A Study on Reporting Standards in Carbon Credit Accounting

Neharika Shrivastava; Dr. Vandana Sharma; Dr Barnali Chaklader

Volume : IV, Issue : II, February - 2015

A Study on Reporting Standards in Carbon Credit Accounting

Neharika Shrivastava, Dr. Vandana Sharma, Dr Barnali Chaklader

Abstract :

India has emerged as a leader in carbon trading (Bhardwaj D. B., 2013). This study aims to analyse how carbon credit trading is done, reporting practices of carbon emission in financial statement of different Indian companies in India and to give some recommendation on reporting for Certified Emission Reductions. This study is an exploratory study. Secondary data has been used for this study. Data has been collected from annual reports of 30 Indian Companies for the year 2012. Reporting standards of CER has been compared according to the Guidance Note on Accounting for Self-Generated Certified Emission Reduction (CERs) (issued 2012) by Institute of Chartered Accountants of India (ICAI, 2012). Judgemental sampling was used for this study. It was found out that 7 percent of Indian Companies gives details about number of CER held as inventory, basis of valuation in their financial report and number of CERs under certification. 93 percent does not give details.17 percent of Indian companies doing carbon trading disclose about equipment used for reduction of CER and 83 percent does not disclose. No Indian company discloses about depreciation, maintenance and operating costs of equipment�s used for CER reduction. The accuracy of the analysis is dependent upon the accuracy of the data in the annual report. This study has focused on guidance note on accounting for self- generated certified emission reduction (CERs) (issued 2012). But the lack of specific guidance furthers scope for judgement and results in varying treatment. The result of this study would help Indian listed companies to save carbon and implement reporting standards for Certified Emission Reductions. This study is first of its kind to determine the reporting standards of Certified Emission Reduction in different listed companies in India. It is a beneficial source for those companies who are saving carbons and reporting in their financial statements.