In 2004, the IASB attempted to address the accounting for emissions credits and allowances in International Financial Reporting Interpretations Committee (IFRIC) and issued IFRIC 3, Emissions Rights (IFRIC 3). IFRIC 3 required GHG emissions and credits to be classified as intangible assets and recorded at fair value regardless of whether the credit or allowance was purchased or issued. However, IFRIC 3 was met with significant resistance from the accounting community who cited that it resulted in a mismatch between assets and liabilities. The mismatch occurred because the credits received would be recognized when obtained and the liabilities would be recognized as it is incurred. The standard was later withdrawn by the IASB in 2005. Currently under IFRS, companies generally develop an accounting policy based on International Accounting Standard (IAS) 8, Accounting Policies, Changes in Accounting Estimates and Errors (E&Y, 2010). In addition, there remains a number of existing standards that provide authorative guidance on relevant accounting on which companies can draw to form their policies for GHG related transactions such as IAS 2, 20, 37, 38, and 39 (KPMG, 2008).
The U.S. Cap and Trade Schemes: Acid Rain Program and NOx Budget Trading Program
In the United States, the EPA is currently monitoring sulphur dioxide (SO2), nitrogen oxide (NOx) and carbon dioxide (CO2) emissions. The Clean Air Act helped to establish a cap-and-trade system for electric power producers to trade SO2 and NOx. The two of the more successful cap and trade programs in the United States are the nationwide Acid Rain Program and the regional NOx Budget Trading Program in the Northeast.
The Acid Rain Program is a departure from the traditional c...
... middle of paper ...
...ounting.
E&Y (2010). Carbon market readiness. (100159), Retrieved from http://www.ey.com/Publication/vwLUAssets/Carbon_market_readiness/$FILE/0912-1118264%20Carbon%20market%20Readiness.pdf
Simnett, R, M Nugent and A Huggins (2009), “Developing an International
Assurance Standard on Greenhouse Gas Statements”, Accounting Horizons,
23(4), 347-363.
Simnett R., A. Vanstraelen and W.F. Chua. 2009. Assurance on Sustainability
Reports: An International Comparison. The Accounting Review, forthcoming.
Simnett R, W Green and A Huggins (2009), “GHG Emissions Standard on its Way”,
Charter, October, 64-66.
KPMG, (2008). Accounting for carbon: the impact of carbon trading on the financial statements. 3-15.
Olson, E.G. (2010). Challenges and opportunities from greenhouse gas emissions reporting and independent auditing. Managerial Auditing Journal, 25(9), 934-942.
Ever since the Environmental Protection Agency otherwise known as the EPA, and the Clean Air Act were enacted into law in 1970 the American Auto Industry has been inundated with many environmental challenges such as brake debris/tire particles, paint and coating, auto shredding residue, battery content, smog, and gasoline. For the first time in 14 years, cost reduction ranked 32% compared to environmental issues such as emissions and fuel economy which ranked 53% in consumer reports.
Third, the CAA does not stump economic growth, rather the American economy continues to flourish while maintaining cleaner air. For example, from 1970 to 2011 the U.S. gross domestic product has increased by 212 percent and jobs in the private sector have increased by 88 percent, meanwhile, the overall air pollutants have dropped 68 percent (EPA). Additionally, economic researchers and scholars report that the funds companies spend to reduce air pollution are reinvested back into the industry to design, build, install, maintain, and operate the processes and equipment to reduce air pollution. It is an industry where jobs may be cut in some sectors and added in others, but the job shift related to air pollution reduction is insignificant when compared to other job shift factors, such as economic growth, technology, and business cycles (EPA). Fourth, according to a U.S. Department of Commerce report, the U.S. is the world’s leader in producing and consuming environmental protection technologies.
“North Americans have been smelting ore and burning fossil fuels for generations. In the past, the gases went up ordinary chimneys or small smoke stacks, to descend upon near by areas and pollute them,” states author, Robert Collins. Almost everyone knows what acid rain is and has a vague idea of the consequences that exist as a cause of it. Most people however do not realize the severity of acid rain. The essay “Acid Rain: Scourge from the Skies” by Robert Collins was very effective in showing the true severity of acid rain. By using excellent developmental devices, Robert Collins was able to write an effective essay that is appealing to today’s society, as well as informative especially for today’s constantly changing world.
The quality of air we intake on a daily basis is essential to our health, therefore, the EPA’s Clean Air Act provides the groundwork to support the quality of the air which we breathe. One of the goals of the Act was to set and achieve NAAQS in every state by 1975 to address the public health and welfare risks posed by certain air pollutants. The setting of these pollutant standards was coupled with directing the states to develop state implementation plans (SIPs), applicable to appropriate industrial sources in the stat...
