will be applicable across all product costing problems, not just those associated with environmental waste.


Accounting may be defined as a ''reconstruction" of a firm, a financial model. That is, accounting provides an image of the firm reflected from a financial mirror. In a traditional financial accounting system, only those economic events that can ultimately be defined in financial terms will be captured by the system. The information may be timely, in which case it may be highly valuable, or dated and stale, which may render the information useless. The level of aggregation at which the information is reported to decision makers is also crucial. Details are lost as information is collected into pools. As only a limited subset of all economic data available for a firm is collected, the resulting aggregated information is likely to be incomplete or flawed, depending on which economic decisions need to be made and the information necessary in a given case to support the decision.

Traditionally, accountants have held that a fundamentally important trait of accounting information to be used for economic decision making is that it be unbiased, or neutral. This property means that accountants should be detached and impartial observers of the operations of the firm rather than instigators or advocates of various courses of action. As a consequence, managers usually specify which decisions they desire to make, and accountants make recommendations regarding the information to be collected and summarized, and the analyses to be prepared in support of the decisions. Rarely is an accountant a graduate chemical engineer or operations management specialist. For accountants to provide enough relevant information to managers for environmental decision making, substantial support and advice will be required from the experts—the engineers and environmental scientists. It is not reasonable to expect managerial accountants to know the appropriate data to seek or even the general questions to ask. Consequently, routine mechanisms must be established for the cooperative collecting and reporting of environmentally relevant information.

Internal Accounting

Economic decision making is the domain of the managers of the firm. Most internal accounting systems, called managerial accounting systems, are capable of capturing any information that the management of a firm may regard as potentially useful. For example, it is common to find that the traditional accounting system has been extended to include such items as product volume information, qualitative personnel record data, and engineering data, as well as a boundless set of other information that managers at some time found it desirable to collect. Thus, managers can direct the firm's accountants to collect, analyze, aggregate, summa-

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