Description
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
n
?
)r
, e , EpA
Ulllted states 2 ; ; T t a lPcotection
Office of Pollution Prevention and Toxics Waslungton, DC 20460
EPA742-K-94-001 July 1994
Design for the Environment
Management Accounting and Capital Budgeting for Environmental Costs Project Update #2
October 1993 - June 1994
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Major Goals of the Stakeholders' Action Agenda:
1. Clarify terms, concepts and roles
2. Create management incentives
3. Promote education, guidance and outreach
4. Develop and disseminate tools, methods and systems
Since late 1992 EPA's Design for the Environment @E) Program has been working to integrate environmental costs into management accounting and capital budgeting practices. This document is the second in a series of updates designed to inform the public of project activities, recent publications and contacts. A new addition to this update is information about other EPA activities outside the D E Program that involve total cost accounting concepts. The documents, fact sheets, and reports discussed throughout this project update can be obtained from the Pollution Prevention Information Clearinghouse (PPIC) (202) 260-1023, unless otherwise indicated. Previous Fact sheets and project updates are available from PPIC:
0
"Accounting and Insurance Projects: Applications for Pollution Prevention in Financial Professions" describes the initial phases of the Accounting Project (EPN744F-093-002) March, 1993 "Environmental Accounting and Capital Budgeting, Project Update # I " describes the project vision and objective, and work w i t h key stakeholders (EPN742F-93-07) October, 1993
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"HE WORKSHOP AND STAKEHOLDERS' ACTION AGENDA
EPA and five co-sponsors held a national workshop of experts i n management accounting and capital budgeting in December, 1993. PIanned by a Focus Group of key stakeholders, the workshop had three objectives:
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0
0
Stimulate ongoing dialogue Identify and discuss issues and potential changes/needs Develop a Stakeholders' "Action Agenda" for improving environmental accounting and capital budgeting
The Focus Group targeted the Workshop in two important ways. First, the group agreed to focus on management accounting (the collection of information for internal decisionmaking), recognizing, however, that financial accounting and reporting would also inevitably be discussed. Second, while recognizing that success in environmental accounting will depend on the support of senior business managers, it decided that the audience for the workshop should be a wider array of stakeholders. Senior business managers, such as CEOs and CFOs, the focus group determined, should more appropriately be the target of follow up efforts. . One of the key Workshop recommendations is in fact to engage senior management. Workshop co-sponsors included:
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-0
American Institute of Certified Public Accountants Institute of Management Accountants
lub
0
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U.S.Chamber of Commerce
AACE International (Assoc'n for Total Cost Management) U.S. Environmental Protection Agency.
The Action Agenda
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The "Stakeholders' Action Agenda: A Report of the Workshop on Accounting and Capital Budgeting for Environmental Costs" (EPA 742-R-94-003) was the primary output of the workshop. Though the Agenda was not specifically endorsed by the sponsoring organizations, it captures the diverse views of nearly 100 participants and is representative of the actions stakeholders can undertake. The Agenda identifies concrete steps the business community, professional associations, academia, government and small business can take to improve environmental accounting and integrate environmental cost information into decisions on product design, costing and pricing, capital budgeting, performance evaluation, and managers' compensation to name a few. Evervone can Dick UD the Action Agenda and find suecific issues and mommendations that their can address. stakeholder P ~ U D The major goals identified in the Action Agenda are presented on the first page of this update. Meeting these goals, the Agenda acknowledges, must involve many different individuals and organizations. Stakeholders who adopt a customer-supplier, total quality framework, the Agenda suggests, may find success easier. To make the Workshop findings practical and useful, the Agenda presents specific recommendations for key stakeholder groups. The list below includes many but not all of the key stakeholders. The Focus Group believed this list was a good place to start. The ten groups are:
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Business Financial Staff Business Accounting Staff Business Environmental Health & Safety staffs Business Operations Staffs
e
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e e
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Accounting Professional Associations Other Professional Societies Small Business Management Consultants Education and Research Community Government Agencies
Key recommendations for the business community include securing top management support, promoting the use of cross-functional teams to address environmental accounting issues, promoting education and training for all parts of the business, benchmarking, and developing and applying analytical and accounting tools that integrate environmental costs. Accounting and other professional societies should assess members' needs, develop educational and training materials, develop standards and guidelines, facilitate communication, review codes of ethics for integration of environmental information, view environment as an economic opportunity, and be proactive, not reactive. Development of curricula and research on a wide array of key issues are the recommendations for the Academic and research community. For small business, the primary recommendations are assistance on regulatory matters and easy to use tools.