Half of the estimated emissions were produced in the last 25 years alone. Well past the date when governments and corporations became aware that rising greenhouse gas emissions from the burning of coal and oil which is causing dangerous climate change. Many of the same companies are also sitting on substantial reserves of fossil fuel which if they are burned puts the world at even greater risk of dangerous climate change. Climate change experts said the data set was the most ambitious effort so far to hold individual carbon producers, rather than governments, to account for. 90 companies on the list of top emitters produced 63% of the cumulative global emissions of industrial carbon dioxide and methane between 1751 to 2010, amounting to about 914 gigatonne CO2 emissions, according to the research. All but seven of the 90 were energy companies producing oil, gas and coal. The remaining seven were cement manufacturers.
United States Environmental Protection Agency (US EPA) . "Tools of the Trade: A Guide to Designing and Operating a Cap and Trade Program for Pollution Control." (2003): Web. 24 Apr 2010. .
...ns use in their homes, the fewer chemicals that power plants use the fewer that will have to be emitted in to the air. Today there are laws on how much pollution is allowed to be put out in the air these laws have made significant changes. Catalytic converters in cars help reduce emissions. There has been reduction in the amount of acid rain causing pollutant to the air by humans. Eastern Canada set a cap of 2.3 million tons of sulphur dioxide to be met by 1994 and maintained until 2000. In Canada several sulphur dioxide reduction targets for provinces to the east of Manitoba-Saskatchewan to meet this cap. Roughly halve of the sulphur dioxide emissions were intended to be cut by this reduction.
P = preliminary data.Note: Data in this table are revised from the data contained in the previous EIA report, Emissions of Greenhouse Gases in the United States 1998, DOE/EIA-0573(98) (Washington, DC, October 1999).Sources: Emissions: Estimates presented in this report. Global Warming Potentials: Intergovernmental Panel on Climate Change, Climate Change 1995: The Science of Climate Change (Cambridge, UK: Cambridge University Press, 1996).
David, Suzuki. “Carbon Offsets Are One of Many Solutions Needed for Global Warming.” Current Controversies: Carbon Offsets. Ed. Debra A. Miller. Detroit: Greenhaven Press, 2009. Print.
What is IFRS, and what is its significance in the world market? In 2001 the International Accounting Standards Board, or IASB, was created to develop a set of standards by which global financial statuses could be reported. According to financialstabilityboard.org, this set of standards, known as the International Financial Reporting Standards, or IFRS, falls under the jurisdiction of the IFRS Foundation, which is a non-profit, private and independently run entity that exists for the public interest, is based on four principle objectives. The first is to develop a single set of international financial reporting standards (IFRS). This set would be high in quality, readily understandable, easily enforceable, and acceptable world-wide. The second objective is to encourage the use of this set of standards in the international business world. Thirdly, the ISAB would like to monitor the needs of different sizes and types of businesses in different settings. The fourth objective is to promote the adoption of the IFRS by converging national accounting standards wit...
Weltman, Barbara. "Tax Incentives for Going Green." NY Report. N.p., 3 Feb. 2010. Web. 06 Feb. 2014.
The globalization of business has resulted in the need for compatible accounting standards that can be used internationally for financial reporting. As a result, the International Financial Reporting Standards (IFRS) were developed by the International Accounting Standards Board (IASB) to unify the various financial reporting methods and create a single accounting standard which can be applied to any financial statement worldwide (Byatt). The global standardization of financial reporting will increase the readability and enhance comparability of globally traded companies’ financial statements, without the need of conversion or translation. There are a few main differences between the International Financial Reporting Standards (IFRS) and the U.S. Generally Accepted Accounting Principles (U.S GAAP). The increasing recognition and acceptance of the International Financial Reporting Standards by accounting professionals in the United States, will affect the way in which the U.S will record financial statements in the future.
The world’s greatest powers have shown a lack of interest in the way that they are destroying the environment around them. The rise of the climate through the years has been altering how different organisms have had to survive. The world’s use of fossil fuels and CO2 emissions is at an all-time high. The countries with the highest CO2 emissions are same countries with the largest economies. The United States, China, India, Japan, and Russia are the top five leaders in CO2 emissions. All together they account for around 60% of the total carbon emissions worldwide. In order to cut down on the amount of CO2 emissions counties need start regulating their larger industries that create the highest amount of carbon emissions.
Judgement is a notion of relevance and reliability in developing and applying accounting policies. It is a requirement of management that they exercise a high degree of professional judgement when selecting appropriate accounting policies in the preparation of financial statements that is relevant to decision-making and assessment needs of users. Management should also consider the applicability of IFRS and AASB in dealing with similar and related issues and then the definitions, recognition criteria in the Conceptual Framework when there is no IFRS standard or interpretation in certain circumstances that are specifically applicable. Management may also consider the most current pronouncements of other standard-setting bodies to the extent that do not conflict with IFRS and AASB in developing accounting standards and accepted industry practices by using a similar conceptual framework.
The third organization that helps to regulate the accounting standards is the IASB. “Our mission is to develop, in the public interest, a single set of high quality, understandable and international financial reporting standards (IFRSs) for general purpose financial statements”(IASB 2008,¶ 1). The IASB consists of a board that is made up from nine different countries with the sole purpose of expanding accounting standards. Their main hope and goal is to one day that there will be only one set of accounting standards that will be used throughout the world.