INDONESIAN UNDERGRADUATE ECONOMIC REVIEW

Volume 3 Issues 2
No.2 (15 pages)

Analysis Implementation Of Environmental Accounting Information And Environmental

Audit To Environmental Performance In Extractive And Non Extractive Industry Company
(Case Study Of Industrial Company In Medan)

Imanuel Armando Panjaitan1, Mareta Hutajulu2, Astuti Siagian3

Accounting1,2, Economic Development 3, Universitas Sumatera Utara
imanuel.panjaitan9@gmail.com

Accepted : December 5, 2017

© Indonesian Undergraduate Economic Review 2017

ABSTRACT
The phenomenon of climate change and the increasingly widespread environmental damage
caused by waste products such as waste contains contaminants and are toxic and hazardous (B3)
which consists of: (1) air pollution waste, (2) liquid waste, (3) solid waste Both in the form
management workin processes and management finish good that make the environment a concern
of all parties. Environmental damage encourages companies to be more concerned about
environmental aspects and show their environmental responsibility. In this case, Environmental
Accounting Information and Environmental Audit can be a management tool to improve
environmental performance and further facilitate the disclosure of environmental information as
a form of environmental responsibility to corporate stakeholders. This study examines the
analysis of the application of environmental accounting information and environmental audit to
environmental performance in extractive and non extractive industries. The target population is
50 industrial companies in Medan with 30 samples, ie a number of companies responding to
questionnaires. Respondents are the head of the accounting department or the company's
environmental auditor. The data used in this study is the primary data. The analytical method
using SPSS help is used to test the hypothesis. The results of this study indicate that:
environmental accounting information and environmental audit have a positive and significant
effect to environmental performance in the company of extractive and non extractive partially and
simultaneously. These results obtain information on the need for extended corporate accounting
practices by incorporating environmental aspects. Thus, accounting can contribute to corporate
environmental responsibility.

Keywords: Environmental Accounting Information, Environmental Audit, Environmental

Performance

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INTRODUCTION

1.1 Background
The phenomenon of climate change and the increasingly widespread environmental
damage caused by waste products such as waste contains contaminants and are toxic and hazardous
(B3) which consists of: (1) air pollution waste, (2) liquid waste, (3) solid waste Both in the form
management workin processes and management finish good that make the environment a concern
of all parties. In Indonesia, most environmental damage occurs due to the industry's increasing
performance. Environmental cases affecting several companies in Indonesia, such as the
case of pollution from factory waste by PT. Inti Indo Rayon in North Sumatra and Sidoarjo mud
by PT. Lapindo Brantas are some real examples of this problem (Revianur 2014; Patnistik 2013;
Kristiono 2006).
The existence of industry in the midst of society has an impact on the life of the society
itself. Economically, the existence of industry improves the welfare of the community through
the provision of employment opportunities. Socially, the industry has an impact on changing social
values. Ecologically, industry can change community infrastructure to cause environmental
pollution. Guinness World Records in 2008 once set a record of Indonesia as a country that has a
high rate of environmental damage. Environmental damage can be defined as the process of
deterioration or deterioration of the environment. This environmental deterioration is characterized
by the loss of soil, water, air resources, the extinction of wild flora and fau na, and ecosystem
destruction.
Environmental damage mainly occurs in forests. Every year Indonesia loses 1.8 million
hectares of forest. Damage occurring in the upstream area (forest) also damaged the area
downstream (coastal). According to Down The Earth's record, the Asian Development Bank
(ADB) project in the Indonesian marine sector has triggered a massive overhaul of mangrove
forests into aquaculture area. Whereas mangrove forests, in addition to protecting the beach from
abrasion, is a good habitat for various types of fish. The destruction of the mangrove forest resulted
in fishermen having to search for fish with longer distances and increase their operational
costs in finding fish. The destruction of mangrove forests also lead to more vulnerable
coastal areas of Indonesia against the brunt of tidal water and floods, especially in the rainy season.
In addition, water ecosystem damage is also caused by extractive and non-extractive
industry industrilaisasi. The industry has a tremendous impact on the environmental damage that

