An Empirical Study on the Impact of the Low-Carbon Economy- Based Enterprise Financial Environment on Financial Accounting

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1 An Emprcal Study on the Impact of the Low-Caron Economy- Based Enterprse Fnancal Envronment on Fnancal Accountng Astract Xaoyu Lu, Desheng Zhao Langfang Polytechnc Insttute, Langfang065000,Chna. Snce reform and openng up, Chna's economy has undergone enormous changes. But at the same tme, a numer of conflcts wth the socal development and the economc take-off. Clmate change and envronmental polluton have ecome the major prolems facng us. Whle Chna's economy s developng rapdly, we have also pad a heavy clmate prce. For example, the emergence of fog, haze, sandstorms, etc., and the destructon of natural resources, have serously hndered the economc development. Therefore, we need envronmental cost accountng to measure these costs. Ths paper starts wth a system where the enterprse fnancal envronment affects fnancal accountng under the ackground of the low-caron economy, estalshes the correspondng evaluaton system, and studes the mpact of enterprse fnancal envronment on fnancal accountng from the perspectve of the low-caron economy ased on an emprcal analyss of enterprse A. Keywords: Low-Caron Economy, Fnancal Accountng, Fnancal Envronment. 1.RESEARCH REVIEW 1.1.Background At present,chna s already a g economy, accountng for a gradually ncreased proporton of share n the gloal economy. Despte rapd economc development, varous envronmental prolems come one after another. Hgh polluton, hgh emssons, hgh energy consumpton, etc. have ecome a major prolem that hnders Chna's economc development. Therefore, the Copenhagen Conference has proposed the low-caron economyorented sustanale economc development (Lu, 2015). The development of the low-caron economy has rought great mpact on Chna's enterprse fnancal accountng. In terms of fnancal accountng as an mportant part n enterprse fnancal management, t s necessary to measure all mpacts of the low-caron economy on enterprses to ensure the ntegrty and authentcty of the enterprse fnancal nformaton. Ths also means that the enterprse fnancal envronment wll have some mpacts on fnancal accountng under the low-caron economy (Zhong, 2016). 1.2 Purpose In the face of the waste of resources and ncreased envronmental polluton, the government has ntroduced varous low-caron energy, envronmental protecton polces. However, t s not possle to solve the contradcton etween the envronment and the economy only y relyng on the government. Enterprses have a domnant poston n Chna's economc socety; they are the sources of envronmental polluton, and also the major users of envronmental resources. Therefore, the low caron research can effectvely mprove Chna's enterprse decson-makng and management n a way to help solve caron emssons, caron tradng and other fnancal accountng ssues nvolved n enterprse fnancal management (Ln, 2016). 2. THEORETICAL BASIS 2.1 Low-Caron economy theory The low-caron economy, as a major form of economc development n the future, s a new development model to acheve sustanale development and respond to gloal clmate change. Its essence s to reduce the use of fossl fuels n enterprse management and acheve economc transformaton through the use of new energy; ts 665

2 core s the nnovaton of energy ndependence and energy technologes. As a new model of economc development, t affects the desgn, sales, etc. of enterprse products; f to acheve low-caron development, enterprses must reduce the use of coal and acheve energy savng and emsson reducton y promotng new technologes or upgradng technologes (Jng, 2011). In addton, n the low-caron economy socety, the research of enterprse energy savng technologes and the adjustment of the energy structure wll affect enterprse fnancal accountng. Therefore, enterprses should focus on the development of the low-caron economy and attach mportance to practcal applcatons of envronmental cost accountng. 