Among the key recommendations, the Agenda suggests that EPA should continue its facilitation role in environmental accounting. Based on this finding, EPA will focus initially on promoting cooperative efforts
2
\
' I
in education, guidance, outreach and research. The Agency is also i n the process of reviewing its options for the longer term. To increase the likelihood of success, and in response to the Agenda's recommendations, EPA will focus its efforts on supporting the work of key stakeholders and experts.
Commitments to Implement the Action Agenda
If you or your organization would like to participate in implementing one or more recommendations in the Agenda, or undertake any other activities to promote improved accounting and capital budgeting for environmental costs that are consistent with the spirit of the Action Agenda, EPA is prepared to report your efforts and commitments to your colleagues and the public. Please complete EPA's revised Accounting
e N
Agenda). EPA will publish a report listing each organization and its commitments to further the Agenda. If you have questions or would like to discuss possible commitments, please contact Dr. Martin Spitzer or Holly Elwood in EPA's Pollution Prevention Division (202) 260-4164.
EPA & EPA SUPPORTED ACTIVITIES COMPLEMENTING THE ACTION AGENDA:
Research
World Resources Institute Study of Corporate Management Accounting Practices. Descriution: Through a series of case studies, this project examines how environmental costs are accounted for within five major corporations (Amoco Oil Company, Ciba-Geigy, Dow Chemical, DuPont, and S.C. Johnson) and four smaller companies, and proposes recommendations for better environmental accounting by business. Status: Draft confidential reports have been submitted to five companies. Final cases for public dissemination are in preparation. A final report is expected by the end of 1994. Contact: Daryl Banks, World Resources Institute at (202) 662-2507 for more information. Linking Environmental Liabilities and Pollution Prevention Investment Decisions. Descriution: EPA supported research by the Environmental Law Institute to explore the connection between various environmental liabilities (such as CERCLA, Criminal, Tort, etc.) and managerial decisions to prevent pollution. Status: EPA will be seeking comments on the draft report and future directions of the project. Contact: Holly Elwood of EPA at (202) 260-4362 for more information. Survey of Corporate Accounting Practices. Descriution: EPA has funded the Tellus Institute, a not-forprofit research institute, to conduct a survey of "current" and "best" practices for incorporating environmental costs into capital budgeting processes. The study is being developed in collaboration with the Institute of Management Accountants (IMA). Status: The survey instrument is under development and will soon go to the Federal Office of Management and Budget for review under requirements of the Paperwork Reduction Act. For more information Contact: D r .Allen White, Director of Tellus's Risk Analysis Group at (617) 266-5400; Dr. Martin Spitzer at EPA (202) 260-4342. For information on IMA's current research projects, contact Julian Freedman, the IMA's Research Director at (201) 573-9000.
Outreach
'Mobilizing the Professional Accounting Community. DescriDtion: As an outgrowth of the December Workshop, EPA, the Institute of Management Accountants (IMA) and the American Institute of Certified Public Accountants (AICPA) are exploring cooperative undertakings. Among the potential areas for cooperation are: (1) an international conference on environmental accounting, (2) continuing professional education, (3) non-binding guidance on managerial accounting for environmental costs, (4) training videos, and (5) research. For more information please contact: Dr. M a k n Spitzer at the U.S.EPA (202) 260-4342, Julian Freedman at the IMA (201) 573-6212, or John MOKOW at the AICPA (201) 938-3011.
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= New Activities Since October, 1993
3
Network Development and Mailings. Status: EPA has completed the third update to the Environmental Accounting Network. With increasing attention on environmental accounting since October, 1993, the network grew from just over 300 members to more than 500 members. The revised network now titled, "Directory of EPA's Network for Management Accounting and Capital Budgeting for Environmental Costs , (EP.4/742-3-94-004), has an improved index and is more user friendly. EPA expects to continue to update the network and directory to help anyone interested in environmental accounting find information and resources. The directory may be used as a phone directory, or for networking or identifying members in particular sectors. It sorts network members into categories, such as industry, consultants, academics, government officials, etc. In addition, for those individuals who filled out EPA's "Network Membership Form," the directory also describes what network members do andor the services they have to offer. the riclxmk nt wish to o r add information to vour . S . EPA's Network in existing listing, please complete and return the "Membership Form for U Environmental Accounting and Capital Budgeting" or contact PPIC to order one. Please feel free to copy the form and provide it to any colleagues that you believe should be part of the network.
I'
'Pollution Prevention Case Studies and Savings from Pollution Prevention. DescriDtion: Finding case studies on pollution prevention in industry that include financial savings from pollution prevention can sometimes be difficult. To help interested parties find this information, EPA recently published two documents: A "Summary of Pollution Prevention Case Studies with Economic Data (by SIC Codes) (EPN742S-94-001), which contains more than 200 examples of case studies that contain economic information, and a companion document, "Abstracts of Pollution Prevention Case Study Sourcesn (EPA/742-B-94-001), which is an annotated bibliography of sources of case studies. Additional case studies not noted in these documents are available directly from states as well. For information on how to contact state pollution prevention programs directly see EPA's "1993 Reference Guide to Pollution Prevention Resources (EPN742/B-93401). Status: Completed. Contact: PPIC (202) 260-1023.
