Janek Ratnatunga

Carbon Business Accounting: The Impact of Global Warming on the Cost and Management Accounting Profession:

The concentrations of greenhouse gases in the atmosphere have risen dramatically, leading to the possibility of costly disruption from rapid climate change. This calls for greater attention and precautionary measures to be put in place, both globally and locally. Governments, business entities and consumers would be affected by the extent to which such precautionary measures are incorporated in their decision-making process. Business entities need to consider such issues as trading in carbon allowances (or permits), investing in low-carbon dioxide (CO2) emission technologies, counting the costs of carbon regularity compliance, and passing on the increased cost of carbon regulation to consumers through higher prices. Such considerations require information for informed decision making. This paper reports on a qualitative research study undertaken to consider the impact of the Kyoto Protocol mechanisms on the changing information paradigms of cost and managerial accounting. It is demonstrated that the information from strategic cost management systems will be particularly useful in this new carbon economy, especially in evaluating the “whole-of-life” costs of products and services in terms of carbon emissions. Similarly, the study discusses how strategic management accounting information would facilitate decisions on business policy, human resource management, marketing, supply chain management, and finance strategies and the resultant evaluation of performance.

Transparent Costing: Has the emperor got clothes?

Abstract Transparent Costing (TC) is a framework for determining the full indirect costs and thereby the full costs (FC) of Australian Competitive Grant (ACG) research projects; with the objective of ensuring the full funding of these projects by the government, so that they could be sustained in the long-run, and preventing their cross-subsidisation from other revenue sources. If a university wishes to be fully funded for its AGC research projects, it is mandatory to undertake a TC exercise and allocate the indirect costs of research activities. It was found in this study that whilst the objectives of FC appear worthwhile, FC may not prevent the practice of cross subsidisation. Also whilst it was found that Time-Driven Activity-Based Costing (TDABC) is preferable to ABC in the TC modelling of ‘research only’ departments and institutes; both approaches do not provide accurate information in ‘teaching and research’ departments. In these departments more accurate estimations could be obtained from studying the workload allocation methods and conducting direct interviews of the staff undertaking research on ACG and other externally funded grants.

Strategic Governance and Management Accounting: Evidence from a Case Study

This paper seeks to establish if top management (the board) of a firm should extend its overview of the governance process to the execution of strategy (i.e., strategic governance) and, if so, does the management accounting information system (MAIS) have a role in facilitating this strategy execution process. This study investigated the role of the board and MAIS in strategic governance by examining a company with a public record of both successful governance and integrated strategic management accounting processes in a high‐risk industry. The analysis demonstrates that boards should go beyond the minimum conformance (compliance) requirements of the governance‐regulatory legislation and assume ultimate responsibility for strategy execution and enterprise performance. However, while management accounting techniques, processes and reports were found to be used extensively in strategic governance to integrate the policy‐management interface in numerous conformance–performance domains, the traditional role of the management accountant was found to be limited in terms of their role in such governance. The study demonstrates that a more strategic governance role offers the management accountant a way back into senior management by using the routines of management accounting to socialize the board and curb any opportunism that may arise.

Carbon Emissions Management and the Financial Implications of Sustainability

The concentrations of greenhouse gases in the atmosphere have risen dramatically leading to the possibility of costly disruption from rapid climate change. This calls for greater attention and precautionary measures to be put in place, both globally and locally. Governments, business entities and consumers would be impacted by the extent to which such precautionary measures are incorporated in their decision making process.

Firm characteristics and balanced scorecard usage in Singaporean manufacturing firms

Purpose - – This study aims to examine the effects of balanced scorecard (BSC) usage on performances in the context of four contingent variables in Singaporean manufacturing firms. The results show that firms are more likely to adopt BSC if they are large in size, have products at an early product lifecycle (PLC) stage, operate in highly uncertain environments or adopt differentiation strategies. However, the adoption of BSC improves performance only in firms that are large or have products at an early PLC stage. The results suggest that contingent factors in which a firm operates can exert significant effects on the results of adopting BSC. Design/methodology/approach - – Survey data are collected, then the authors check data correlations, principle components analysis, run regression analysis and ANOVA. Findings - – BSC use is positively and significantly correlated with PLC stage, external environment and performance. Size and strategy are positively correlated with BSC usage, but are not statistically significant. Higher BSC use is found in large firms with products at an early PLC stage or operating in a highly uncertain environment. Companies with a cost leadership strategy are significantly associated with BSC use. Research limitations/implications - – This study has small sample size and uses survey research method. The measurements to capture all aspects of BSC usage are non-exhausting. Future research can use different methodologies, such as field studies, case studies and lab experiments, to examine other industries than manufacturing. Practical implications - – The authors results show the positive association between BSC use and certain firm characteristics. Firms with those characteristics should get insights about the benefit of using BSC and extract the maximum benefit from their investment on the BSC use and those firms which don’t have BSC in implication may think of implementing the BSC use. Social implications - – Firms’ contingent factors affect the value of adopting BSC. With the authors research result, firms will be aware of how to extract the most value out of BSC and improve the social wealth of the manufacturing industries. Originality/value - – The authors paper is the first paper to use survey method to examine the association between BSC and firms’ contingent factors in the Singaporean manufacturing firms setting.

Carbonomics of the Bangladesh agricultural output: causality and long‐run equilibrium

Purpose – The key purpose of this paper is to examine the causality and long‐run relationship between CO2 emission and agricultural output for an agriculture‐dependent developing country, namely Bangladesh.Design/methodology/approach – In order to attain the objective, this study has used long‐time series data and employed advanced econometric techniques of unit root test, nonlinear least square estimation, Vector Error Correction estimation and Granger causality test.Findings – The empirical results of the study reveal that Bangladesh agricultural output is not a Granger causal for Bangladesh CO2 emission, but the countrys CO2 emission is a Granger causal for its agricultural output. The results also reveal for Bangladesh that any disequilibrium between CO2 emissions and agricultural output could take approximately 17 years to converge to the long‐run equilibrium. The results further reveal that the adjustment rate for Bangladesh agricultural output is positive and quite fast at the rate of 69 percent a...

Carbonomics of Japan's agricultural output: causality and long-run sustainability

This study investigates the causality and long-run sustainability between carbon emission and agricultural output in Japan using the long time series data and employing advanced econometric techniques of unit root test, nonlinear least-square estimation, vector error correction estimation, and Granger causality test. The results reveal that Japans agricultural output does not Granger-cause the countrys carbon emissions and its carbon emissions do not Granger-cause its agricultural output and hence the relationship between the two is proven to be not sustainable in the long run. The results also reveal that any disequilibrium between the two variables could take approximately 116 years to converge to their long-run sustainability. The adjustment rate for Japans agricultural output is positive and quite slow at the rate of 27% per year. Since the current carbon emission in Japan vis-à-vis its agricultural output is below the long-run sustainability level, Japans agriculture sector is expected not to face any stricter carbon emission controlling policies and regulations in the near future.