2.2 Sustanale development theory Sustanale development emodes the reflecton of the natural envronment and human self-relatonshp. Its orgnal concept orgnated n Rome's Research Report The Lmts to Growth. Sustanale development has three meanngs: multdmensonal development, coordnated development and effcent development. Multdmensonal development refers to that all the gloal regons should take the road of sustanale development; coordnated development refers to the overall envronmental, socal and economc coordnaton; effcent development refers to the effcent development of coordnated populaton, resources, economy and the envronment. Sustanale development s not only an mportant theoretcal foundaton n the enterprse fnancal management envronment, and also the asc theory of fnancal accountng (Jng, 2011). Sustanale development requres that enterprses should attach mportance to the ojectves and status of development whle payng attenton to the sustanalty and development potental of development, and put enterprse fnancal accountng n an ecologcal, socal and economc system ased on the major gudng prncple of commonness and farness. 3.OVERVIEW OF THE IMPACT OF THE ENTERPRISE FINANCIAL ENVIRONMENT ON THE FINANCIAL ACCOUNTING SYSTEM UNDER THE BACKGROUND OF THE LOW-CARBON ECONOMY Fnancal accountng provdes reference to enterprse plannng and decson-makng, and also helps provde enterprse stakeholders wth nformaton on the assets of enterprses. As an mportant part of enterprse fnance, t ncludes the confrmaton, measurement, classfcaton, summary and report of accountng costs. Under the ackground of the prosperty of the low-caron economy, n order to study the mpact of the enterprse fnancal envronment on fnancal accountng, to egn wth, the followng matters should e determned: 3.1 Impact of the enterprse fnancal envronment on the fnancal accountng oject In the context of the low-caron economy, the fnancal envronment oject s the envronmental cost whle fnancal accountng ncludes the confrmaton, measurement, classfcaton, summary and report of envronmental costs. In addton, all producton actvtes durng enterprse operatons can e regarded as a complete economc system, and three mportant producton functon modules, green nput, green manufacturng and green output, make up the entre economc system. In addton, gven that enterprse envronmental protecton functon modules are not mature enough, materal resources from the envronment dscharge wastes to the extent to cause loads on the envronment. Therefore, ths paper suggests that n the context of the lowcaron economy, the fnancal accountng oject n the fnancal envronment s the loads on the envronment resultng from the use of resources durng enterprse operatons and the economc costs spent to reduce such loads (Wang, 2011). 3.2 Dvson of the accountng oundares affected y the enterprse fnancal envronment 666

3 Fgure 1.The Relatonshp Between Enterprse Envronmental Cost and Enterprse Cost Under the low-caron economy, enterprses wll need to dstngush cost and envronmental cost n the tradtonal accountng system, and calculate all envronmental costs ncludng energy savng and emsson reductons, n to avod any decrease or ncrease n the recorded amount due to mxed oundares. Fgure 1 shows the relatonshp etween enterprse envronment cost and enterprse cost. In addton, enterprse envronmental cost can e dvded nto external envronmental cost and nternal envronmental cost. But currently the external envronmental cost s part of the socal urden whle enterprses are only responsle for the nternal envronmental cost. In order to avod external envronmental costs, enterprses should know aout the oundares etween the external envronmental cost and the nternal envronmental cost, as shown n Fgure 2. Envronmental costs ncluded n enterprse cost Envronmental costs not ncluded n the cost of enterprses Envronmental costs Fgure 2.Boundary Dvson Between External Envronment and Internal Envronment Cost It can e seen from the aove two fgures that under the low-caron economy, fnancal accountng of the enterprse envronmental cost should e n lne wth the enterprse ncome for a certan perod provded that the external envronmental cost and the nternal envronmental cost are defned, so as to clearly reflect the dfferences of fnancal accountng of the external and nternal envronmental costs n content and purpose, and allow for the coordnated relatonshp etween product proftalty and envronmental protecton. 3.3 Impact of the Enterprse Fnancal Envronment on the Fnancal Accountng System The fnancal accountng oject n the enterprse fnancal envronment s the envronmental cost, namely the envronmental load cost that occurs durng enterprse operatons and the economc cost requred to reduce such load. Therefore, specfc fnancal accountng of the enterprse envronmental cost determnes the estalshment of the enterprse fnancal accountng system under the ackground of the low-caron economy. In addton, ased on ths, enterprses should take a reasonale way and scentfc defnton standard for the confrmaton, measurement, classfcaton, summary and report of all envronmental costs, so as to estalsh a complete envronmental cost fnancal accountng system (Feng, 2011). 