Chapter 17- Strategy Performance Measurement System

Q17.1 The concept of sustainable development applies to economies but has nothing to do with
individual business.LO17.1

 This statement is not true because sustainability requires the organization to consider the
interrelated impacts of their activities on the economy, the environment and society. And
their core elements are Firstlt,sustainability is concerned with the future and with the ability
to maintain certain values, assets or capabilities over the long term, Secondly, Sustainability
involves decision that address the interaction between environment, social and economic
domains and thirdly, Sustainability requires choices considering equity within society and
across generation. While sustainability is based on the concept of sustainable development,
which is define by the united nation that meets the needs of the present without
compromising the ability of the future generation to meet their own needs.

Q17.3 what are integrated reports and how do they relate to sustainability report?

 An integrated report is a concise report with the prime purpose of explaining how an
organization creates values overtime. It required to explain how, in the context of its
external environment, an organization’s strategies, governance, performance and prospects
lead to values creation in the short, medium and long. Integrated report explain value
creation and value diminution in terms of the impart of an organization’s activity while the
sustainability report provides a tripe fronted overview of the outcome of its operations, the
context for their operations and the planning for the future are seen in the integrated
report.

Q17.4 Stakeholder group, such as employees, customers and community group, may influence
organizations to adopt sustainable work practice. For each stakeholder group, provide an example of
how it can influence organizations. LO17.3

 Employees who value sustainability principles may put pressure on their employers to adopt
more sustainable work practices, and may choose to leave the employ of an organization if
the organization fails to adopt sustainable work practices. Employees are often the frontline
of contact between the organization and customer and community so the success of the
adoption of sustainability work practices may depend on whether employees choose to
cooperation in their adoption.

Q17.5 Explain how management accounting system can be adapted to enable an organization to
engage in sustainability reporting.LO17.4

 Management accounting system have only included measures related to the financial impact
of operations and the incorporation these into decision relevant report. Management
accounting systems can be adapted to assist sustainability reporting by defining, tracking,
measuring and social impact of operations, then presenting them in ways that assist
sustainable decision making and sustainability reporting.

Q17.6 Outline the challenges for organizations that seek to measure the future impact of their
current activities on the environment and society.LO17.5

 Difficult to identify what impacts will be important to future generation, so what are
appropriate measures to monitor between now and then.
 Chapter 17- Strategy Performance Measurement System

 The evaluation of future impacts is difficult because there are usually not any available
benchmark.

Q17.7 what is an environmental management system and how does this relates to environmental
management accounting? LO 17.6

 Environmental Managements are systems that help manage the environmental performance
of an organization and they include recycling system and systems that monitor and control
waste. Environment Management systems are management accounting systems and
practices installed to provide information about the environment impact of an organization
activities.

Q17.9 Explain the difference between Tier 2 and Tier 3 environmental cost and provide 2 examples
of each. LO17.7

 Tier-2 costs, hidden costs that include the cost of monitoring and reporting activities to
comply with regulations. These costs also can be found in the accounting system, but may
not be easy to fine and report as they are often hidden in various overhead accounts and in
the cost of wages and salaries while Tier -3 cost, contingent costs, include costs that may be
incurred in the future, depending on future events and these costs may be recognized within
an organization’s internal report.

EXERCISES
Q17.24 – LO 17.9 – Life Cycle Analysis; Environmental and Social Impact: Fast Food Company.

PROBLEM
P17.33 – LO17.7 and LO 17.8 – Cost Analysis: Winery