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Full cost accounting (FCA) generally refers to the process of collecting and presenting information (costs as well as advantages) for each proposed alternative when a decision is necessary. A synonym, true cost accounting (TCA) is also often used. Experts consider both terms problematic as definitions of "true" and "full" are inherently subjective. See green economics for more on these problems. Green economics is an approach to economics in which the economy is considered to be a component of, and dependent upon, the natural world within which it resides and of which is it considered a part. ...
Basis of triple bottom line
Since costs and advantages are usually considered in terms of environmental, economical and social impacts, full or true cost efforts are collectively called the "triple bottom line". A large number of standards now exist in this area including Ecological Footprint, eco-labels, and the United Nations International Council for Local Environmental Initiatives approach to Triple Bottom Line using the ecoBudget metric. The International Organization for Standardization(ISO) has several accredited standards useful in FCA or TCA including ISO 14064 for greenhouse gases, the ISO 8000 series for corporate social responsibility, and the ISO 19011 standard for audits including all these. An environment is a complex of external factors that acts on a system and determines its course and form of existence. ...
Wikibooks has more about this subject: Economics Wikibooks Wikiversity has more about this subject: School of Economics U.S. Economic Calendar Economics at the Open Directory Project Economics textbooks on Wikibooks The Economists Economics A-Z Institutions and organizations Bureau of Labor Statistics - from the American Labor Department Center...
Although the term social is a crucial category in social science and often used in public discourse, its meaning is often vague, suggesting that it is a fuzzy concept. ...
The triple bottom line captures an expanded spectrum of values and criteria for measuring organizational (and societal) success - economic, environmental and social. ...
Ecolabel is a labelling system for consumer products (also food stuff) that are made in fashion to avoid detrimental effects on the environment. ...
The foundation of the U.N. The United Nations (UN) is an international organization whose stated aims are to facilitate co-operation in international law, international security, economic development, social progress and human rights issues. ...
ICLEI - Local Governments for Sustainability is an international association of local governments and national and regional local government organizations that have made a commitment to sustainable development. ...
The triple bottom line captures an expanded spectrum of values and criteria for measuring organizational (and societal) success - economic, environmental and social. ...
The International Organization for Standardization (ISO) is an international standard-setting body composed of representatives from various national standards bodies. ...
Top: Increasing atmospheric CO2 levels as measured in the atmosphere and ice cores. ...
Corporate social responsibility (CSR) is an expression used to describe what some see as a company’s obligation to be sensitive to the needs of all of the stakeholders in its business operations. ...
ISO 19011 is a terse document that sets forth guidelines for: quality management systems auditing environmental management systems auditing Provider: International_Organization_for_Standardization The stadards offer four resources to organizations to save time, effort and money: A clear explanation of the principles of management systems auditing. ...
An audit is an evaluation of an organization, system, process, project or product. ...
Because of this evolution of terminology in public sector use especially, the term full-cost accounting is now more commonly used in management accounting, e.g. infrastructure management and finance. Use of the terms FCA or TCA usually indicate relatively conservative extensions of current management practices, and incremental improvements to GAAP to deal with waste output or resource input. < [[[[math>Insert formula here</math>The public sector is that part of economic and administrative life that deals with the delivery of goods and services by and for the [[government </math></math></math></math> Direct administration funded through taxation; the delivering organisation generally has no specific requirement to meet commercial...
Management accounting is concerned with the provisions and use of accounting information to managers within organizations, to provide them with the basis in making informed business decisions that would allow them to be better equipped in their management and control functions. ...
This article or section does not cite its references or sources. ...
These have the advantage of avoiding the more contentious questions of social cost.
Concepts Full cost accounting embodies several key concepts that distinguish it from standard accounting techniques. The following list highlights the basic tenets of FCA. It has been suggested that Accounting scholarship be merged into this article or section. ...
- Accounting for costs rather than outlays
- Accounting for hidden costs and externalities
- Accounting for overhead and indirect costs
- Accounting for past and future outlays
- Accounting for costs according to lifecycle of the product
In economics, business, and accounting, a cost is the value of inputs that have been used up to produce something, and hence are not available for use anymore. ...
Costs rather not outlays An outlay is an expenditure of cash to acquire or use a resource. A cost is the cash value of the resource as it is used. For example, an outlay is made when a vehicle is purchased, but the cost of the vehicle is incurred over its active life (e.g., 10 years). The cost of the vehicle must be allocated over a period of time because every year of its use contributes to the depreciation of the vehicle's value. Declining-balance depreciation of a $50,000 asset with $6,500 salvage value over 20 years. ...
