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Environmental management accounting

Unit: Advanced Management Accounting

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Practice CPA Advanced Management Accounting Environmental management accounting questions with detailed answers and explanations.

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August 2025

 1 Questions
Question 1a
​​Evaluate FOUR roles of management accounting in identifying and allocating environmental costs.


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December 2024

 1 Questions
Question 2a
​​Simtel Ltd. is a small and medium-sized enterprise (SME) seeking opportunity in emerging business in mobile telephone innovation and digital marketing platform. However, the company is experiencing challenges in navigating the regulatory requirements such as compliance with Electronic Waste (e-waste) Management and Disposal Act. The project manager has proposed to the Management Accountant that they should implement e-waste management and disposal policy when disposing of its electronic waste for sustainable waste management. 

Required: 
Explain THREE sustainability issues that Simtel Ltd. could leverage on when implementing e-waste disposal policy.


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August 2024

 2 Questions
Question 5b
​ ​​Trans Africa Airline Company is a manufacturing company of the world’s biggest air buses. By the end of the year 2023, the environmental manager indicated that the company had made significant improvement in its environmental performance by reducing the carbon emissions of contaminating residues of all types. 

The following is the environmental cost report for the years 2022 and 2023:

2022 
Sh.“000”
2023 
Sh.“000”
Sales revenue 
13,000,000
20,000,000
Evaluating and selecting suppliers 
154,000
600,000
Treating and disposing of toxic materials
500,000
800,000
Inspecting process for regulatory conformance 
450,000
300,000
Restoration cost of carbon emissions
1,350,000
1,200,000
Recycling scrap cost 
550,000
300,000
Testing for contaminants 
88,000
100,000

Required: 
(i) Classify the above costs as: prevention, detection, internal failure and external failure costs.

(ii) Prepare an environmental cost of quality report for the year 2023 where costs are expressed as a percentage of sales revenue. 


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Question 1a
​​“Resilience” describes the capacity or ability of an organisation to anticipate and mitigate environmental risks and costs and recover from their adverse effects in a timely and efficient manner. This is because the external environment has a significant impact on the business activities and financial performance of an organisation. 

With reference to environmental management accounting (EMA), identify THREE countermeasures that each of the following techniques could provide to build resilience and adaptation to environmental cost identification and allocation: 

(i) Environmental life cycle costing. 

(ii) Environmental inflow-outflow analysis.


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April 2024

 1 Questions
Question 5a
​​Explain THREE roles of accountants in environmental management.


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December 2023

 2 Questions
Question 4a
​​Highlight FOUR roles of a management accountant in accounting for environmental costs.


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Question 1b
​​“Carbon credits” and “carbon credit tax” are increasingly being applied in environmental management accounting (EMA) as transparent measurable and result oriented activities aimed at protecting and preventing environmental degradation by adopting environmental management strategies, policies and compliance requirements. Carbon credit tax (CCT) is aimed at enhancing compliance. CCT is levied on pollution caused by carbon emission to the environment. One of the aims of the tax is to discharge organisations from operating with excessive carbon emission and instead encourage a transition to more sustainable alternatives by detecting and preventing external costs of environmental management. 

Required: 
With reference to the above statement, identify THREE benefits that might accrue to an organisation as a result of implementation of carbon credit strategies and policies towards: 

(i) Environmental detection costs. 

(ii) Environmental external failure costs.


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August 2023

 1 Questions
Question 1a
​​Explain TWO benefits of each of the following concepts as used in environmental management accounting: 

(i) Environment life cycle costing.

(ii) Environmental activity-based costing (EABC).


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April 2023

 1 Questions
Question 2a
​​The Management Accountant of Floratec Ltd. has attended a brainstorming seminar on Environmental Management Accounting (EMA) organised to sensitise the management team on strategic goals and policies to put in place to address various environmental costs. 

Required: 
For each of the environmental costs below, identify THREE costs to be addressed by the management team: 

(i) Environmental internal failure costs. 

(ii) Environmental external failure costs.


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December 2022

 1 Questions
Question 1a
​​In the context of environmental management accounting, explain FOUR types of environmental costs.


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August 2022

 1 Questions
Question 4a
​​Explain three areas where environmental management accounting (EMA) might be applied.


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December 2021

 1 Questions
Question 5a
​Business organisations especially the manufacturing firms are required to factor in environmental concerns in their decision making. 

Required: 
Analyse four ways of aligning business operations with environmental issues.


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September 2021

 1 Questions
Question 4b
​​Describe three challenges encountered in environmental management accounting.


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May 2021

 1 Questions
Question 5a
​​Discuss the scope and breadth of environmental management accounting.


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November 2019

 1 Questions
Question 4a
​​Describe three categories of environmental costs.


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May 2019

 1 Questions
Question 1a
​​Highlight four fields in which the use of environmental management accounting (EMA) is applied.


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November 2018

 2 Questions
Question 1a
​​Stating two examples in each case, distinguish between "internalised environmental costs" and "externalised environmental impacts".


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Question 3a
​​ Describe three roles that are played by a management accountant in environmental management accounting (EMA).


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May 2018

 1 Questions
Question 3a
​​Outline four costs that should be reported in an environmental cost report.


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November 2017

 1 Questions
Question 5a
​​Environmental management accounting (EMA) is complementary to the conventional financial management accounting approach with the aim of developing appropriate mechanisms that assist in identification and allocation of environmental related costs. 

With reference to the above statement, highlight four areas for the application of EMA.


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May 2017

 1 Questions
Question 2a
​​Evaluate three benefits that might accrue to an organisation that adopts Environmental Management Accounting (EMА).


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November 2016

 1 Questions
Question 1a
​​ Business organisations are required to factor in environmental concerns in their decision making.

Describe four ways of aligning business operations with environmental issues.


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May 2016

 1 Questions
Question 4a
​​Environmental Management Accounting (EMA) is broadly defined as the identification, collection, analysis and use of two types of information for internal decision making namely:

  1. Physical information on the use and flow of energy, water and materials including waste. 
  2. Monetary information on environmental related costs, earnings and savings. 

The management accountant possesses important cost data and information regarding the environment. 

Required: 
With regard to the above statement, evaluate the role of management accountants in Environmental Management Accounting (EMA).


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