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'Internet. Status: EPA is working to make the D E Environmental Accounting Information available on Internet. We hope to load a variety of documents on in the coming months. If you would like others to know your Internet address, please complete EPA's revised Network membership form mentioned immediately above. 'Sharing Reports, Resources or Success Stories. If you possess or know of information, reports, resources, success stories or training opportunities that you would like share with others, please send a copy to Environmental Accounting Project, USEPA, Pollution Prevention Division (7409, 401 M Street, SW Washington, DC 20460, or contact Holly Elwood in EPA's Pollution Prevention Division at (202) 260-4362. EPA is committed to being a resource center for information.
University and Professional Curriculum Development and Tmining
University Curricula and Resources. Description: EPA is supporting the National Pollution Prevention Center for Higher Education at the University of Michigan in developing university based curricula. The Center has revised its curriculum module (Le., compendium of resources) on Environmental Accounting (April, 1994). This compendium of resources provides an introduction to the application of pollution prevention in business accounting, and includes bibliographic information, several case studies that may be used in a management accounting curricula, and some key contacts in the academic community. Status: Compendium revised April, 1994. The Center's staff is currently completing an annotated bibliography of environmental accounting documents. Contact: The compendium and bibliography when it is completed may be obtained from the University of Michigan, School of Natural Resources and Environment 430 E. University, Dana Building, Ann Arbor, MI 48109-1115; Ph: (313) 764-1412. Training Technical Assistance Providers. DescriDtion: In addition to exploring development of continuing professional education curriculum with the Professional U.S. Accounting Societies, EPA is continuing support for developing curricula to train professionals in government on environmental accounting and costing
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= New Activities Since October, 1993
4
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!
concepts. Specifically, EPA is supporting efforts to train state pollution prevention technical assistance program personnel and federal EPA staff. In addition, as part of the Clinton Administration's Environmental Technology Initiative, EPA is hoping to develop protocols and support training for staff in the Department of Commerce's Manufacturing Extension Partnerships (MEPs) and the Small Business Administration's Small Business Development Centers (SBDC). The MEP's under Commerce's National Institute for Standards and Technology (NIST) provide services to small and medium businesses on investing in new production technologies. T6e SBDCs provide financial support and expertise to small and medium size businesses cross the country. Status: Grant award process underway. Contact: Dr. Martin Spitzer (202) 260-4342.
'Accounting Professional Education. For information on education for accounting professionals see under the "Outreach" heading 'Mobilizing the Professional Accounting Community' above.
See EPA's Resource List available from PPIC for additional available cumcula materials. If you are aware of university curriculum that others could use or adapt, please contact the University of Michigan at (313) 764-1412. If you are aware of cumcula for business or other professions, contact EPA's Holly Elwood (202) 260-4362
Methods for Environmental Accounting, Total Cost Assessment & Capital Projects
Total Cost Assessment Software. Descriution: Now available to federal, state and local government employees at no cost is a total cost assessment software package called P2.FINANCE. Available from EPA's
PPIC, P2.FINANCE is a spreadsheet software system designed to guide organizations in the data collection and analysis essential to a clearer financial evaluation of pollution prevention projects. P2.F"ANCE is designed to complement an organization's existing project evaluation practices while ensuring that prevention investments receive balanced and comprehensive treatment during the capital budgeting process. For organizations or projects where no formal budgeting guidelines are in place, P2.FINANCE offers a valuable starting point for introducing a TCA approach. Status: Completed. Contact: Call PPIC for an order form.