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surrounds it. Socially, the industry has an impact on the change of social values. Ecologically,
industry can change community infrastructure and environmental pollution. The type of industry
that most impacts on environmental damage is the extractive industry. Extractive industries are
industries engaged in the management of natural resources, such as the mining industry and the
oil drilling industry.
Increased productivity and efficiency, businesses undertaken by the company, among
them using modern technology, cost reductions, mergers and acquisitions, and the use of cheaper
resources. Efforts are made to provide maximum results for stockholders. Currently, the
company is required not only to prioritize owners and management, but also all related parties,
such as employees, consumers, and society and the environment. This is because the existence of
the company can not be separated from the interests of various parties. One of them is
environmental support. In the era of corporate movement towards the green company, the
industry is not only demanded for the limited processing of waste, but the demands of the
consumer society furthermore that the production process of a product ranging from the taking of
raw materials to the disposal of a product after consumed (used) .
In an effort to conserve the environment, accounting also plays a role through voluntary
disclosure in its financial information related to environmental costs or environmental costs. The
accounting system in which there are accounts associated with these environmental costs is
referred to as environmental accounting or environmental accounting. Internally, the role of
environmental accounting can provide a motivation for managers to reduce the environmental
costs incurred, which will affect the decisions that will be the basis of the company's existence in
the future. The concept of environmental accounting has actually started growing since the 1970s
in Europe. Due to the pressure of non-government institutions and increased environmental
awareness among the public that insisted that companies not only engage in industry for the sake
of business, but also apply environmental management. The purpose of applying environmental
accounting is to improve the efficiency of environmental management by assessing
environmental activities from environmental costs and economic benefits, as well as producing
environmental protection. In brief, environmental accounting can provide information about the
extent to which the organization or company contribute positively or negatively to the quality of
human life and the environment. Through the application of environmental accounting it is
expected the environment will be maintained its sustainability, because in implementing
environmental accounting then the company will voluntarily mamatuhi government policies
where the company runs its business . In addition, research conducted by De Beer and Friend

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(2005) demonstrates that disclosure of all environmental costs, both internal and external, and
allocating these costs based on the cost and cost drivers in a structured environmental accounting
will contribute well to the performance environment .
1.2 Problem Formulation
Based on the background of problems that have been described before, the formulation of
the problem in this study are:
1. Does Environmental accounting affect the environmental performance of extractive
and non-extractive companies?
1.3 Research Objectives And Benefits
1.3.1 Research Objectives
As has been said in the formulation of the above problem then, the purpose of this study
is to:
1. To know whether the Environmental Accounting Information and Environmental Audit
Affects the Environmental Performance of Extractive and Non-Extractive Companies either
partially or simultaneously.
1.3.2 Research Benefits
By doing this research is expected to provide benefits for:
1. Author
To increase knowledge and insight about Environmental Accounting Information and
Environmental Audit Influence On Environmental Performance In Esktractive And Non-
Extractive Companies.
2. Company Management
Provide information for managers of companies, especially financial managers in making
decisions about the environment and can be used as an input on the performance of corporate
managers.
3. Investors
Being one of the inputs for investors in influencing the consideration of potential
investors in taking decisions to invest in a company.
4. Creditor
Can be used as a consideration for the creditors in terms of providing loans to the
company

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LITERATURE REVIEW

2.1 Theoretical Foundation

2.1.1 Environmental Accounting

Environmental Accounting (EA) is a term related to the inclusion of environmental costs

into accounting practice of a company or government agency. Environmental costs are the
financial and non-financial consequences that should be borne out as a result of activities
affecting the quality of the environment.
In the Environmental Accounting Guidelines issued by the Minister of the Environment
(2005: 3) stated that environmental accounting covers the identification of the costs and benefits
of environmental conservation activities, the provision of facilities or the best way through
quantitative measurement, and to support the communication process aimed at achieving
development sustainable, nurturing lucrative relationships with communities and achieving the
effectiveness and efficiency of environmental conservation activities. Belkoui and Ronald (1991)
explain that culture is a major factor affecting the development of business structure and social
environment, which will ultimately affect accounting. The consequences of this social and
environmental accounting discourse ultimately led to the concept of Socio Economic
Environmental Accounting (SEEC). Bell and Lehman (1999) define the environmental
accounting as follows, “Environmental accounting is one of the contemporary concepts in
accounting that support the green movement in the company or organization by recognizing,
quantifying, measuring and disclosing the contribution of the environment to the business process”.
Based on the definition of environmental accounting above it can be explained that
environmental accounting is an accounting in which identify, measure, assess, and disclose costs
associated with company activities related to the environment. While the activity in environmental
accounting is explained by Cohen and Robbins (2011: 190) as follows:
Environmental accounting collects, analyzes, assesses,and prepares reports of both environmental
and financial data with a view toward reducing environmental effect and costs. This form of
accounting is central to many aspects of governmental policy as well. Consequently, environmental
accounting has become a key aspect of green business and responsible economic development.

