The case study will focus on AMP Limited which is a financial services organization based in various countries around the world. The company has an employee base of about 14,500 employees in the AMP International organization of the company. The case study will focus on the service division of AMP which provides a variety of services to the company's affiliate in Australia. These services include human resource services, administration services, procurement management and maintenance of the company's facilities. The use of the US EPA classification of environmental costs is useful for this case study because it helps to explain how and why different types of costs need to be considered for decision making within the management accounting system (KPMG 2002)
The use of the classification system was able to highlight the environmental costs that are utilised by the various divisions of Services AMP. The company's environmental costs are mostly related to the energy and water consumption needs of the organization as well as waste disposal activities identified in the first question of this analysis. By classifying the various costs of the company based on the EPA classification system, the company will be able to develop a new environmental management system that takes into account a new structure of costs that can be managed properly under the new system.
[...] Environmental costs according to this study are defined as the costs that are related to the environmental aspects of a business and they have to be paid directly so that goods and services are produced for customers. These costs do not however cover waste management and disposal of the materials that have been used by the organization or business to produce goods and services. Environmental costs do not also cover the corporate responsibility activities within the surrounding environment where the organization operates (Langfield-Smith 2009). [...]
[...] The case study will focus on the service division of AMP which provides a variety of services to the company's affiliate in Australia. These services include human resource services, administration services, procurement management and maintenance of the company's facilities. The use of the US EPA classification of environmental costs is useful for this case study because it helps to explain how and why different types of costs need to be considered for decision making within the management accounting system (KPMG 2002) The use of the classification system was able to highlight the environmental costs that are utilised by the various divisions of Services AMP. [...]
[...] Breakdown of AMP's Costs The breakdown of costs for the top fifty items ordered by AMP's cost centres for a six-month period revealed that compendium and satchel sets accounted for 33 percent of the budget while office paper and stationery accounted for 27 percent of the company's budget. Staff gifts and incentives which were other items ordered by the company accounted for 20 percent of the expenditure while one off purchase items accounted for 7 percent. Folders, dividers and files accounted for 6 percent of the budget while stickers took up 4 percent of the cost. Funds that were set aside for other purchasers accounted for three percent of AMP's cost budget (KPMG 2002). [...]
[...] The costs related with these goods and services were consolidated, an exercise that demonstrated office equipment and stationery to account for 71 percent of AMP's total costs. Creating an additional field would therefore allow the company to identify cost reduction opportunities (KPMG 2002). Another change to AMP's accounting system will involve separating the costs charged for waste collection and disposal with those for building and office rent. This will ensure that the system is able to properly track the quantities and costs that are used by these services. [...]
[...] The company is also able to pay for office stationery, furniture, equipment and publication material by charging back the costs of these products to AMP's cost centres. Services @ AMP manages the environmental costs of purchasing electricity and water purchases but in some cases, the building manager conducts the procurement of the company's purchases. The building manager also manages the cleaning contract for Services @ AMP where the contracting company offers services for waste collection and disposal as well as payment of waste water bills. [...]
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