'Methods of Environmental Accounting (including total cost assessment, total cost accounting, full cost accounting, and life cycle costing). Descriution: EPA plans to support research that will inform practitioners on available methods of environmental accounting. The report will document existing accounting and costing methods, (largely focused,on capital projects or acquisitions) and evaluate them against a set of life-cycle costing (LCC) criteria. LCC means all internal and external costs associated with a product or process from raw material acquisition to final disposal of waste. Each method shall be summarized, assessed against LCC criteria, and then reported with availability and cost information. Status: Grant funding process underway; report expected in December 1994. Contact: If you know of any Total Cost Accounting models that should be part of the study, contact Keith Weitz at Research Triangle Institute at (919) 541-6973, or EPA's Holly Elwood (202) 260-4362. 'Review of Project Management Software and Systems for Integration of Environmental Attributes. Descriution: This study will document commercially available "project management software systems" and evaluate the extent to which environmental information, including costs, is incorporated into each system. It will be conducted in cooperation with AACE International Status: Grant funding process underway. Report expected early 1995. Contact: If you know of project management system software of methods that should be part of the study, contact Keith Weitz, Research Triangle Institute (919) 541-6973, or EPA's Holly Elwood (202) 260-4362. "rotal Cost Assessment Software for Screen Printers. DescriDtion: EPA's DfE program staff plans to work with the Tellus Institute and the Screen Printing Association International to develop a decision support tool to perform financial assessments using a total cost assessment framework. The tool is an upgrade of Tellus's P2.FINANCE software system described above, tailored to the needs of the screen printing industry. When completed, it will demonstrate to screen printers how lower risk pollution prevention alternatives may save money. Effectiveness of the tool will be judged through case studies, and fact sheets will be developed to publicize innovative pollution prevention solutions emerging from the case studies. Status: Grant funding
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= New Activities Since October, 1993
5
,
process underway. Completion expected early 1995. Contact: Stephanie Bergman of EPA at 260-1821. American Society for Testing and Material (ASTM). Descridion: The ASTM's Subcommittee on Pollution Prevention, Reuse, Recycling and Environmental Effuiency (E50.03) is developing a "Standard Guide for Pollution Prevention" (Standard E.50.03.1). EPA has funded an effort to incorporate "Total Cost Assessment" (TCA) principles'into the Guide. Status: TCA work complete, status of guide unknown. Contact: James Satterfield, Chair of the E-50.03 Subcommittee, at (215) 864-6434 for more information.
OTHER ENVIRONMENTAL ACCOUNTING ACTIVITIES IN THE FEDERAL GOVERNMENT AND AROUND EPA
'National Performance Review. Descriution: Environmental accounting in the federal government has been identified as an important issue in the National Performance Review's assessment of ways to reinvent government. A major recommendation of the report, "Creating a Government that Works Better and Costs' Less: Reinventing Environmental Management, Accompanying report to the National Performance Review (September, 1993) is to "Improve Federal Decisionmaking Through Environmental Cost Accounting. The 'report calls for EPA and the Department of Defense (DoD) to develop pilot projects, report on those projects and make recommendations for government wide implementation. Status: Report completed and distributed to EPA and DoD. Contact: Copies of the report may be obtained from the U.S.Government Printing Office, Superintendent of Documents, Mail Stop:SSOP, Washington, DC 20402-9328.
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Total Cost Assessment and Life Cycle Assessment: A Practical User's Guide for Federal Facilities. Descriution: Under Federal Executive Order No. 12856, "Federal Compliance in Right-to-Know Laws and Pollution Prevention Requirements," all Federal facilities should apply life-cycle Analysis and total cost accounting principles to the greatest extent practicable, ,when evaluating pollution prevention opportunities under the order. To help Federal facilities staff implement the order, EPA's Office of Federal Facilities Enforcement (OFFE) is, among other things, developing a practical user's guide. The guide is designed to help front line managers become familiar with the application of total cost assessment principles as they begin compliance with the Executive Order. Specifically, it defines pollution prevention, life cycle analysis, life cycle costing, and total cost assessment (TCA); identifies the advantages of TCA principles; and provides examples and case studies. Status: Completion expkted in fall. Contact: Reggie Cheatham in OFFE at (202) 260-4641.
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'Office of Solid Waste, Waste Minimization Branch. Descriution: EPA's Waste Minimization Branch plans to apply elements of accounting and capital budgeting for the environment in implementing the "Draft RCRA Waste Minimization National Plan." Status: The draft plan was recently released for public review. Contact: The RCWSuperfund Docket at 1-800-424-9346 and please ask for document No. EPA 530-D-94-001. For more information contact Mark Ralston of EPA's Office of Solid Waste at (703) 308-8595.
'Full Cost Accounting for Municipal Solid Waste. Descriution: EPA's Office of Solid Waste is developing a guidance document titled, "Full Cost Accounting, Unit Pricing and Enterprise Funds: A Good Management Package for Municipal Solid Waste." The guide will address accounting issues in depth so communities can move from general fund accounting to accounting using generally accepted accounting principles (accrual accounting). Accrual accounting will allow communities to more clearly see the environmental impacts and full costs of operating landfills. Status: Publication expected in December, 1994. Contact: George Garland (202) 260-7413.
The documents, fact sheets, and reports discussed throughout this project update can be obtained from the Pollution Prevention Information Clearinghouse (PPIC), unless otherwise noted. Phone: (202) 260-1023, Fax: (202) 260-0178,
or write
PPIC U.S. EPA Headquarters Library (3404) 401 M Street, SW Washington, DC 20460
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= New Activities Since October, 1993
doc_888970542.pdf
Management accounting or managerial accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis to make informed business decisions that will allow them to be better equipped in their management and control functions.
n
?
