You know what’s so lovely about Sustainable Cost Accounting?

It makes no damn difference:

I was asked by a person with a political persuasion to prepare some slides for them so that they might present my ideas on what I call Sustainable Cost Accounting.

The argument is on the production methods of the company. OK. So, apply to an oil company. Their production methods might be mildly emittive. But that’s not the point, is it? The people who buy the products are going to be doing an awful lot of emitting.

That is, this new accounting method doesn’t actually solve any known problem.

11 comments on “You know what’s so lovely about Sustainable Cost Accounting?

  1. His plan is the equivalent of saying that unless you can demonstrate that your eating dinner has a zero net cost, you’re no longer allowed to eat. The utility of the activity seems to have been completely ignored.

  2. That is, this new accounting method doesn’t actually solve any known problem.

    Two facts to note here: (1) There’s nothing new about the methodology he is promoting, and (2) it isn’t actually accounting.

    Other than those minor speed bumps, hey, Murphy’s onto something big.

  3. It might get Ritchie another grant or two though.

    It might also give a Labour government an excuse to nationalise without compensation anything they want.

  4. a person with a political persuasion

    Such simpering coyness when he means himself or some prodnose totalitarian creep just like himself.

    to prepare some slides for them

    Graphics being one of his stronger suits, of course, if you’re after impenetrable.

  5. I thought he’d declared that it was beneath him to actually define a working accounting model for this, it was his big idea and other lesser beings had to figure it out.
    His main problem is that he doesn’t understand cost accounting, when I challenged him on something previously he claimed he’d covered it as part of his accounting training so was an expert. I did point out that there are different accounting qualifications for a reason, but apparently my CIMA and 25 years experience actually doing management accounting didn’t stack up against his expertise.

  6. As an FCA (ret) I do get exasperated with his trumpeting his radical inventions- country by country reporting and sustainable cost accounting. The former is a type of segment reporting ( around when I was an articled clerk I think!) similarly SCA is merely incorporating additional (environmental) costs / externalities.
    So a tiresome preening smug git.

  7. And his version will be made up costs, direct costs (e.g. replanting forested land, purchasing carbon credits) are already accounted for, contractual obligations (land cleanup/reclamation) will be provided for and govt covered costs (carbon tax) will be covered in specific and general taxation.
    Maybe worth suggesting that it should include the carbon footprint of its employees travelling to the workplace and they should monitor the forms transport and car pooling/sharing to determine what ‘sustainable’ cost should be included

  8. Murphy omits to include the profits out of which the company will pay for the changes/investment to make it carbon-neutral in his formula. So if a company has costs of £100k over twenty years and only has assets of £50k, he demands that it raises further capital or be declared “carbon-insolvent” even if it is making profits of £25k pa.
    Hmm!

  9. @john77
    He does say they could fund it by not paying dividends somewhere in the list.
    It’s not clear even if he’s looking at this as a non-allowable expense for tax purposes, otherwise likely to be a large hit to the corporation tax take, possibly even taxable losses to claim for as well. The fact he’s not highlighted even that basic a fact shows how shallow his idea is.

  10. @ BniC
    Yes, I did see that he suggested cutting dividends or raising new capital as an alternative to allocating part of current assets – but made no suggestion of taking the cost out of retained profits or reducing investment or raising prices or reducing wages/laying off redundant staff, so no indication that those dividends might be related to future profits.
    How shallow is his idea? Well, he has not explained why he imagines that BA or Easyjet can become carbon-neutral, how he imagines Bradley Wiggins is going to replace Eddie Stobart (electric vehicles used fossil-fuel-produced electricity), how offices and factories are going to keep warm in winter ….

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