Hidden costs With FCA, the value of goods and services is reflected as a cost even if no cash outlay is involved. One community might receive a grant from a state, for example, to purchase equipment. This equipment has value, even though the community did not pay for it in cash. The equipment, therefore, should be valued in an FCA analysis.
Overhead and indirect costs FCA accounts for all overhead and indirect costs, including those that are shared with other public agencies. Overhead and indirect costs might include legal services, administrative support, data processing, billing, and purchasing.
Past and future outlays Past and future cash outlays often do not appear on annual budgets under cash accounting systems. Past (or upfront) costs are initial investments necessary to implement services such as the acquisition of vehicles, equipment, or facilities. Future (or back-end) outlays are costs incurred to complete operations such as facility closure and postclosure care, equipment retirement, and post-employment health and retirement benefits.
Examples of full-cost accounting
Waste management For example the State of Florida uses the term full cost accounting for its solid waste management. In this acceptance, FCA is a systematic approach for identifying, summing, and reporting the actual costs of solid waste management. It takes into account past and future outlays, overhead (oversight and support services) costs, and operating costs.[1][2] Waste management is literally the process of managing waste materials (normally those produced as a result of human activities). ...
Integrated solid waste management systems consist of a variety of municipal solid waste (MSW) activities and paths. Activities are the building blocks of the system, which may include waste collection, operation of transfer stations, transport to waste management facilities, waste processing and disposal, and sale of byproducts. Paths are the directions that MSW follows in the course of integrated solid waste management (i.e., the point of generation through processing and ultimate disposition) and include recycling, composting, waste-to-energy, and landfill disposal. The cost of some activities is shared between paths. Understanding the costs of MSW activities is often necessary for compiling the costs of the entire solid waste system, and helps municipalities evaluate whether to provide a service itself or contract out for it. However, in considering changes that affect how much MSW ends up being recycled, composted, converted to energy, or landfilled, the analyst should focus the costs of the different paths. Understanding the full costs of each MSW path is an essential first step in discussing whether to shift the flows of MSW one way or another. Municipal Solid Waste (MSW) includes commercial and residential wastes generated in a municipal or notified areas in either solid or semi solid form excluding industrial hazardous wastes but it includes treated Bio Medical Wastes (BMW). ...
For the corporation, see Waste Management Incorporated Waste management is the collection, transport, processing or disposal of waste materials, usually ones produced by human activity, in an effort to reduce their effect on human health or local amenity. ...
The Hiriya transfer station, largest in the Middle East located at Tel Aviv and mechanical biological treatment facility A transfer station is a building for the temporary deposition of some wastes. ...
The following page contains a list of different forms of waste treatment Anaerobic digestion ArrowBio Composting Gasification Incineration In-vessel composting Landfill Mechanical biological treatment Mechanical heat treatment Plasma Pyrolysis Recycling Sewage treatment Tunnel composting UASB Windrow composting Categories: | ...
The international recycling symbol. ...
An active compost heap, steaming on a cold winter morning. ...
Waste-to-energy (WtE) or energy-from-waste (EfW) in its strictest sense refers to any waste treatment that creates energy in the form of electricity or heat from a waste source that would have been disposed of in landfill, also called energy recovery. ...
Albury landfill, Surrey, England A landfill, also known as a dump, is a site for the disposal of waste materials by burial and is the oldest form of waste treatment. ...
Benefits to waste management Identify the costs of MSW management
When municipalities handle MSW services through general tax funds, the costs of MSW management can get lost among other expenditures. With FCA, managers can have more control over MSW costs because they know what the costs are.
See through the peaks and valleys in MSW cash expenditures
Using techniques such as depreciation and amortization, FCA produces a more accurate picture of the costs of MSW programs, without the distortions that can result from focusing solely on a given year's cash expenditures.
Explain MSW costs to citizens more clearly
FCA helps you collect and compile the information needed to explain to citizens what solid waste management actually costs. Although some people might think that solid waste management is free (because they are not billed specifically for MSW services), others might overestimate its cost. FCA can result in "bottom line" numbers that speak directly to residents. In addition, public officials can use FCA results to respond to specific public concerns.
