Current developments of sustainability reporting
1 current status of entities’ sustainability reporting.
In Australia, the reporting rate is much lower than average rate, with 41percent and 23 percent respectively (Parliament of Australia, 2010).
And this number is even far more behind other leading countries. In Japan the rate reached to 81 percent. Even government departments are less likely to publish reports voluntarily. The low rate of report is due to lack of incentives from mainstream financial market. Although the reporting rate is lower than average, the rate itself is increasing (Parliament of Australia, 2010).
In other nations, the development of sustainability reporting is irresistible. Relevant regulations and acts are set to make reporting regular and mandatory (Parliament of Australia, 2010).
2 the developments of reporting system
GRI offers the framework of sustainability report. The original sustainability reports were single issue reports which focused on either environmental or social performance. These one-dimensional reports have been replaced over time with the presentation of a variety of non-financial information through integrated sustainability reports (Parliament of Australia, 2010).
In 2006, the most recent update of GRI was occurred. The G3 Guidelines are the cornerstone of the GRI Sustainability Reporting Framework. It is recommended to be used as basis for all organizations’ reports. And it is updated by a lot of researches, for the purpose of better assessing corporate performance by continuous providing newer and more accurate indicators. Moreover, it consummates reporting principals and guidelines—offering report contents, report quality define criteria and report boundary.
In today’s competitive world, companies do not compete on price or delivery alone. Introduction of new products or new product features has become a main source of competitive advantage. The best example of this strategy is that of Pepsi Co. For decades, Pepsi Cola & Coca Cola battled for supremacy in the cola market, however in 1990’s Pepsi gained market share, improved profitability and ...
Relevant implementation issue
As OT is still using traditional energy to generate power and facing more and more severe water relating cost problem, both new production processing and accounting system needed to be installed.
For the sustainability accounting system, there are some issues needed to be concerned.
First of all, the technical issues in sustainable accounting. Accounting rules need to define environment event (Llewellyn, 1994).
Financial rules needed to be satisfied to recognise certain environment related events or operation. According to those rules, may environmental problems can be recorded and occurred in financial reports. Then, external parties may explicitly understand how the environment issue get involved into a firm’s operation.
Second, as sustainable accounting system emphasised environment cost should be not treated as contingency cost, those cost need to be measured and recorded precisely. Then a question arise, how to correctly allocate those batches of costs to each responsible centre? The main problem of this system is that the difficulty of dividing costs between environmental and non- environmental elements and so lack of credibility if the relating costs have (Larringa &Bebbington, 2001).
That is there is an unavoidable overlap between those costs.
Third, not only technical issues needed to be solved, corporate culture is also very critical to the implementation of new accounting system. Environment accounting cannot succeed without anticipating of corporate culture (Duncan&Thomson, 1998).
While implementation of sustainable accounting system is essential to OT because of severe competition and public concern, new power generation technology and environment-friend method is also need to change.
Cost accounting is an important tool in the management of any business firm or organization, which includes those in the small scaled industry. In the cause of our research instrument indicated the maintenance of improper and inadequate records coupled with the fact that cost methods used, through sometimes effective, were unconventional. For a small scale business to approach profit maximization ...
Underlying used fossil fuel is non-renewable resource and it’s not a clean resource. Its main drawback is pollution. After coal burning, the large emission of CO2 can’t be tolerated by public. However, coal is still the dominant way of power generation. And it is unclear that whether it is proper for OT to establish a clean energy power station. Meanwhile, it is costly for a single entity to establish a power station. So balancing many aspects, it is practical for OT to buy an emission cleaning system. On the other side, by using the old production system, the high use of water cause costs increase which is adverse to company itself. Use water recycle system is a good choice. Hence, both power generation energy and production system need to change too. Implementation issue
Given situations discussed above, here are some recommendations.
First, regarding to adopt sustainable accounting system, cultivate a sustainability concept in corporate. Any change in an organization can’t be successful without acceptance by majority in the group. It’s a long-run business. So it can be done by many ways, by training employees, by “set the tone from the top” to support sustainable awareness.
Second, make clearer environmental related cost allocation. For different departments, use different allocation base and charge rate. Like, in OT, the manufactory plant could use direct labour hour as allocation base, while it is better for management department use electricity consumption as overhead allocation base.
Meanwhile, several support departments should allocate costs to each other, by using reciprocal method. Though above means, more costs would be involved into calculation and the costs itself would be more precise.
With respect to existing production systems, it is less likely for a company to establish a power station for its own production; however it is likely to adopt certain system to reduce its pollution by buying some emission cleaning system. When the cost of adopting new energy system is affordable to OT, then the company can change the energy to use. The high use of water could be solved by leasing or buying a water- recycle system.
BAO 2204: 2 nd Assignment The current costing system that is presumed to being used is the Job Costing system: Cost Driver: Machine Hours According to the calculations that are specified in the first spreadsheet attachment, it can be assumed that the Job Costing system is the current costing system that Pilot Plant is allocating to the Low Voltage Group. As the above diagram suggests, this system ...