Discuss about the Accounting and the Control of Energy Costs for Control and Reduction.
Accountants plays an important role in accounting and controlling energy costs. Via the environmental management accounting, accountants ensure reduced environmental impacts caused by the energy on the environment to reduce such costs. Since environmental impacts have such business costs as consuming raw materials and utilizing utilities like energy (Schulze. and Heidenreich 2017). The accountants use the standard accounting methods in the identification, analysis, managements as well as reducing these energy costs in a manner that can benefit both the environment and business. Accountants use environmental management accounting in the identification of additional issues like noncompliance, negative public relations as well as safety and health issue relating to the energy production cost.
The accountants have direct interest in the control and reduction of energy cost as well as increasing profits. They monitor, measure as well as control these costs. They also manage info systems to have accurate and reliable outputs. They also identify and plan financial budgets for the energy project improvements and help in the formulation and implementation of cost-saving strategies. They also have a role to provide highly considered advice to energy sector stakeholders.
This issue should be considered as one of the key issues in environmental and social accounting because it falls under the environmental management accounting thereby offering the opportunity for the accountants to develop the services offered over and above traditional central activities. The issue also requires two social and environmental accounting-attached skills. It requires skills in costing and investment appraisals. Costing skills enable to determine the environmental costs of energy for effective allocation to manage and set prices at appropriate levels. Skills in investment appraisals of energy products ensure all environmental costs are considered to control and reduce energy costs.
The issue needs to be addressed now because both environmental and social costs associate with energy is rising and without being controlled and reduced, there will be no sustainability. With the increase demand for energy, costs have been shooting and hence accountants must play their role to control and reduce these costs at as soon as possible.
These issues have substantial implications for the accounting profession as well as society and community. For the accounting profession, these issues have ensured that more emphasis are shifted to gain skills that help accountants and financial staff to adapt their prevailing skills alongside usual job responsibilities to assist energy sector businesses deal with the environmental and social issues (Brown, Henze and Milford 2017). To the community and society, it helps them to be protected from damages linked to social and environmental costs arising from energy production.
Brown, K.E., Henze, D.K. and Milford, J.B., 2017. How accounting for climate and health impacts of emissions could change the US energy system. Energy Policy, 102, pp.396-405.
Schulze, M. and Heidenreich, S., 2017. Linking energy-related strategic flexibility and energy efficiency–the mediating role of management control systems choice. Journal of Cleaner Production, 140, pp.1504-1513.