)r
, e , EpA
Ulllted states 2 ; ; T t a lPcotection
Office of Pollution Prevention and Toxics Waslungton, DC 20460
EPA742-K-94-001 July 1994
Design for the Environment
Management Accounting and Capital Budgeting for Environmental Costs Project Update #2
October 1993 - June 1994
.
-.
Major Goals of the Stakeholders' Action Agenda:
1. Clarify terms, concepts and roles
2. Create management incentives
3. Promote education, guidance and outreach
4. Develop and disseminate tools, methods and systems
Since late 1992 EPA's Design for the Environment @E) Program has been working to integrate environmental costs into management accounting and capital budgeting practices. This document is the second in a series of updates designed to inform the public of project activities, recent publications and contacts. A new addition to this update is information about other EPA activities outside the D E Program that involve total cost accounting concepts. The documents, fact sheets, and reports discussed throughout this project update can be obtained from the Pollution Prevention Information Clearinghouse (PPIC) (202) 260-1023, unless otherwise indicated. Previous Fact sheets and project updates are available from PPIC:
0
"Accounting and Insurance Projects: Applications for Pollution Prevention in Financial Professions" describes the initial phases of the Accounting Project (EPN744F-093-002) March, 1993 "Environmental Accounting and Capital Budgeting, Project Update # I " describes the project vision and objective, and work w i t h key stakeholders (EPN742F-93-07) October, 1993
0
"HE WORKSHOP AND STAKEHOLDERS' ACTION AGENDA
EPA and five co-sponsors held a national workshop of experts i n management accounting and capital budgeting in December, 1993. PIanned by a Focus Group of key stakeholders, the workshop had three objectives:
0
0
0
Stimulate ongoing dialogue Identify and discuss issues and potential changes/needs Develop a Stakeholders' "Action Agenda" for improving environmental accounting and capital budgeting
The Focus Group targeted the Workshop in two important ways. First, the group agreed to focus on management accounting (the collection of information for internal decisionmaking), recognizing, however, that financial accounting and reporting would also inevitably be discussed. Second, while recognizing that success in environmental accounting will depend on the support of senior business managers, it decided that the audience for the workshop should be a wider array of stakeholders. Senior business managers, such as CEOs and CFOs, the focus group determined, should more appropriately be the target of follow up efforts. . One of the key Workshop recommendations is in fact to engage senior management. Workshop co-sponsors included:
0
-0
American Institute of Certified Public Accountants Institute of Management Accountants
lub
0
0
U.S.Chamber of Commerce
AACE International (Assoc'n for Total Cost Management) U.S. Environmental Protection Agency.
The Action Agenda
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<
The "Stakeholders' Action Agenda: A Report of the Workshop on Accounting and Capital Budgeting for Environmental Costs" (EPA 742-R-94-003) was the primary output of the workshop. Though the Agenda was not specifically endorsed by the sponsoring organizations, it captures the diverse views of nearly 100 participants and is representative of the actions stakeholders can undertake. The Agenda identifies concrete steps the business community, professional associations, academia, government and small business can take to improve environmental accounting and integrate environmental cost information into decisions on product design, costing and pricing, capital budgeting, performance evaluation, and managers' compensation to name a few. Evervone can Dick UD the Action Agenda and find suecific issues and mommendations that their can address. stakeholder P ~ U D The major goals identified in the Action Agenda are presented on the first page of this update. Meeting these goals, the Agenda acknowledges, must involve many different individuals and organizations. Stakeholders who adopt a customer-supplier, total quality framework, the Agenda suggests, may find success easier. To make the Workshop findings practical and useful, the Agenda presents specific recommendations for key stakeholder groups. The list below includes many but not all of the key stakeholders. The Focus Group believed this list was a good place to start. The ten groups are:
e
0
0
0
Business Financial Staff Business Accounting Staff Business Environmental Health & Safety staffs Business Operations Staffs
e
0
e e
0
0
Accounting Professional Associations Other Professional Societies Small Business Management Consultants Education and Research Community Government Agencies
Key recommendations for the business community include securing top management support, promoting the use of cross-functional teams to address environmental accounting issues, promoting education and training for all parts of the business, benchmarking, and developing and applying analytical and accounting tools that integrate environmental costs. Accounting and other professional societies should assess members' needs, develop educational and training materials, develop standards and guidelines, facilitate communication, review codes of ethics for integration of environmental information, view environment as an economic opportunity, and be proactive, not reactive. Development of curricula and research on a wide array of key issues are the recommendations for the Academic and research community. For small business, the primary recommendations are assistance on regulatory matters and easy to use tools.
