Environmental accounting practices in Indonesia : case study on state owned enterprises

Environmental accounting (EA) in Indonesia is lacking in its accounting data due to the insufficiency of its environment accounting standards or focus on international standards. Literature indicates that EA is needed by the external stakeholders and the internal management to maintain business stability. A qualitative case study was conducted to understand the EA treatment from the perspective of Indonesian regulations, to understand the general procedures of accounting practices associated with the environment by national companies, and to recommend a plausible conceptual EA framework for State-Owned Enterprises (SOEs). The data was gathered from seventeen participants in two settings of gathering data; the first setting was from regulators, and the second setting was from two companies, using three data collection techniques: interviews, observations, and document review which were later triangulated for analysis purpose. The plausible conceptual framework that was proposed by this study
consisted of six categories from the Indonesian regulators’ perspectives, and four categories from the internal management perspectives of the EA practices. The categories from regulators’ perspective which should be set in an integrated manner, are: the use of organizational standards, the enforcement of environmental laws, the management of organization systems and activities, the reporting, the evaluation of environment accounting, and the sustainability aspects. The internal management’s perspective of the two SOEs consisted of: growth and sustainability, compliance with regulatory laws, improvement of standard operations, and environmental improvement and friendly products. Findings showed that the EA practices were influenced by the internal management perspectives, which are: cost structure, performance measurement, and disclosure or reporting. In conclusion the findings of this study contribute to policy-makers in deciding the regulations and the procedures of EA reporting in Indonesia