ISO 14051 is part of the

ISO 14000 The ISO 14000 family is a set of international standards for environment management systems. It was developed in March 1996 by International Organization for Standardization. The goal of these standards is to help organizations (a) minimize how t ...

family of standards relating to

environmental management Environmental resource management or environmental management is the management of the interaction and impact of human societies on the environment. It is not, as the phrase might suggest, the management of the environment itself. Environment ...

codified by the

International Organization for Standardization The International Organization for Standardization (ISO ; ; ) is an independent, non-governmental, international standard development organization composed of representatives from the national standards organizations of member countries. M ...

. The purpose of ISO 14051:2011 is to provide principles and generic guidelines on material flow cost accounting. The norm seeks to provide a universally recognized

paradigm In science and philosophy, a paradigm ( ) is a distinct set of concepts or thought patterns, including theories, research methods, postulates, and standards for what constitute legitimate contributions to a field. The word ''paradigm'' is Ancient ...

for practitioners and companies employing material flow cost accounting. It is not intended for third parties certification.

Introduction

ISO 14051
was published as a standard in 2011. It covers the implementation of material flow cost accounting (MFCA). In MFCA energy can be accounted as part of the cost of flow of materials or separated. Many organizations are unaware of the real cost of loss of materials due to incomplete recording in traditional

cost accounting Cost accounting is defined by the Institute of Management Accountants as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includ ...

. This norm aims to fulfill a gap providing a tool to use an integrate accounting perspective that helps to reduce

environmental impact Environmental issues are disruptions in the usual function of ecosystems. Further, these issues can be caused by humans ( human impact on the environment) or they can be natural. These issues are considered serious when the ecosystem cannot reco ...

and financial costs.

Scope

ISO 14051:2011 provides general framework for the implementation of material flow cost accounting in small, medium and big organizations. In MFCA flow and

inventories Inventory (British English) or stock (American English) is a quantity of the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying ...

of materials are measured in physical amounts (i.e. mass, volume, liters, etc.) and the costs related with these flows are also taken into account and assessed. ISO 14051 is a tool of environmental management accounting and it provides information for internal use. MFCA can be extended to other organizations in the supply chain, both upstream and downstream, thus helping to develop an integrated approach to improving material and energy efficiency in the supply chain. This extension can be beneficial because waste generation in an organization is often driven by the nature or quality of materials provided by a supplier, or the specification of the product requested by a customer.

Cost estimation under ISO 14051:2011

MFCA are estimated three kind of costs: (1) Material cost (2) System cost (3) Waste management cost. Energy costs can be added to material costs or be quantified separately. Material, energy and system costs are assigned to cost centers outputs differentiating clearly which percentage belongs to final product and which percentage belongs to waste. The

normative Normativity is the phenomenon in human societies of designating some actions or outcomes as good, desirable, or permissible, and others as bad, undesirable, or impermissible. A Norm (philosophy), norm in this sense means a standard for evaluatin ...

highlights the importance of a proper assignation criteria. Some criteria mentioned are number of hours of machine work, production, number of employees, number of hours of employees work, number of tasks completed, etc. in the

estimation Estimation (or estimating) is the process of finding an estimate or approximation, which is a value that is usable for some purpose even if input data may be incomplete, uncertain, or unstable. The value is nonetheless usable because it is d ...

is needed to consider produce that is an output for a cost center but an input for another as well as internally recycled material.

Difference between MFCA and traditional cost accounting

Before the implementation of this particular

ISO The International Organization for Standardization (ISO ; ; ) is an independent, non-governmental, international standard development organization composed of representatives from the national standards organizations of member countries. Me ...

it is helpful to understand the difference with the traditional cost accounting. MFCA makes a record of material flow in physical and

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are: med ...

terms and puts emphasis in the loss of materials (or in other words, the waste produced). Although traditional cost accounting recognizes loss of materials, waste management costs are not separated but integrated in the total cost of production. This practice makes difficult to identify easily and clearly which part of production is due to losses or waste generation. MFCA highlights

waste management Waste management or waste disposal includes the processes and actions required to manage waste from its inception to its final disposal. This includes the collection, transport, treatment, and disposal of waste, together with monitor ...

costs and inefficiency of processes therefore making easier to identify room for improvements. Many losses produce environmental impact (air pollution,

water pollution Water pollution (or aquatic pollution) is the contamination of Body of water, water bodies, with a negative impact on their uses. It is usually a result of human activities. Water bodies include lakes, rivers, oceans, aquifers, reservoirs and ...

, health problems, etc.) therefore identifying losses, the framework aims to make easier to also reduce some

environmental impacts Environmental issues are disruptions in the usual function of ecosystems. Further, these issues can be caused by humans (human impact on the environment) or they can be natural. These issues are considered serious when the ecosystem cannot recov ...

. It is worth saying that this framework does not identify environmental impact that is not linked with any material cost.

References

Sources

*Jasch, C. (2003). The use of Environmental Management Accounting (EMA) for identifying environmental costs. Journal of Cleaner Production, 11(6), 667–676. doi:10.1016/S0959-6526(02)00107-5 *Schaltegger, S., & Burritt, R. (2000). Contemporary Environmental Accounting: Issues, Concepts and Practice. Sheffield, UK: Greenleaf Publishing Limited.

External links

International Organization for Standardization
{{ISO standards Sustainable business Environmental monitoring #14051