making: it is no longer (…) to measure in the abstractPast events, in search of a unique and self-sufficient concept of economic veracity, but of measuring and informing with a specific purpose: decision making, so that the user utility criteria constitutes the starting point for the determination ofaccounting rules and, consequently, the content of the financial statements."
Due to the international events that address the environmental problem, it is that multiple information needs begin to be born towards organizations, and that they must meet in order to fulfill the social responsibility that concerns them. The first Spanish publications about environmental accounting take place in 1992, and some authors before began to propose their treatment. We can establish that it is from this decade that a significant space for environmental accounting opens. Evolution of the accounting-medium relationship:
Among any of the great milestones of the 90s, we can highlight the emergence of the Kyoto protocol signed by several countries among which Argentina was present, which seeks a reduction in CO2 emissions through green bonds. As well as the birth of a series of ISO 14001 standards, which provides the guidelines for environmental management and also being the only certifiable standard that allows the entity to have a proof that it has met the requirements required for “non -pollution”.
On the other hand, international accounting standards make their appearance during this same time, the IASB makes a great contribution when publishing:
- IAS 36, which affects the measurement of environmental responsibilities and depreciation of environmental assets.
- IAS 37 that affects the recognition of environmental responsibilities.
- IAS 38 that deals with material immobilized.
Finally, we must mention that there is no international accounting standard that focuses specifically on addressing environmental issues. And in our country there are no professional accounting standards that require information about the social and environmental behavior of the entities, but we observe very positively as they currently begin (little by little) to worry about providing this type of information due tothat it is society that has begun to become aware and advance in order to preserve the environment.
ENVIRONMENTAL ACCOUNTING OBJECTIVES
Environmental accounting is making great importance today, and this is due to all the negative factors that are emerging in the environment due to the excessive exploitation of natural resources, many times without becoming aware of what this entails, paying more attention towhat is obtained economically and leaving aside adverse factors.
Environmental accounting has several objectives, where the most important thing does not revolve around the recordable in an accounting system, but in the information that the organization can issue with respect to its relationship with the environment.
The main objective is related to the measurement and control of environmental processes, as well as the assessment from the accounting point of view, that is, that all those environmental processes in which the organization participates, must analyze and measure them to dump them in the informationTo prepare for its users. When talking about environmental processes we refer to all, and not only to those that cause negative effects.
The other objectives are related to the elaboration and implementation of environmental laws and norms for organizations, increase communication and environmental information both in balance sheets and between organizations and within them, thus achieving importance of its implementation in all thelevels and know if organizations meet the environmental requirements and if they contribute to the care of this.
Advantages and disadvantages of the application of environmental accounting
Advantage
- It allows to have a rapid knowledge of the fulfillment of the socio -environmental requirements by the entity, thus leaving its behavior against it both technologically and in its processes, that is, that it will be evidenced whether they are clean or not.
- In case of complying with current environmental laws or regulations, it will allow the entity to obtain more easily financing sources, to carry out any business improvement regarding environmental care.
- Have prior knowledge about which company, entity or supplier will be related.
- Evaluate the improvements for the entity when applying environmental behavior, that is, its application and care will positively increase its social image.
- Provide information that allows awareness of users to increase and, especially, encourage other companies to begin to implement.
Disadvantages
- Not being mandatory yet, the entities usually cost their application, because there are no accounting systems that include or adapt to it easily.
- Environmental costs usually encomp.
- The entities do not usually reveal the data of the environmental damage caused by their activities, when applying environmental accounting they should do so which would expose them to society, in terms of their behavior and social and environmental commitment.
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