PowerPoint

Accounting for Water: A Global Comparison

Kelly ConwayEV 302

May 6th, 2015

Agenda

● Australia● England● United States● My Recommendation

Australia● Started in 2004 with National Water Initiative● Water Act 2007

o The Bureau of Meteorology Australian Water Accounting Standard

● National Accounting Standards Board● Auditing and Assurance Standard Board

National Water Initiative● Blueprint for water reform● Generalized plan

o “achieve a more cohesive national approach to the way Australia manages, measures, plans for, prices and trades water”

● Created National Water Commission

Water Act 2007● Assigned responsibilities to the Bureau of

Meteorology ● 4 core responsibilities

o Ensure availability of water info (public & stakeholders)

o Provide regular status updates of water usageo Offer future forecast of water availabilityo Compile/maintain water accounts

Australian Water Accounting Standard● 2 approved standards:

o AWAS 1 & AWAS 2● Both adhere to the Water Accounting

Conceptual Frameworko accrual basis of accountingo clear definitions of water accounts (water

assets/liabilities)o necessary qualitative characteristics

AWAS 1 & AWAS 2● AWAS 1

o preparation and presentation of water financial statements

o Statement of Water Assets and Water Liabilitieso Statement of Water Flows

● AWAS 2o requirements for assurance engagementso assumed responsibilities of lead practitionero stresses confidentiality, communication and

documentation

National Accounting Standards Board● Established in 2009● Independent advisory board● Provides professional advice on development and

application of water accounting standards● Composed of cross-disciplinary fields of water

o academiao environmentalo governmental

Auditing and Assurance Standard Board

England● Beginning stages of creating water accounting system● Developed affiliations with advisory boards to assist in

planning and designing systemo ICAEWo Natural Capital Coalitiono United Nations

SEEA - Water● Future forecasts

Institute of Chartered Accountants in England & Wales (ICAEW)● Mission: to advance the profession of accountancy

through education, professional standards and innovative developments

● Water Initiativeso recognize problemo offer solutions/case studieso do not offer definitive answers, merely advice &

possibilities to consider

Natural Capital Coalition● Mission: achieve a shift in corporate behavior to

conserve and enhance rather than deplete natural capital

● Comprised of businesses, practitioners, policy-making bodies, etc.

● Need for common approach to accounting for natural resources

● Natural Capital Protocol

Natural Capital Protocol● aims to create a standardized, uniform system for

businesses to measure and value their direct and indirect impacts on natural capital

● first step in developing future generally-accepted principles of accounting

● act as a tool for companies to:o improve decision makingo decrease riskso identify new opportunities

United Nations - SEEA Water● System of Environmental-Economic Accounting for

Water o agreed upon concepts, definitions, tables, accountso standardizing valuation methods in water accounting

various techniques no standardized ways because economies differ

o focuses on both economic/environmental impact on water

Future Forecasts● “plan for the plan”● Valuable information to source from● Continue to research and develop ideas● More detailed/focused on its approach● Start implementing in the next few years

United States● No national reporting/valuation standards● State vs. State

o Regulatory boardso Valuation methods

● Municipalities

State vs. State● Various water companies both public/private

o Aquarion (CT, MA, ME)o American Water (PA, NY,)

● Rates determined by region, meter size, usage, OH, etc.

● Report to different regulatory boards:o Public Utilities Regulatory Authority (CT) o Pennsylvania Public Utility Commission (PA)

Aquarion

Pennsylvania American Water

MunicipalitiesMetropolitan District Company

● non-profit municipal organization● governed by 29 board, residents of towns

comprising the district● report to committees/bureaus

o Municipal Securities Rulemaking Board

Metropolitan District Company

Challenges FacedBy lacking national standards for water accounting:

● Limited consistency● Difficult to compare prices/regulations

municipalitie vs. state, state vs. state location/region

● Fluctuations in water quality & assessment

My RecommendationsNeed for water accounting system● Current/water issues● Financial perspective● Unified system promotes reliability and acts as guideline

o Reporting standardso Boards/Commissions

● Cost-benefit analysiso comparability increaseso consistency increases