Among the key recommendations, the Agenda suggests that EPA should continue its facilitation role in environmental accounting. Based on this finding, EPA will focus initially on promoting cooperative efforts
2
\
' I
in education, guidance, outreach and research. The Agency is also i n the process of reviewing its options for the longer term. To increase the likelihood of success, and in response to the Agenda's recommendations, EPA will focus its efforts on supporting the work of key stakeholders and experts.
Commitments to Implement the Action Agenda
If you or your organization would like to participate in implementing one or more recommendations in the Agenda, or undertake any other activities to promote improved accounting and capital budgeting for environmental costs that are consistent with the spirit of the Action Agenda, EPA is prepared to report your efforts and commitments to your colleagues and the public. Please complete EPA's revised Accounting
e N
Agenda). EPA will publish a report listing each organization and its commitments to further the Agenda. If you have questions or would like to discuss possible commitments, please contact Dr. Martin Spitzer or Holly Elwood in EPA's Pollution Prevention Division (202) 260-4164.
EPA & EPA SUPPORTED ACTIVITIES COMPLEMENTING THE ACTION AGENDA:
Research
World Resources Institute Study of Corporate Management Accounting Practices. Descriution: Through a series of case studies, this project examines how environmental costs are accounted for within five major corporations (Amoco Oil Company, Ciba-Geigy, Dow Chemical, DuPont, and S.C. Johnson) and four smaller companies, and proposes recommendations for better environmental accounting by business. Status: Draft confidential reports have been submitted to five companies. Final cases for public dissemination are in preparation. A final report is expected by the end of 1994. Contact: Daryl Banks, World Resources Institute at (202) 662-2507 for more information. Linking Environmental Liabilities and Pollution Prevention Investment Decisions. Descriution: EPA supported research by the Environmental Law Institute to explore the connection between various environmental liabilities (such as CERCLA, Criminal, Tort, etc.) and managerial decisions to prevent pollution. Status: EPA will be seeking comments on the draft report and future directions of the project. Contact: Holly Elwood of EPA at (202) 260-4362 for more information. Survey of Corporate Accounting Practices. Descriution: EPA has funded the Tellus Institute, a not-forprofit research institute, to conduct a survey of "current" and "best" practices for incorporating environmental costs into capital budgeting processes. The study is being developed in collaboration with the Institute of Management Accountants (IMA). Status: The survey instrument is under development and will soon go to the Federal Office of Management and Budget for review under requirements of the Paperwork Reduction Act. For more information Contact: D r .Allen White, Director of Tellus's Risk Analysis Group at (617) 266-5400; Dr. Martin Spitzer at EPA (202) 260-4342. For information on IMA's current research projects, contact Julian Freedman, the IMA's Research Director at (201) 573-9000.
Outreach
'Mobilizing the Professional Accounting Community. DescriDtion: As an outgrowth of the December Workshop, EPA, the Institute of Management Accountants (IMA) and the American Institute of Certified Public Accountants (AICPA) are exploring cooperative undertakings. Among the potential areas for cooperation are: (1) an international conference on environmental accounting, (2) continuing professional education, (3) non-binding guidance on managerial accounting for environmental costs, (4) training videos, and (5) research. For more information please contact: Dr. M a k n Spitzer at the U.S.EPA (202) 260-4342, Julian Freedman at the IMA (201) 573-6212, or John MOKOW at the AICPA (201) 938-3011.
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= New Activities Since October, 1993
3
Network Development and Mailings. Status: EPA has completed the third update to the Environmental Accounting Network. With increasing attention on environmental accounting since October, 1993, the network grew from just over 300 members to more than 500 members. The revised network now titled, "Directory of EPA's Network for Management Accounting and Capital Budgeting for Environmental Costs , (EP.4/742-3-94-004), has an improved index and is more user friendly. EPA expects to continue to update the network and directory to help anyone interested in environmental accounting find information and resources. The directory may be used as a phone directory, or for networking or identifying members in particular sectors. It sorts network members into categories, such as industry, consultants, academics, government officials, etc. In addition, for those individuals who filled out EPA's "Network Membership Form," the directory also describes what network members do andor the services they have to offer. the riclxmk nt wish to o r add information to vour . S . EPA's Network in existing listing, please complete and return the "Membership Form for U Environmental Accounting and Capital Budgeting" or contact PPIC to order one. Please feel free to copy the form and provide it to any colleagues that you believe should be part of the network.
I'
'Pollution Prevention Case Studies and Savings from Pollution Prevention. DescriDtion: Finding case studies on pollution prevention in industry that include financial savings from pollution prevention can sometimes be difficult. To help interested parties find this information, EPA recently published two documents: A "Summary of Pollution Prevention Case Studies with Economic Data (by SIC Codes) (EPN742S-94-001), which contains more than 200 examples of case studies that contain economic information, and a companion document, "Abstracts of Pollution Prevention Case Study Sourcesn (EPA/742-B-94-001), which is an annotated bibliography of sources of case studies. Additional case studies not noted in these documents are available directly from states as well. For information on how to contact state pollution prevention programs directly see EPA's "1993 Reference Guide to Pollution Prevention Resources (EPN742/B-93401). Status: Completed. Contact: PPIC (202) 260-1023.
