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Case Study for AMP

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business law
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Moi University

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MARGARET K.
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documents in English
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case study
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6 pages
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  1. Definition of Environmental Management Accounting
  2. Changes that AMP made to its Management Accounting System
  3. Definition of Environmental Costs
  4. Environmental Impacts of Services @ AMP's
  5. Changes that can be made to AMP's Accounting System
  6. Relevant Costs for Selected Environmental Inputs and Outputs
  7. Break down of AMP's Costs
  8. Benefits Resulting from the Separation of Costs
  9. Conclusion

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. [...]


[...] These costs were identified as relevant because they accounted for a large percentage of AMP's environmental costs. The cost breakdown of each of these items in terms of percentage focuses on the kind of environmental impact. The items that had the highest costs included office stationery and paper which had a cost breakdown percentage of 71 percent followed by electricity costs which had a percentage of 21 percent. Newspapers, paper recycling and shredding services used by the company had a breakdown percentage cost of 4 percent and 3 percent respectively. [...]


[...] The environmental costs that are incurred for AMP's building services are usually combined with those for every building office occupied by the company. These charges are based on the number of offices that have been occupied instead of the amount of office space that has been utilised in general and they are usually charged back to the cost centres of the company in the form of single office service charges (SOSC). The single office service charge system includes rental payments, maintenance of the space, office cleaning, electricity, water and waste water management systems within the company (KPMG 2002). [...]


[...] Environmental costs are beneficial to an organization because they improve the environmental performance of the organization increasing the company's competitive advantage. According to the US EPA Pollution Prevention Benefits Manual of 1989, environmental costs are classified into five tiers which include Tier Tier Tier Tier 3 and Tier 4. Tier 0 classifies environmental costs to be the direct costs that are associated with the capital expenditures, raw materials and operating costs of a company (KPMG 2002). Tier 1describes environmental costs to include the hidden regulatory costs that arise from activities that fall under compliance and quality assurance such as monitoring, reporting and controlling of organizational resources. [...]

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