Financial accounting for emissions trading schemes

In order to mitigate the negative effects of climate change, programs have been implemented to reduce the creation of greenhouse gasses. In this paper the accounting problems associated with emission trading schemes and the current standards developments projects have been investigated by means of a literary review. Due to the lack of an accepted accounting standard, divergent practices have developed when accounting for the effects of emissions trading schemes. Progress is evident in the IASB/FASB joint emissions trading project and the accounting decisions that have been made are based on compromise. In an effort to create a standard that will provide industry and financial statement users the information they need while remaining true to the existing accounting framework. However, this completed standard, regardless of its content, will be the source of conflict when gaining international public approval and adoption because of the existing divergent practice and potential materiality to large emitters accounts. --P. ii.