E(
'Internet. Status: EPA is working to make the D E Environmental Accounting Information available on Internet. We hope to load a variety of documents on in the coming months. If you would like others to know your Internet address, please complete EPA's revised Network membership form mentioned immediately above. 'Sharing Reports, Resources or Success Stories. If you possess or know of information, reports, resources, success stories or training opportunities that you would like share with others, please send a copy to Environmental Accounting Project, USEPA, Pollution Prevention Division (7409, 401 M Street, SW Washington, DC 20460, or contact Holly Elwood in EPA's Pollution Prevention Division at (202) 260-4362. EPA is committed to being a resource center for information.
University and Professional Curriculum Development and Tmining
University Curricula and Resources. Description: EPA is supporting the National Pollution Prevention Center for Higher Education at the University of Michigan in developing university based curricula. The Center has revised its curriculum module (Le., compendium of resources) on Environmental Accounting (April, 1994). This compendium of resources provides an introduction to the application of pollution prevention in business accounting, and includes bibliographic information, several case studies that may be used in a management accounting curricula, and some key contacts in the academic community. Status: Compendium revised April, 1994. The Center's staff is currently completing an annotated bibliography of environmental accounting documents. Contact: The compendium and bibliography when it is completed may be obtained from the University of Michigan, School of Natural Resources and Environment 430 E. University, Dana Building, Ann Arbor, MI 48109-1115; Ph: (313) 764-1412. Training Technical Assistance Providers. DescriDtion: In addition to exploring development of continuing professional education curriculum with the Professional U.S. Accounting Societies, EPA is continuing support for developing curricula to train professionals in government on environmental accounting and costing
*
= New Activities Since October, 1993
4
b
!
concepts. Specifically, EPA is supporting efforts to train state pollution prevention technical assistance program personnel and federal EPA staff. In addition, as part of the Clinton Administration's Environmental Technology Initiative, EPA is hoping to develop protocols and support training for staff in the Department of Commerce's Manufacturing Extension Partnerships (MEPs) and the Small Business Administration's Small Business Development Centers (SBDC). The MEP's under Commerce's National Institute for Standards and Technology (NIST) provide services to small and medium businesses on investing in new production technologies. T6e SBDCs provide financial support and expertise to small and medium size businesses cross the country. Status: Grant award process underway. Contact: Dr. Martin Spitzer (202) 260-4342.
'Accounting Professional Education. For information on education for accounting professionals see under the "Outreach" heading 'Mobilizing the Professional Accounting Community' above.
See EPA's Resource List available from PPIC for additional available cumcula materials. If you are aware of university curriculum that others could use or adapt, please contact the University of Michigan at (313) 764-1412. If you are aware of cumcula for business or other professions, contact EPA's Holly Elwood (202) 260-4362
Methods for Environmental Accounting, Total Cost Assessment & Capital Projects
Total Cost Assessment Software. Descriution: Now available to federal, state and local government employees at no cost is a total cost assessment software package called P2.FINANCE. Available from EPA's
PPIC, P2.FINANCE is a spreadsheet software system designed to guide organizations in the data collection and analysis essential to a clearer financial evaluation of pollution prevention projects. P2.F"ANCE is designed to complement an organization's existing project evaluation practices while ensuring that prevention investments receive balanced and comprehensive treatment during the capital budgeting process. For organizations or projects where no formal budgeting guidelines are in place, P2.FINANCE offers a valuable starting point for introducing a TCA approach. Status: Completed. Contact: Call PPIC for an order form.
