Material Flow Cost Accounting in Czech Environment

Dana Kovanicová

doi:10.18267/j.efaj.36

Abstract

The theme of article is the draft of ISO 14051-Environmental Management - Material flow cost accounting - General framework, whose final form should be finished at the end of 2011 or later. This standard does not take in consideration the national particularity. Therefore, the main aim of this paper is to review how the concept of MFCA meets the Czech conditions. The MFCA (as one of cost accounting methods) is in Czech Republic a part of management accounting (MA), which coincides with the Anglo- Saxon concept. MA is a skeleton for other components of information system, closely connected with the physical process. The environmental management accounting (EMA) is based on the same concept: it could be defined as a "green MA". When defining EMA, we encounter many misleading inaccuracies and misunderstandings. Firstly, some believe that traditional management accounts generally detect only actual costs. From this, MFCA is defined as a (solely) accounting method. Secondly, EMA is segmented to physical part (PEMA) and monetary part (MEMA). This leads to obscure the substance of EMA. Implementation of costing methods has a long tradition in Czech Republic. Basic types of traditional costing methods (unlike MFCA) have been derived from the conditions, under which specific production process continues. MFCA adoption in our conditions should be comprehended as an upgrading and enhancement of the traditional methods, not as their suppression.

Highlights

Nature of MFCAPrecise characteristics of MFCA concept are expressed in METI (2007)
It is important from the point of impact on the environment: the quality of life of future generations depends on the rational energy management significantly
In the view of the dissemination of MFCA method as the instrument of environmental management that is able to affect the quality of the world positively, the international standardization (ISO) is prepared

Summary

Nature of MFCA

Precise characteristics of MFCA concept are expressed in METI (2007). According to this source, the recording and calculating system under MFCA is based on following features: a) The quantitative centers are created. Hallmark of MFCA is the monitoring (registration, accounting) of material/energy flows (flows of materials throughout the manufacturing process in both physical and money expression) and sorting out the outputs in each process stage to positive product(s) and waste; monitoring of processes proceeds in cost accounting. Characteristics predetermined the name of method: Material Flow Cost Accounting – MFCA

Origin and standardization of MFCA

MFCA – an instrument of EMA in Czech environment

MFCA versus traditional costing methods

Brief overview of the traditional types of costing methods

MFCA adoption with regard to national specificity

Conclusion