Adopt a business like approach to MSW management
By focusing attention on costs, FCA fosters a more businesslike approach to MSW management. Consumers of goods and services increasingly expect value, which means an appropriate balance between quality and cost of service. FCA can help identify opportunities for streamlining services, eliminating inefficiencies, and facilitating cost-saving efforts through informed planning and decision-making.
Develop a stronger position in negotiating with vendors
When considering privatization of MSW services, solid waste managers can use FCA to learn what it costs (or would cost) to do the work. As a result, FCA better positions public agencies for negotiations and decision-making. FCA also can help communities with publicly run operations determine whether their costs are competitive with the private sector.
Evaluate the appropriate mix of MSW services
FCA gives managers the ability to evaluate the cost of each element of their solid waste system, such as recycling, composting, waste-to-energy, and landfilling. FCA can help managers avoid common mistakes in thinking about solid waste management, notably the error of treating avoided costs as revenues.
Fine-tune MSW programs
As more communities use FCA and report the results, managers might be able to "benchmark" their operations to similar communities or norms. This comparison can suggest options for "re-engineering" current operations. Furthermore, when cities, counties, and towns know what it costs to manage MSW independently, they can better identify any savings that might come from working together.
Motives for adoption Various motives for adoption of FCA/TCA have been identified. The most significant of which tend to involve anticipating market or regulatory problems associated with ignoring the comprehensive outcome of the whole process or event accounted for. In green economics, this is the major concern and basis for critiques of such measures as GDP. The public sector has tended to move more towards longer term measures to avoid accusations of political favoritism towards specific solutions that seem to make financial or economic sense in the short term, but not longer term. In economics, a comprehensive outcome is the entire result of an event or process. ...
Green economics is an approach to economics in which the economy is considered to be a component of, and dependent upon, the natural world within which it resides and of which is it considered a part. ...
< [[[[math>Insert formula here</math>The public sector is that part of economic and administrative life that deals with the delivery of goods and services by and for the [[government </math></math></math></math> Direct administration funded through taxation; the delivering organisation generally has no specific requirement to meet commercial...
Corporate decision makers sometimes call on FCA/TCA measures to decide whether to initiate recalls, practice voluntary product stewardship (a form of recall at the end of a product's useful life). This can be motivated as a hedge against future liabilities arising from those who are negatively affected by the waste a product becomes. Advanced theories of FCA, such as Natural Step, focus firmly on these. According to Ray Anderson, who instituted a form of FCA/TCA at Interface Carpet, used it to rule out decisions that increase Ecological Footprint and focus the company more clearly on a sustainable marketing strategy. The term recall has a number of meanings: Product recall A recall election Recall to employment after a layoff Recall from memory. ...
Product stewardship is the inclusion of waste disposal measures in the distribution chain of an industrial product. ...
It has been suggested that this article or section be merged into Hedge (finance). ...
The Natural Step is a systematic definition of sustainability developed by Swedish scientist, Karl-Henrik Robèrt. ...
Ray Anderson is founder and CEO of Interface, Inc, the worlds largest carpet manufacturer. ...
The urban ecology and industrial ecology approaches inherently advocate FCA - treating the built environment as a sort of ecosystem to minimize its own wastes. Urban ecology is the subfield of ecology which deals with the interaction of plants, animals and humans with each other and with their environment in urban or urbanizing settings. ...
Industrial ecology is the shifting of industrial process from open loop systems, in which resource and capital investments move through the system to become waste, to a closed loop system where wastes become inputs for new processes. ...
The phrase built environment refers to the manmade surroundings that provide the setting for human activity, ranging from the large-scale civic surroundings to the personal places. ...
See also An externality occurs in economics when a decision (for example, to pollute the atmosphere) causes costs or benefits to individuals or groups other than the person making the decision. ...
The Genuine Progress Indicator (GPI) is a concept in green economics and welfare economics that has been suggested as a replacement metric for gross domestic product (GDP) as a metric of economic growth. ...
In economics, opportunity cost, or economic cost, is the cost of something in terms of an opportunity forgone (and the benefits that could be received from that opportunity), or the most valuable forgone alternative (or highest-valued option forgone), i. ...
pollution c, sometimes called pollution permits or pollution certificates are pollution rights as used in emissions trading. ...
References - ^ Solid Waste Full Cost Accounting, www.dep.state.fl.us, Department of Environmental Protection, Florida, Accessed 24.11.06
- ^ Full Cost Accounting on Municipal Solid Waste Management at US-EPA, www.epa.gov, US Environmental Protection Agency, Accessed 24.11.06
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