Sustainability management accounting system (SMAS): towards a conceptual design for the manufacturing industry

Abstract

[Abstract]: The study reported in this paper aims to identify an effective management accounting system using sustainability accounting concept for environmental and social cost measurement to add value to organizations. The motivation for undertaking this research is driven by the current practice of activity based costing (ABC), which has not identified and allocated costs of environment and social impacts to a single production activity. This has resulted in inaccuracies in cost accounting information when preparing environmental and social performance disclosures for internal management decisions, as well as external disclosures. This study therefore develops a conceptual model for a Sustainability Management Accounting System (SMAS) to improve the identification and measurement of environmental and social impact costs. A SMAS also provides sustainable organizations with a way to enhance cost allocation and analysis efficiently, thus creating more accurate cost accounting information for management decisions and reporting disclosure purposes. This paper describes preliminary work undertaken to date. Currently, it would appear that most Australian firms fail to report on their environmental performance, however, social indicators make it increasingly important for organisations to embrace corporate social reponsibility in their financial reporting and disclosure. Further, the results of quantitative data anlaysis will be used to identify an effective management accounting of sustainable organizations while supporting the development of a SMAS conceptual model.