ISO 14051
ISO 14051 is part of the ISO 14000 family of standards relating to environmental management codified by the International Organization for Standardization. The purpose of ISO 14051:2011 is to provide principles and generic guidelines on material flow cost accounting. The norm seeks to provide a universally recognized paradigm for practitioners and companies employing material flow cost accounting. It is not intended for third parties certification.
Introduction
ISO 14051 was published as a standard on the 2011, and provides a standard on the implementation of material flow cost accounting (MFCA). In MFCA energy can be accounted as part of the cost of flow of materials or separated. Many organizations are unaware of the real cost of loss of materials due to incomplete recording in traditional cost accounting. This norm aims to fulfill a gap providing a tool to use an integrate accounting perspective that helps to reduce environmental impact and financial costs.
Scope
ISO 14051:2011 provides general framework for the implementation of material flow cost accounting in small, medium and big organizations. In MFCA flow and inventories of materials are measured in physical amounts (ie mass, volume, liters, etc) and the costs related with these flows are also taken into account and assessed. ISO 14051 is a tool of environmental management accounting and it provides information for internal use.
Cost estimation under ISO 14051:2011
In MFCA are estimated three kind of costs: 1) Material cost 2) System cost 3) Waste management cost. Energy costs can be added to material costs or be quantified separately. Material, energy and system costs are assigned to cost centers outputs differentiating clearly which percentage belongs to final product and which percentage belongs to waste. The normative highlights the importance of a proper assignation criteria. Some criteria mentioned are number of hours of machine work, production, number of employees, number of hours of employees work, number of tasks completed, etc. in the estimation is needed to consider produce that is an output for a cost center but an input for another as well as internally recycled material.
Implementation steps
Step 1: Management level staff is needed to fully achieve environmental and financial objectives that are part of this framework. Managerial tasks are among others, leading implementation, providing resources, establishing follow up, reviewing results, decision making based on MFCS results.
Step 2: As per its nature, MFCS needs a multi-disciplinar approach. A non exhaustive list of these knowledge and skills is: skills on design, purchases and production; engineering knowledge about processes, quality control, environmental expertise, cost accounting knowledge and skills.
Step 3: Before starting it is needed to clearly define boundaries of study and time scope.
Step 4: Cost center determination.
Step 5: Identification of each input and output of every cost center.
Step 6: Flow of material quantification in physical and monetary terms (both).
Step 7: Summary of MFCS results and identification of areas of improvement.
References
- [1]
- Jasch, C. (2003). The use of Environmental Management Accounting (EMA) for identifying environmental costs. Journal of Cleaner Production, 11(6), 667–676. doi:10.1016/S0959-6526(02)00107-5