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 Through the application of environmental accounting, it is expected that the environment
will sustain its sustainability, because in applying environmental accounting, the company will
voluntarily comply with the government policy in which the company operates its business.
Furthermore, the US EPA (1995) environmental accounting as an aspect of management
accounting, supports business managers' decisions by including costing, product or process
design decisions, performance evaluations and other business decisions.
Environmental accounting is an anclusive field of accounting. It provides reports
inveronmental information to help make management decisions on pricing, controlling overhead
and capital budgeting, and external use, disclosing inveronmental information of interest to
public and to the financial community.
2.1.1.1 Environmental Information
Cooper and Owen (2007) accountability involves not only the management of the
company but also the ability or power of the stakeholders to demand accountability of the
management and the ability to reward or sanction according to management performance.
Consistent with the argument in advance, the social and environmental informa- tion of the
company can be defined as follows:
The process of communicating the social and environmental effects of
organizations’economic actions to particular interest groups within society and to society
at large.As such, it involves extending the accountability of organisations (particularly
companies), beyond the traditional role of providing a financial account to owners of
capital, in particular, shareholders. Such an extension is predicated upon the assumption
that companies do have wider responsibilities than simply to make money for their
shareholders (Adam dan Zutshi (2004)).

Gone and Herrbach (2006) argue that CSR informations not only benefit external parties,
but also benefit the company. By creating CSR information the company will conduct self-
assessment so as to identify the strengths and weaknesses of the company related to CSR
activities in the company. Thus, the information is an organizational learning tool, which can cause
dynamic changes to individuals and companies, which ultimately encourages the improvement of
organizational performance.
2.1.2 Enviromental Audit
Environmental Audits are an integral part of the environmental management system used
by management to determine whether the company's environmental control system is sufficient
to ensure compliance with internal rules and policies. The internal environmental audit is
therefore considered as a self-evaluation process used by the company to determine whether the
company meets its internal and legal policy objectives. The Environmental Audit is included in

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various industry programs for assurance of quality control and presence within the scope of
internal audit responsibility. Environmental audits have internal and external objectives. Internal
audit The audit is useful for informing management about whether the company's operations
comply with regulations, whether a waste disposal contract has been conducted competently, and
whether environmental management decisions are made on the basis of the facts. Audit The
external environment provides guarantees to outside parties such as creditor, investor or external
information user of the business or activity that the company has undertaken. Activities
classified as external environmental audits include the services provided by consultants, lawyers,
and the implementation and supervision of the environmental management system.
2.1.3 Environmental Performance
Environmental performance is a measurable result of the environmental management
system, which is linked to the control of its environmental aspects, as well as the assessment of
environmental performance based on environmental policy, environmental objectives and
environmental targets (ISO 14004, ISO 14001). According to Ari Retno (2010: 43), environmental
performance (environmental performance) is How the company's performance to take part in
preserving the environment. According to Suratno et al. (2006) environmental performance
is the performance of companies that create a green environment (green). Environmental
performance (environmental performance) is made in the form of ranking by an institution related
to the environment.
2.2 Conceptual Framework
The framework of thought according to the Secretariat (2006) is an association network
that is structured, explained and elaborated logically between variables that are considered relevant
to the problem situation and identified through the process of interviewing, observing, and
literature surveys. The research capabilities to support the development of environmental
accounting practices are always interesting to observe. In this research, it is expected to
strengthen the parties related to environmental accounting in their efforts to participate in
realizing environmental awareness efforts. Little is expected that environmental accounting
becomes an agent of change for environmental improvement (Susilo, 2008).

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 The following figure is the conceptual framework of this research:

Environmental
Accounting H1

Information
H3 Environmental
Performance
H
Environmental
Audit Figure 2.1
conceptual framework

2.3. Research Hypothesis

Hypothesis is a temporary answer to the problems encountered and the truth must be
proven through the results of research. The hypothesis proposed in this study are:
H1: Environmental Accounting Information affects the environmental performance of extractive
and non-extractive companies.
H2: Environmental Audit affects the environmental performance of extractive and non-extractive
companies.
H3: Environmental Accounting The Environmental Audit information affects the environmental
performance of extractive and non-extractive companies.

