A review of the business management and accounting issues of environmental costs of an organization
“The improved knowledge of the regulatory requirements relevant to the environment of a specific country that directly or indirectly impacts the overall operation of the selected company and their adequate discussion in the RAP by providing practical aspects under the guidance of a highly qualified mentor are the keys for successful passing of the RAP”
Environmental costs are the costs related to the actual or potential deterioration of the natural assets of a country resulting from the various economic activities. These costs can be looked from two perspectives:
(a) Costs caused: costs associated with the economic units that are actually or potentially causing the environmental deterioration via their activities;
(b) Costs born: costs that have occurred independently from the economic units or these units have actually caused the environmental impact.
These issues have an influence on the business and accounting management because the laws require the businesses to change their procedures and equipment in order to meet the proposed standards, and this is costing to the businesses.
Under topic 4 the student will have to implement the theoretical knowledge acquired from the different ACCA papers along with the proper approach from the beginning of the preparation of the RAP, paired with the guidance of a highly qualified Project Mentor. Further, the student will have to have adequate knowledge of the operations of the selected company so he/she can adequately connect the impacts of the environmental costs in both qualitative and quantitative terms.
A significant aspect that the student has to consider is the ethical and lawful liability (in more developed countries) of the company to operate their business in a manner by which the operations do not cause major impacts on the overall environment. In the developed countries, there are specific requirements and even laws that bind the companies to operate their business in a manner that lowers the impact on the overall environment, on the other side in underdeveloped countries there are no specific requirements relevant to the environment. Generally, for the purpose of this topic, the student will need to evaluate the environmental costs and if these costs are essential in meeting the regulatory requirements or if this is a managerial decision. If the case is binding regulatory requirements, both the qualitative and quantitative aspects should be noted in the RAP. On the other side, if there are no binding regulatory requirements related to the environment, the student should focus only on the quantitative aspect of the environmental costs.
- Assessing the business management issues related to the environmental costs.
- Assessing the accounting issues related to the environmental costs.
- Accessing the isolated environmental costs related to the industry practices.
- Correct links between the environmental costs of the company and the other operational costs and assessing its applicability for the major shareholders of the company.
- Providing a qualitative and quantitative analysis (where possible) to properly support the mentioned aspects.
- Maintaining a good balance in explaining and analyzing the different aspects that are required for this topic.
Key Success Factors
- Adequate knowledge of the general concepts of the environmental costs.
- Proper knowledge of the environment-related regulations in the county where the selected company operates (if applicable).
- In-depth knowledge of the operations of the selected company that are in a direct or indirect correlation with the environment.
- The appropriate connection of the environmental costs with the business management and the accounting issues.
- Adequate discussion while providing practical examples by the adequate linking of the environmental costs of the business management and the accounting issues of the selected company.
- Appropriate application of the selected goals and objectives that were decided in the beginning of the RAP in their proper sections.
- Adequate answers on the research questions that were set in the beginning of the RAP in the proper section of the RAP.
- Applying a good research methodology to get good results on all the selected goals and objectives that were decided in the beginning of the RAP.
- Maintain a logical flow of the discussion by keeping all the important requirements of topic 3.
- Give logical conclusions to the work at the end of the Research Report by also having in consideration all the prescribed requirements for this topic.
Major benefits of choosing this topic
- The student can apply their theoretical knowledge in practical situation.
- The student can understand the different business management and accounting issues caused by the environmental costs.
- The different techniques learned under this topic will significantly help the student in their professional career.
Major possible limitations faced by the student under this topic
- The student may not be appropriately welcomed by the management of the selected company, and may not be provided with all the necessary documentation (due to confidentiality issues or lack of authorized personnel
- The student may find the lack of relevant information from reliable secondary sources due to an inadequate research approach or may face lack of ideas for improvement of the RAP.
- Due to the lack of professional experience, the student may have difficulties in the critical assessment of the performance management related to the review of the business management and accounting issues of the selected company.
- The student may be confused by the possible contradictions in the gathered information provided by the primary sources against the results of their actual research work through the secondary sources.
Suitable organisation under this topic
An appropriate company for preparation of the RAP under topic 4 is a company for which the student has appropriate access to the management and such where the management is willing to provide the required information. The proper selection of the most suitable organization is very important and the student needs to have an adequate understanding of the sector where the company operates. Upon their knowledge on the company and sector, the student can connect the different aspects of the overall operations of the selected company and will be able to effectively fulfil the requirements of the topic and get good grades on their RAP.
The student will need to evaluate these aspects while choosing a company for their RAP:
- The personal interest of the student in relation to the general interest of the selected company;
- Access to primary sources of information (essential for topic 4);
- Access to reliable secondary sources of information;
- Knowing the general operations of the selected company (essential for topic 4);
- Knowing the sector where the selected company operates;
- Access to adequate officials from the selected company (essential for topic 4);
- A general idea of the requirements of the selected topic in the beginning of the RAP and their application in the selected organization.
Suggested approach for this topic
An adequate plan needs to be set by the student from the beginning of the preparation for the RAP in order to effectively finish all the necessary tasks. The student will need to clearly understand the major requirements of the topic and to analytically evaluate all the necessary aspects with setting a detailed strategy. The student will need to decide on the approach he/she will follow in order to meet all the necessary requirements of this topic from the beginning of the RAP.
First, the student will need to prepare the table of contents for the RAP under topic 4 so that it flows in a logical manner. The table of contents will enable the student to stay on the correct track from the beginning of the work and also help the student to create a proper timetable and estimate the necessary time to complete each task for the RAP.
After preparing the table of contents of the RAP under topic 4, the student will need to start work in a logical manner to gather the necessary information. The student has to analytically and logically evaluate the gathered information via consultations with their Project Mentor. The feedback and proper guidance from the Project Mentor in many aspects of the RAP are of great importance for the proper completion of the RAP.
As there is not a prescribed approach for the creation of the RAP under topic 4 and the broad level approach described here is the start. The detailed approach depends on the student’s plans that were made at the beginning of the RAP in accordance with the available information on the selected company. No matter the approach the student will choose to follow, the guidance from the Project Mentor along every step of the process has an important influence in preparing a quality RAP and getting good grades.
Availability of Information
The RAP needs to be created upon the information provided by the management of the company ( the primary source of information) in relation to the information gathered from reliable secondary sources of information (internet, newspapers, books, etc.). The availability of primary sources of information is of essential importance for topic 4, as this topic can’t be completed without access to the specific primary information. The student needs to be certain that he/she has access to information provided by the management of the selected company and there are no confidentiality clauses behind these.
The student needs to carefully evaluate topic 4 and all its prescribed requirements and assess the availability of primary sources of information before making the final decision to base their RAP on this topic. If there are doubts on any of these factors, the student should not choose this topic for their RAP, as these factors have a very big influence on the evaluation of the RAP and their final grades.
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