4. CONSTRUCTION OF THE EVALUATION SYSTEM FOR THE IMPACT OF THE ENTERPRISE FINANCIAL ENVIRONMENT ON FINANCIAL ACCOUNTING 4.1 Evaluaton suject Shareholders Shareholders should e enttled to know aout the development potental and usness development of an enterprse snce they are the actual owner of such enterprse. They are dvded nto pulc shareholders, corporate shareholders, state-owned shareholders. Indvdual shareholders, the same as to pulc shareholders, have a dspersed numer n a small shareholdng rato, and generally focus on f the share prce goes up and f the enterprse's value ncreases. corporate shareholders wll not only allow for the development potental of the 667

4 enterprse, ut see profts as the ultmate goal. In these years, resources and the envronment have ecome the two major factors that affect the healthy development of the enterprse; therefore, corporate shareholders wll coordnate ecologcal and socal enefts whle pursung maxmzed nterests. State-owned shareholders, on the one hand, focus on enterprse nterests and, on the other, pay attenton to the ecologcal and socal enefts caused to the enterprse (Zheng, 2011). The aove three types of shareholders domnate the evaluaton of accountng performance n the enterprse envronment, and they oserve the performance of the enterprse fnancal envronment responsltes from the perspectve of the enterprse Consumers Consumers play an mportant role n the development of an enterprse. They promote the economc development of the enterprse economy y purchasng the products of the enterprse, and evaluate whether the enterprse fnancal envronment affects fnancal accountng through the qualty of servces or products provded y the enterprse (Zhang, 2011) Managers Managers wll not only e responsle for the clent, ut complete the economy tasks and envronmental tasks developed y the enterprse. Therefore, managers should evaluate the research on the mpact of the enterprse fnancal envronment on fnancal accountng. Durng evaluaton, on the one hand, managers can provde the clent wth the nformaton on the enterprse fnancal envronment performance and fnancal accountng, n a way to help the clent know aout the contruton of the enterprse to the envronment as well as ts usness performance, so as to facltate the evaluaton of enterprse management achevements, mantan the agency relatonshp and keep the mutual trust etween the agent and the clent; on the other hand, managers can know aout the envronmental advantages otaned y the enterprse and the accompaned envronmental ssues, so as to help develop reasonale envronmental protecton measures n the future envronmental management ncludng mprovng the utlzaton of envronmental resources and adjustng the nvestment rato of enterprse envronmental protecton equpment (Fang, 2014). 4.2 Evaluaton Oject Durng the evaluaton of the mpact of the enterprse fnancal envronment on fnancal accountng, the evaluaton oject s determned as requred y the evaluaton suject as the man oject of evaluaton. In addton, the evaluaton suject ncludes shareholders, consumers, managers, etc., so the evaluaton oject s vared therefore (Ln, 2014). Operatonal enefts and management actvtes are manly nvolved n the evaluaton oject of the mpact of the enterprse fnancal envronment on fnancal accountng n ths paper: operatonal enefts refer to the evaluaton of low-caron enefts, socal enefts and economc enefts generated y the enterprse; fnancal management actvtes refer to the evaluaton of the enterprse fnancal envronment operatng condtons, fnancal envronment fnancng condtons and fnancal envronment nvestment condtons. 