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RESEARCH METHODS

This research uses primary and refrensial method of study. For the primary method type
of research conducted is a correlative research is research that aims to determine the relationship
that explains the influence of independent variables to the dependent variable. This study aims to
analyze the relationship between independent variables, to one dependent variable. The
population in this research is 50 Extractive and Non-Extractive Industries companies in
Indonesia. The underlying reason for the selection of companies included in the industrial sector
as a research material is that companies belonging to the industrial sector are seen that their
operations and production activities are considered to have a lot of conflict with the environment.
Of the many types of industrial enterprises a lot of environmental pollution results and generate a
lot of waste. Sampling is the process of selecting a sufficient number of elements from the
population, so research on the sample and understanding of its nature or characteristics will
allow us to generalize the properties and characteristics of the population (Sekaran, 2006: 123).
The technique of determining samples using Convinience Sampling is sampling based on ease of
researcher (Mustafa, 2000).
Variables are anything that can differentiate or bring variations on value (now, 2006).
The research variables are basically anything in the form of what is determined by the researcher
to be studied to obtain information about it, then drawn the conclusion (Sugiyono, 2007). The
dependent variable in this research is environmental accounting (Environmental Accounting
Information and Environmental Audit) and independent variable that is Environmental
Performance. The scale is Likert scale. Taking hypothesis from linear regression test and
multiple regression test. After the data collected it will get a theory of conclusion while in
writing so that in the next stage the authors formulate alternative solutions based on data
obtained.
Data used to sharpen the topic, then the alternative problem solving formulated in the
form of a clear discussion so that will be answered formulation of the above problem. The
questionnaire distributed has been tested for its validity and reliability.
Questionnaires have been shared and responded to by some reliable respondents who
understood waste or work in a section that could result in the waste of even an industry leader.
The respondent of this research is someone who works in the field of Financial Of Manager. The
following Industry Type fill out this research questionnaire:

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 type of Industry Number of Industrial Number of Industry
Population Sample
Plantation Industry 11 6

Mining Industry 11 5

Various Industries 7 7

Basic Industry And 7 4

Chemistry

Food Industry 6 1

Industrial Processing / 8 7
Manufacturing

Amount 50 30

Figure 3.1 Extractive and Non-Extractive Industries

Referential methods of study are used to describe theoretical references in literature

review through deductive analysis of the theories and opinions of experts obtained from various
supportive sources. The literature of the source of the writing is selected from the source relevant
to the title, in order to make the relevance between the source of the writing and the later
discussion.

ANALYSIS AND DISCUSSION

4.1 TEST PARTIAL ( TEST T)

Figure 4.1 Test Partial X1

For H1 test based on result of regression analysis obtained t value counted 5,363 > t table
2,306 and significance value (Sig.) 0,00 < 0,05. It can be concluded that H0 is rejected and H1
accepted, which means "Environmental Accounting Information has significant effect on
Environmental Performance".

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 Figure 4.2 Test Partial X2
For H2 test based on result of regression analysis obtained t value equal to 3,797> t table
2,306 and significance value (Sig.) 0,001 <0,05. It can be concluded that H1 is accepted and H0
is rejected, which means "Environmental Audit has significant effect on Environmental
Performance".
4.2 TEST SIMULTAN (TEST F)

Figure 4.3 Test Simultaneous

For H1 and H2 test based on result of simultaneous analysis (Test F) obtained value of F
count equal to 42,784> t table 2,306 and significance value (Sig.) 0,00 <0,05. It can be

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concluded that "Environmental Accounting and Environmental Audit have a significant effect on
Environmental Performance".
By looking at the above description, the stability of F test decisions either that compares between
F arithmetic with F table, or guided on the value of significance obtained the same value or
consistent results.

4.3 TEST DETERMINATION (R)

Figure 4.4 Test Determination

Based on Table "Model Summary", it can be concluded that Environmental Accounting
Information and Environmental Audit has 76% impact on Environmental Performance, while
24% is influenced by other un-researched variables such as environmental awareness and
environmental responsibilies. Because the value of R Square close to 1 then the ability of
independent variables to the dependent variable is stronger.

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CONCLUSIONS AND RECOMMENDATION

5.1. Conclusions
Based on the results of data analysis and the results of the discussion then the conclusions
can be taken from the research with the title "Analysis Implementation Of Environmental
Accounting Information And Environmental Audit To Environmental Performance In Extractive
And Non Extractive Industry Company (Case Study Of Industrial Company In Medan). Then the
result is:
1. Variable Environmental accounting information positively significant Positive to
Environmental Performance in Extractive and Non-Extractive companies.
2. Environmental variables have a significant positive impact on environmental
performance on extractive and non-extractive companies.
3. Environmental accounting information and environmental audit variables have a
significant positive impact on environmental performance on extractive and non-extractive
companies.
These results are available for information on the need for extended corporate accounting practices
by incorporating environmental aspects. Thus, accounting can contribute to corporate
environmental responsibility.
5.2 Recommendation
1. For the Government of the Environment Agency / Ministry of Environment is
expected to facilitate and provide assistance in the form of both material and non-material in
order to implement environmental accounting in the company to reduce waste production waste.
2. For extractive and non-extractive companies are expected to participate actively in
succeeding the concept of Environmental accounting in order to get a good performance from
the company's environmental performance.

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