Environmental Accounting and Estimating Hidden Costs In Dubai


From literature review, it has been realized that environmental accounting has a great role to play in the operations of the business of the modern firms. For this reason there have come up several regulations both within the country and abroad. Many international agencies have come up to help in the regulation of the impacts of environmental pollution on businesses. They have decided to do this by establishing a system through which accountability measures are undertaken when accounting for the costs that come along with such acts. The research is therefore directed towards realizing that the environment and the hazards that it creates are vital causes of costs in any organization. Derived from this are the crucial needs that regulations b e therefore introduced within the accounting systems to help track and minimize such costs. In addition, it is vital for those charged with the responsibility to regulate to be aware of the full costs of likely to be consumed with such regulations. This is mentioned to be of benefit in the identification of the best approach in identification of the hidden environmental costs. The importance of conducting environmental accounting is emphasized in the literature review. As a role, the stakeholders of firms in Dubai should be enlightened on the components of environmental accounting and the parts that aid it in identification of the hidden costs and how such costs can be minimized. According to Parto (2007), available environmental accounting techniques, the view given to the cost minimization measures through the same techniques and the mode of implementation approach would shape how such costs are taken care of for the prosperity of the organizations. Therefore, the only question that remains unanswered is whether the major stakeholders are prepared to face the challenges that come with such costs. Purpose of the study The study was constructed through a well-developed survey and employee assessment procedure.

The survey was directed towards determined towards determining and comparing the estimated costs as well as the hidden costs between the years 2007=2011. This is because in such circumstances estimated costs in such systems are normally different from the environmental costs hence comparison and ethical considerations in handling such costs is identified and selected. Moreover, survey is geared towards finding out and establishing the measures to be used in regulating the costs that are hidden so that the environment is managed in an appropriate manner. The phase of the study focused much on studying the trends of the data collected with the difference between the estimated and the environmental costs. The main aim of staff evaluation was to find out the views of the major employees of the organizations specifically those in the finance department. This stage allowed for the comparison of the trend and difference in the independent variables. Data collection and analysis provided a helping hand in the determination of the vast effects of the estimated hidden costs; this would be considered with be respect to the impact created by the costs to both the environments and the operations of the businesses. Costs are very serious components of any serious organization, if not taken care of well such costs are likely to cut into the profits of the company hence reduced shareholder’s earnings. The costs should therefore be minimized while in the process there comes the problem that some of these costs are hiding and cannot be identified that easily and openly, thus there is need for this form of study and research.

Research Design

The data collected for this study was got from both primary and secondary sources of data. A thorough cross-sectional analysis of the companies highlighted was conducted in the ways they dealt with the hidden environmental costs. A longitudinal content analysis of financial reports for four years of around 145 companies of which the list of the companies was extracted from the Dubai Stock Exchange(DSE). The researcher went to the registrar of companies from where they were able to get the Annual Company Reports for the required number of years. The other way of sourcing the company documents was through a direct request from the companies while others they got from the Dubai Stock Exchange (DSE) and the Manufacturing Association of Dubai (MAD). Primary data was also gathered through the administration of questionnaires and this was applied on only a few of the companies selected. The questionnaires were structured in a way that they could appropriately be used to collect the required information. The questionnaire was divided into four parts in readiness for the exercise. Part A was designed to address the expenditures on the operations on the environment, Part B, to address cost accounting on the environment, Part C, was to address technological advancement and its formulated policies on the environmental matters and lastly, Part D, to address the hidden environmental costs, how to detect them and the preventive measures adopted against them.

A further consideration was made that the methods would be used interchangeably to supplement and at other times complement the other in assessment of the mode of environmental accounting and hidden costs identification form the sample list of the chosen firms. Area of study Much attention will be directed to the study of the impact of hidden environmental costs in the firms in the financial sector. The study is however spread in more other sub sectors of the economy, which ranges from the manufacturing sector, agricultural sector, construction sector, breweries and more others. This study mainly has its focus in the general study of the firms and specifically it wants to study the impacts of the environmental costs on the costs of running the firms. The study is focused on environmental accounting, specifically the study tries to find out about the estimated costs and hidden costs and how they are distinct from the environmental costs. In addition, the ways to regulate the hidden costs are also looked at to facilitate the better management of the surroundings. To the effects above, the study indulges and largely relies on the secondary data that is got from the financial and any annual reports of the companies especially the ones listed in the DSE. Population and Sampling Procedure When referring to environmental protection it is highly disorderly not to mention the Kyoto Convention since it is the benchmark for the worldwide movement. The movement was an immediate follower to the Montreal convention, which was held to avoid the depletion of the ozone layer.

The Kyoto Protocol was held with a specific purpose of assigning each country the percentage of green house gas emission they are assigned so that they do not exceed such measures. The member countries to that convention would jointly work together in order to realize the attainment of the set targets of reduction hence reduced pollution. The population to the study is therefore picked from a diverse range of a population. The population should constitute countries that are member’s signatory to the Kyoto Convention. Such a list would be useful for longitudinal comparison of companies. Companies would be selected from the listed ones in the stock exchange from which they will be able to get information on how they handle environmental accounts. That is their way of recognizing the hidden costs, which are so hard to arrive at in most of the cases. The population estimation companies that is found in the financial sector is 60, 000. On the other hand, the population of all the fully registered companies and businesses according to the data that is found with the registrar of companies in Dubai states the number at around 590000. This is subjects to consistent daily rise explaining the possibility of the figure even becoming higher as days go. It is also in record that not all the incorporated companies and businesses are successful and therefore some may either collapse or wind up at early phases of their development. Despite the challenges above, we still would use a list of 590000 having taken a consideration of the pluses and minuses. The population for the study is thus 60000, which is approximately one-tenth of the larger population. The figure used above does not though entail 200 listed companies in the DSE with annual reports that are frequently done for the public consumption. The list of companies is though containing other 10 companies that are not listed in the DSE but they are listed in other countries capital markets abroad. Sampling techniques and size of samples For the above research, the formula to be used is represented by n=N/ {1+N (e2)} where, n= desired sample size; N= overall population and e= error limit. In selecting our sample size stratified sampling technique has been employed, this is to ensure the relevance of the corporations. The degree of impact of each coronation on the environment is considered in the bid to employ stratification. Our research has therefore given priority to financial companies since they are the ones to help extract the hidden costs. There is a modification in the samples that will differentiate companies, which seized to exist currently and those which declined long time ago. For all the samples that were gathered, verification and analysis of the secondary data should be conducted which would take place 20 years from the Kyoto protocol. For validity and reliability to exist for generalizations, his acceptable level is placed to be at around 5% of the used population. From the formula, a population of around 400 is highly recommended for our study to be a success. CONCLUSION Although, reflection will be on the entire population, stratification will still need to take place so that the hidden costs attainment objective is met reliably. Though the identification of companies is from the stock markets, particular emphasis is made on the companies that are highly pollutant to the environment. About 130 companies have undergone through the process of verification for the study with most of the multinational corporations being included.

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