4.3 Determnaton of the Weghts of Envronmental Performance Evaluaton Indexes The weghts of enterprse performance evaluaton ndexes are determned n the followng four steps: 1. To analyze the relatonshps etween the varous factors n the enterprse fnancal envronment system, so as to estalsh a correspondng herarchcal structure; 2. To compare the same-level elements wth a crteron n the last level and construct a comparson judgment matrx of the two factors; 3. To calculate the correspondng weghts of the two factors wth the use of the judgment matrx n the prevous step and test such matrx; 4. To calculate the rankng of weghts of the enterprse fnancal envronment system at varous levels to otan the fnal rankng of the total target (Shen, 2012) Estalshment of the Herarchcal Structure For the estalshment of a herarchy structure, t s necessary to dvde dfferent elements of dfferent attrutes and nclude every element nto a correspondng level; when some elements at the same level are controlled y the elements at the last level, t s also necessary to control the correspondng elements at the next level, so as to form a complete herarchcal structure evaluaton system for envronmental performance (Xe, 2015). These elements are dvded nto lowest level, mddle level and top level, of whch the lowest level manly ncludes the 668

5 decson-makng plan and measures chosen n order to acheve the enterprse goal; the mddle level nvolves all aspects requred to acheve the enterprse goal and t conssts of some levels of su-crtera and crtera; the top level usually has only one element, and t s the deal result and reservaton target of fnancal envronment performance analyss Constructon of the judgment matrx Upon estalshment of the herarchcal structure, the correspondng suordnaton relatonshp can e determned. If elementsb 1, B 2, B 3,...,B n at the next level are suordnated to element A 1, then elements B 1, B 2, B 3,...,B n should e gven weghts accordngly. Therefore, managers need to determne whch of B 1 andb 2 s more mportant and to what extent ased ona scalng method s adopted n ths paper to determne the weghts of these ndexes, as shown n Tale 1. Tale 1Analytc Herarchy Process Scalng connotaton 1 The two element s equally mportant 3 One of the two elements s slghtly more mportant than the other 5 One of the two elements s ovously more mportant than that of the other 7 One of the two elements s very mportant 9 One of the two elements s extremely mportant Intermedate value of judgment aove Upon assgnment ton, correspondng judgment matrx s otaned: B n * n (1) It has the followng propertes: Lowest Level: Mddle Level: Top Level: jj (2) where the weght vectorh 1 s calculated as follows:frst, calculate the product H of all elements n the matrx, H n j1, 1,2,3,..., n (3) Then calculateu, the nth root of H : U n H (4) Fnally normalze U = (U 1, U 2, U 3,, U n ) T and calculate ts feature vector: U n U j1 Uj (5) 669

6 4.3.3 Test of the judgment matrx In order for the judgment matrx to avod any prolem n the weght calculatons, ths paper tests the judgment matrx after the weght vector s calculated, usually n the concdence ndcator to check the correctness of thnkng: CI max n n 1 (6) where n represents the order of the judgment matrx, λ max represents the maxmum feature root of B. Generally, the degree of devaton of the judgment matrx ncreases wth the ncrease of CI Calculaton of the comned weght of ndexes at each level The evaluaton weght of the enterprse fnancal envronment performance s calculated as per Y=r *u, whch refers to the product of the relatve weghtu and the last ndex weghtr. Calculate the weght comnaton of ndexes at each level ased on the correspondng ndex weght at each level calculated as per Emprcal Analyss 5.1 Enterprse A Enterprse A, a major steel supply enterprse n Chna, specalzes n the development of new equpment, new products and new technologes. In recent years, enterprses have shfted the fnancal management model from decentralzed management to centralzed management n a way to allow for envronmental protecton and the reasonale utlzaton of resources whle pursung the enterprse sustanale development. And there has een ovous effect n envronmental protecton management: Compared wth 2015, n 2016, enterprse A reduced pollutant emssons y 20%, ncludng wastewater emssons y 25%, dust emssons y 19% and caron doxde emssons y 25%. 5.2 Evaluaton of the mpact of enterprse A fnancal envronment on fnancal accountng Based on the ndex system for the mpact of the fnancal envronment on fnancal accountng, the author evaluates the enterprse fnancal envronment performance n the followng 2 methods: 1. y calculatng the rate and weght of enterprse ndexes, sustanale development report, cost report, socal responslty report, etc. 2. y selectng professonal person(s) to overall evaluate enterprse A ased on the related weghts after gradng ts fnancal accountng ndexes n the envronmental cost. Therefore, the followng method s used n ths paper to evaluate the fnancal accountng of enterprse A envronmental cost (Jn, 2013). Frst, dvde the fnancal accountng