Chemco Ltd. is engaged in the production of chemical products and selling them locally. The company wishes to extend its market and export some of its products. It has come to the attention of the financial director that compliance with international environmental requirements is a significant precondition if it wishes to sell products overseas. Although Chemco Ltd. has during the past put in place a series of environmental policies, it is clear that it is also common practice to have an environmental audit done from time to time, which will cost approximately EUR 120,000. The audit will encompass the following: 

° a full review of all environmental policy directives; 

° a detailed analysis of compliance with these directives; 

° a report containing in-depth recommendations of those physical and policy changes that would be necessary to meet international requirements. 

The financial director of Chemco Ltd has suggested that the amount be capitalised as an asset and then written off against the revenues generated from export activities so that the matching of income and expense will occur. 

Do you agree with the financial director? Explain why.