Financial Performance Management

Financial Performance Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Evaluating the key issues which has been faced by the company to manage the environmental
cost and also evaluating the varied set of methods used by business in accounting of
environmental cost......................................................................................................................1
PART 2............................................................................................................................................4
Evaluating important decision making process and is relevant in providing right information
to improve the business performance..........................................................................................4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Financial performance management is referred to as a significant way that the company
focuses monitoring and effectively managing the key financial results across the organization.
This helps in effectively equipping with the business goals. This study critically focus on
evaluating the key issues which has been faced by the company to manage the environmental
cost and also evaluate the varied set of methods which has been used within the business in
accounting of environmental cost. Furthermore, this study also focuses on important decision
making process and is relevant in providing right information to improve the business
performance.
PART 1
Evaluating the key issues which has been faced by the company to manage the environmental
cost and also evaluating the varied set of methods used by business in accounting of
environmental cost.
Environmental management accounting is considered to be one of the key process to
identify, analyse, and collect use of two type of information in order to carry out internal
decision-making. Environmental management accounting is useful in addressing the
management information which is needed for the managers for carrying out corporate activities
which eventually affects the environment and impacts associated with the environment within
the corporation (Song, Zhao and Zeng, 2017). The first is associated with physical information
upon the use, rate of energy, material, flows and water. However, the second is linked with the
monetary information upon the environment linked with earnings, cost and saving.
The key environmental cost is mainly linked with prevention cost, Appraisal cost, external
failure cost and internal failure cost. Prevention cost is mainly linked with the prevention of
adverse impact upon the environment. Appraisal cost is useful in assessing the compliance linked
with the environmental policies. External failure cost mainly incurred after the environmental
damages has been done outside the company. Internal failure cost is linked with eliminating of
environmental impact which has been created by the company.
The cost versus benefit analysis is one of the significant process within the business which
is usually used to analyse the decisions. However the analyst or the business focuses on summing
up the benefits of the situation and then deduct the cost linked with taking such action. The cost
– benefit analysis is referred to as a significant tool which is useful in evaluating the key
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potential social and economic impact upon the public investment choices. This tool is prominent
in the better decision making.
Management of the environmental cost is considered to be one of the key prominent
measure which must be taken by the company. Society in turn become highly environmentally
aware and focuses on ensuring that the company take measures associated with recycling of the
products and reducing carbon footprint. Environmental cost has been becoming one of the
serious issue for some companies and specially those who has been operating within highly
industrialised sectors. The management of the environmental cost is considered to be one of the
difficult process because it becomes difficult to separate and identify few environmental cost. It
is of crucial importance to identify the environmental cost correctly and take necessary actions
on a timely manner (Opstrup and Villadsen, 2015). Contingent cost is one of the key
environmental cost which incurs on a future date. Conventional cost is another environmental
cause which is linked with energy cost and raw material which have environmental relevance.
Potential hidden cost is associated with capturing by the accounting system which loses to
identify the general overheads.
Management accounting techniques in turn are considered to be of utmost importance
because it is useful in effectively identifying and managing the environmental cost. Management
of the environmental cost is considered to be of most importance for the company because it is
useful in controlling the cost and also helps in determining how the company can impact the
environment in ways such as manufacturing emissions, air pollution, waste disposal and wetland
impact (Feng and et.al., 2016). Environmental cost mainly comprises of future and current
environmental impacts upon the company. It is also useful in determining the Labour cost linked
with the accounting for environmental cost. However, effective control of the environmental cost
as well as promotion of other environmental benefits will be useful in increasing the overall
productivity, sustainability and profitability of the business.
Input output analysis: It is considered to be one of the significant technique which has been
used by the management accountants in order to effectively manage an identified environmental
cost. This technique is considered to be significant in recording the material inflows and also
useful in balancing the same with the outflows on the basis of what inflows and outflows. Ever,
input and output analysis is an affective environmental accounting tool which mainly focuses on
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