Conventional approaches of cost accounting have become inadequate because they have
ignored important environmental costs and activities impacting consequences on the environment. Corporate neglect and avoidance of environmental costing have left gap of
financial incompleteness and absence of fair view of financial information reporting to users of
financial statements, environmental regulatory agencies and the general public. The research
instruments utilized in the study were primary data survey and secondary data elucidation. For
this purpose, cross-sectional and longitudinal content analyses were carried out. The test
statistics applied in this study were the t-test statistics, Pearson Product-Moment correlation
tests, ANOVA, and Multivariate Linear Regression Analysis. The study investigated best
practice of environmental accounting among companies currently operating in Nigeria.
Specifically, the study assessed the level of independence of tracking of costs impacting on the
environment; level of efficiency and appropriateness of environmental costs and disclosure
reporting. Findings are that environmental operating expenditures are not charged
independently of other expenditures. There is also, absence of costing system for tracking of
externality costs. Environmental accounting disclosure does not however, take the same pattern
among listed companies in Nigeria. Considering the current limited exposure of many
organizations to environmental accounting methodology, this study proffers an insight into
new bases and design for environmental accounting. Recommendations among others are that
corporate organizations should develop Plans and Operating Guidelines expected to meet
Industry Operating Standards which should focus on minimizing impact on environment.
There should be continued evaluation of new technologies to reduce environmental impacts.
Standard cost accounting definitions should be agreed for environmental spending, expenditure
and management accounting in the Oil & Gas and manufacturing sectors operating in Nigeria.
Both the Nigerian Securities and Exchange Commission (SEC) and accounting practice in
Nigeria should consider the urgency of placing demand for mandatory environment disclosure
requirement on corporate organizations which impact degradation on the environment.

TITLE PAGE ii
DECLARATION iii
CERTIFICATION iv
DEDICATION v
ACKNOWLEDGEMENT vi
PREFACE viii
ABSTRACT   ix
LIST OF TABLES xiv

CHAPTER ONE
INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Research Questions 7
1.4 Objectives of the Study 8
1.5 Research Hypotheses 8
1.6 Significance of the Study 9
1.7 Scope of the Study 10
1.8 Research Limitations  10
1.9 Operational Definitions 12

CHAPTER TWO
LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK
2.0 Theory, Concepts and Models 15 
2.1 Social Accounting 15
2.1.1 The Social Contract Concept 16
2.1.2 Legitimacy Theory as pertaining to social disclosure 17
2.1.3 Quality of Life Theory 18
2.1.4 Risk Society Theory 19
2.2 Environmental Accounting 21
2.2.1 Significance of Environmental Accounting 28
2.2.2 Land Degradation 30
2.2.3 Pollution  31
2.2.4 Levels of Environmental Accounting 32
2.2.5 Problems of Environmental Accounting 34
2.3 Legal Foundation on Environment and Accounting 36
2.3.1 The United Nations’ Protocols and agreements on environment 36
2.3.2 The Kyoto Protocol to the United Nations framework on Climate Change 37
2.3.3 Accounting Guidance on Kyoto Agreement by Governments 39
2.3.4 Environmental Accounting implication arising from the Kyoto Convention 40
2.3.5 EU Directive on Environmental Issues in Company Annual Reports 
and Financial Statements   41
2.4 Models 42 
2.4.1 Market valuation of environmental capital expenditure 42
2.4.2 Environmental Cost Primer Model 43
2.4.3 The Cost Benefit Model 50
2.4.4 Eco-efficiency Framework 54
2.4.5 Environmental Quality Cost Model (EQCM) 57
2.5 Environmental Audit 60
2.6 Environmental Accounting and Reporting 61
2.6.1 ECQM and Financial Reporting 61
2.6.2 Cost Estimation for Environmental Accounting 64
2.6.3 Externality Environmental Costs and Property Rights 65
2.6.4 Internalizing Externality Costs 66
2.6.5 Accounting Standards on environmental issues 68
2.6.6 Treatment of environmental capital expenditure 73
2.6.7 Environmental Accounting for Market Driven Competitiveness  74
2.6.8 Environmental Disclosure   75
2.6.9 Institutional and Policy framework in Nigeria   77
2.6.10 Regulations, standards and codes on environment in Nigeria  79
2.6.11 Policy Assessment   81
2.6.12 Mandatory disclosure for corporate organizations in Nigeria 81
2.6.13  Environmental Standards in Nigeria   82
2.7 Environmental Quality Reporting Model (EQR) and Research  Operationalization 83

CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Design  85
3.2 Area of Study   85
3.3 Population and Sampling Procedure   86
3.4 Sampling Technique and Size  88
3.5 Environmental Quality Reporting/DisclosureModel Specification 90
3.6 EOQ Model 1   93
3.7 EOQ Model 2 94
3.8 Data Descriptions  96
3.9 Instrument Reliability and Validity 97
3.10 Estimation Technique / Rating Scale 99
3.11 Technique for Data Analyses   99

CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION 
4.1 Sources of Data Collection 103
4.2 Factor Analysis of Primary Data 106
4.3 Secondary Data Analysis 107
4.4 Test of Hypothesis 4 (H0) 110
4.5 EQR Model 1 Regression Function and Test for Hypothesis 3 (H0) 115
4.6 Primary Data Analysis 117
4.7 EQR Model 2 118
4.8 Tests of Hypotheses 1 and 2 119
4.9 Responses to Questionnaire and interview with Environmental Policy Regulators   127
4.10 Environmental Performance Reports in some companies in Nigeria 129
4.11 Bases and Design of Environmental Cost Accounting 134
4.12 Environmental Financial Statements (EFS) Model 135
4.13 Reporting of Financial Statements to External Public and Accounting users142
4.14 The United States Superfund 142

CHAPTER FIVE
DISCUSSION OF FINDINGS, POLICY RECOMMENDATIONS AND
CONCLUSIONS
5.1 Overview of the Study Objectives 147
5.2 Discussions of Findings 148
5.3 Policy Recommendations 152
5.4 Conclusions 154
5.5 Contributions to knowledge 155
5.6 Areas of Future Research 156
References 157 - 170
Appendices     171 - 264


LIST OF TABLES
Table 2.1 Environmental Costs in Firms 46 
Table 2.2  Decline in size of Marine Fishing in the Nigeria Niger Delta 55
Table 2.3 Decline in size in Tonnage / Trawler of Marine Fishing in the Nigeria Niger Delta 55
Table 2.4  Mangrove Conversion in Nigeria Niger Delta 56
Table 3.1 Stakeholder Companies in the Oil and Gas Sector in Nigeria 90
Table 3.2 Sample Companies by Year and Sector 101
Table 4.1a Environmental Quality Reporting Summaries in Secondary Data in the Sub-Sectors 105
Table 4.1b Summary of Data (Secondary and Primary) analyzed in Companies106
Table 4.2 Environmental Quality Reporting 109
Table 4.3 Test of Hypothesis 111
Table 4.4 Regression 114
Table 4.5 Environmental Quality Reporting through Primary Data 117
Table 4.6 T-Test Paired Sample Statistics 119
Table 4.7 Model Summaries of R-Squares 123
Table 4.8 Regression Statistics 124
Table 4.9 Environmental Financial Statement (EFS) Model 137
Table 4.10  Environmental Financial Statement (EFS) adjusted profit and loss 
(highlighted) for three accounting years 139
Table 4.11  Pro-forma consolidated external environmental cost accounts
for A Company PLC 139
Table 4.12  Pro-forma external environmental cost accounts  141
Table 4.13 Costs of Environmental Measures  143
Table 4.14 Recommendations for Environmental Reporting from the UN CTC ISAR’S 9th Session in the Director’s Report 144
Table 4.15 UN ISAR Accounting Guidelines-Environmental 
Financial Accounting Recognition of Environmental Costs 145
Table 4.16 Environmental Costs relating to current accounting period  146

FIGURES
Figure 2.1 The GEMI Environmental Cost Primer Model - Cost Boundaries 44

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