performance of the enterprse envronmental cost nto excellent, good, medum and poor, represented respectvely yw 1,W 2, W 3, W 4, and n an evaluaton set W=(W 1,W 2, W 3, W 4 ). AndW 1 s defned from 90 to 100, W 2 from80 to 89,W 3 from 70 to 79,W 4 from 60 to 69. Use the medan of each of them as the parameter vector: k=(64.5,74.5,84.5,95) T, and the selected professonal person(s) grades the fnancal accountng performance of enterprse A envronmental cost. Multply the weght vector of each factor y the fnancal envronment performance value of enterprse A for the frst quarter to otan the evaluaton matrx V. Multply V y the parameter vector K to fnally otan the enterprse fnancal accountng performance evaluaton result, as shown n Tale 2. Tale 2a Enterprse's Frst Quarter Fnancal Envronment Accountng Performance Scorng Tale ndex frst quarter excellent good neutral ad Envronmental fnancng actvtes Envronmental nvestment actvtes Low caron eneft Economc performances

7 Wth the aove method, suppose U represents the gradng matrx for the frst quarter U=(u 1, u 2, u 3,..., u n, ), then the comprehensve evaluaton result s: V1 W T *U 89 (7) 5.3 Evaluaton and analyss of the mpact of enterprse a fnancal envronment on fnancal accountng The evaluaton result of enterprse A envronmental cost fnancal accountng performance shows that the enterprse comprehensve evaluaton score for the frst quarter s 89 ponts, ndcatng that the enterprse fnancal envronment s good. The enterprse should allow for envronmental socal contruton and development opportuntes rought for the enterprse from the low-caron economy, and regulate the enterprse fnancal actvtes n lne wth the envronmental requrements so as to promote ts healthy development. 6. CONCLUSION Gven envronmental ssues have currently ecome hot ssues, how to speed up the research of the enterprse fnancal management on fnancal accountng from the perspectve of the low-caron economy s very mportant n vew of economy (Gu, 2010). Based on low-caron economy and sustanale development as the two major theoretcal research ass, ths paper constructs the fnancal accountng system affected y the enterprse fnancal envronment under the low-caron economy, and evaluates and analyzes the fnancal accountng performance of the enterprse envronmental cost so as to provde reference to the reportng, recordng, measurement, etc. n the enterprse fnancal accountng for the purpose of the sustanale development of Chna's economy. REFERENCES Fang B. (2014). analyss of green accountng under the ackground of low caron economy. Busness accountng, 10, Feng Y. (2011). on the development of low caron accountng n the era of low caron economy. Accountng communcaton, 13, Gu S.S. (2010). the mplementaton of envronmental accountng n Chna under low caron economy. Assets and fnancal admnstraton, 05, Jn Z.L. (2013). the realstc choce of envronmental nformaton dsclosure. Techncal economcs and management research,11, Jng C.Y. (2011). the countermeasures from the perspectve of crcular economy and uldng materals enterprse accountng. Frends of accountng, 02, Jng C.Y. (2011). under low caron economy accountng nnovaton of uldng materals enterprses. Journal of Southwest Unversty of Scence and Technology (phlosophy and socal scences edton), 28(01), Ln L. (2014). dscusson on envronmental accountng nformaton dsclosure n Chna. Journal of Schuan Agrcultural Unersty, 32(02), Ln W. (2016) mprovement strategy of power accountng management under low caron economy. Enterprse reform and management, 17, Lu Y.G. (2015). the mprovement strategy of electrc power accountng management under low caron economy. Accountant, 22, Shen H.Y. (2012). the constructon of green accountng system under low caron economy. Accountng communcaton, 13, Wang Y.D. (2011). the reflecton functon of enterprse accountng under the low caron economy. Helongjang foregn trade and economcs, 05, Xe D.L. (2015). analyss of enterprse fnancal management ojectves and ways of realzaton under low caron economy. Journal of Wuy Unversty, 34 (03), Zhang M.X. (2011). the value of green accountng n enterprses n the era of low caron economy. Forum on Contemporary Educaton (Comprehensve Research), 07, Zheng X.Q. (2011). low caron economy and enterprse envronmental cost control: a conceptual analyss framework. Enterprse economcs, 30(06), Zhong F.G. (2016) the mpact and Countermeasures of low caron economy on enterprse fnancal management envronment. Internatonal usness accountng,01,