'Methods of Environmental Accounting (including total cost assessment, total cost accounting, full cost accounting, and life cycle costing). Descriution: EPA plans to support research that will inform practitioners on available methods of environmental accounting. The report will document existing accounting and costing methods, (largely focused,on capital projects or acquisitions) and evaluate them against a set of life-cycle costing (LCC) criteria. LCC means all internal and external costs associated with a product or process from raw material acquisition to final disposal of waste. Each method shall be summarized, assessed against LCC criteria, and then reported with availability and cost information. Status: Grant funding process underway; report expected in December 1994. Contact: If you know of any Total Cost Accounting models that should be part of the study, contact Keith Weitz at Research Triangle Institute at (919) 541-6973, or EPA's Holly Elwood (202) 260-4362. 'Review of Project Management Software and Systems for Integration of Environmental Attributes. Descriution: This study will document commercially available "project management software systems" and evaluate the extent to which environmental information, including costs, is incorporated into each system. It will be conducted in cooperation with AACE International Status: Grant funding process underway. Report expected early 1995. Contact: If you know of project management system software of methods that should be part of the study, contact Keith Weitz, Research Triangle Institute (919) 541-6973, or EPA's Holly Elwood (202) 260-4362. "rotal Cost Assessment Software for Screen Printers. DescriDtion: EPA's DfE program staff plans to work with the Tellus Institute and the Screen Printing Association International to develop a decision support tool to perform financial assessments using a total cost assessment framework. The tool is an upgrade of Tellus's P2.FINANCE software system described above, tailored to the needs of the screen printing industry. When completed, it will demonstrate to screen printers how lower risk pollution prevention alternatives may save money. Effectiveness of the tool will be judged through case studies, and fact sheets will be developed to publicize innovative pollution prevention solutions emerging from the case studies. Status: Grant funding
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process underway. Completion expected early 1995. Contact: Stephanie Bergman of EPA at 260-1821. American Society for Testing and Material (ASTM). Descridion: The ASTM's Subcommittee on Pollution Prevention, Reuse, Recycling and Environmental Effuiency (E50.03) is developing a "Standard Guide for Pollution Prevention" (Standard E.50.03.1). EPA has funded an effort to incorporate "Total Cost Assessment" (TCA) principles'into the Guide. Status: TCA work complete, status of guide unknown. Contact: James Satterfield, Chair of the E-50.03 Subcommittee, at (215) 864-6434 for more information.
OTHER ENVIRONMENTAL ACCOUNTING ACTIVITIES IN THE FEDERAL GOVERNMENT AND AROUND EPA
'National Performance Review. Descriution: Environmental accounting in the federal government has been identified as an important issue in the National Performance Review's assessment of ways to reinvent government. A major recommendation of the report, "Creating a Government that Works Better and Costs' Less: Reinventing Environmental Management, Accompanying report to the National Performance Review (September, 1993) is to "Improve Federal Decisionmaking Through Environmental Cost Accounting. The 'report calls for EPA and the Department of Defense (DoD) to develop pilot projects, report on those projects and make recommendations for government wide implementation. Status: Report completed and distributed to EPA and DoD. Contact: Copies of the report may be obtained from the U.S.Government Printing Office, Superintendent of Documents, Mail Stop:SSOP, Washington, DC 20402-9328.
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Total Cost Assessment and Life Cycle Assessment: A Practical User's Guide for Federal Facilities. Descriution: Under Federal Executive Order No. 12856, "Federal Compliance in Right-to-Know Laws and Pollution Prevention Requirements," all Federal facilities should apply life-cycle Analysis and total cost accounting principles to the greatest extent practicable, ,when evaluating pollution prevention opportunities under the order. To help Federal facilities staff implement the order, EPA's Office of Federal Facilities Enforcement (OFFE) is, among other things, developing a practical user's guide. The guide is designed to help front line managers become familiar with the application of total cost assessment principles as they begin compliance with the Executive Order. Specifically, it defines pollution prevention, life cycle analysis, life cycle costing, and total cost assessment (TCA); identifies the advantages of TCA principles; and provides examples and case studies. Status: Completion expkted in fall. Contact: Reggie Cheatham in OFFE at (202) 260-4641.
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'Office of Solid Waste, Waste Minimization Branch. Descriution: EPA's Waste Minimization Branch plans to apply elements of accounting and capital budgeting for the environment in implementing the "Draft RCRA Waste Minimization National Plan." Status: The draft plan was recently released for public review. Contact: The RCWSuperfund Docket at 1-800-424-9346 and please ask for document No. EPA 530-D-94-001. For more information contact Mark Ralston of EPA's Office of Solid Waste at (703) 308-8595.
'Full Cost Accounting for Municipal Solid Waste. Descriution: EPA's Office of Solid Waste is developing a guidance document titled, "Full Cost Accounting, Unit Pricing and Enterprise Funds: A Good Management Package for Municipal Solid Waste." The guide will address accounting issues in depth so communities can move from general fund accounting to accounting using generally accepted accounting principles (accrual accounting). Accrual accounting will allow communities to more clearly see the environmental impacts and full costs of operating landfills. Status: Publication expected in December, 1994. Contact: George Garland (202) 260-7413.
The documents, fact sheets, and reports discussed throughout this project update can be obtained from the Pollution Prevention Information Clearinghouse (PPIC), unless otherwise noted. Phone: (202) 260-1023, Fax: (202) 260-0178,
or write
PPIC U.S. EPA Headquarters Library (3404) 401 M Street, SW Washington, DC 20460
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= New Activities Since October, 1993
doc_888970542.pdf