Environmentally Related Impacts On Financial
Reporting: The Case Of Pollution Permits In
Czech Legislative Conditions
Author(s)
J. Horák & O. Malíková
Abstract
The Czech Republic was one of the biggest air polluters in Europe before the
year 1989. Czech industry was restructured from heavy to light industry as a
consequence of the transition from a centrally planned economy to a market
economy after the political, social, economic and other changes that took place
that year. The Czech Republic became a member of the European Union in 2004.
Due to the membership it was crucial to implement environmental legislation
that ensures the reduction of greenhouse gas emissions. The submitted paper
deals with problems of pollution permits from the view of Czech accounting
legislation. The purpose of financial accounting is to generate financial
information about a company in order to provide a basis for transparency and
accountability relationships with stakeholders. Financial reporting is used by
managers to communicate the dated financial information to external parties. The
main environmental topics in a company’s financial accounting are the
recognition, measurement and disclosure of environmentally related economic
impacts on business and a company value. Local financial accounting standards
differ between jurisdictions and can substantially influence the economic results
of a company. When examining sustainable development and accountability it is
crucial to investigate how environmental issues are dealt with by financial
reporting rules, whether and when environmentally induced financial outlays
should be classified as assets or as expenses. The aim of this paper is to discuss
the influence of pollution permits on Czech financial reporting with the view of
accounting entity that pollutes air by greenhouse gases. The paper describes
problems of a present situation of recording accounting transactions connected
with pollution permits such as a purchase or donation of permits, their evidence
in Czech financial accounting. The paper analyzes implementation of the EU
Keywords
air pollution, pollution permits, emission allowances, environmental accounting, financial reporting, intangible fixed assets, expenses, emissions trading, balance sheet, greenhouse gases, environmental legislation
Related Book
Other papers in this volume
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