Question 1 - Environmental management accounting

Part A) OneSteel plead guilty to environmental hazard

28 September 2007 Yesterday at Broadmeadows Magistrates' Court a steel processing company pleaded guilty to causing an environmental hazard following an incident where chromic acid spilled into a stormwater drain in 2005. The Broadmeadows Magistrates' Court heard approximately 3,000 litres of acid spilled from Onesteel's plant at Cliffords Road in Somerton between 29 October and 1 November in 2005.

The Court heard the discharge resulted from an overflow of acid from the purification cell system at the site, when the power and air supply was turned off for a long weekend. Chromic acid is used to plate steel. Magistrate Spillane found the company guilty, and without conviction ordered it pay $75,000 to Merri Creek Management Committee Inc.

EPA West Metropolitan Region Manager Scott Maloney said the potential impact of the acid could have harmed aquatic life in local waterways. "The community expects businesses to protect our local waterways as an essential part of their operations," Mr Maloney said. "The acid spilled into a stormwater drain which then contaminated a Melbourne Water retarding basin.."Onesteel" has since improved their practices and modified equipment to prevent a recurrence of this incident," Mr Maloney said. Onesteel was ordered by the Court to publicise the court findings and penalty to its shareholders and the wider community. Magistrate Spillane also ordered Onesteel to pay EPA legal costs in the amount of $10,000.

Required:

Discuss one activity (or cost) for each environment cost category that is (or potentially could be) related to the situation of OneSteel, as outlined in the article above (OneSteel is the largest manufacturer and distributor of steel products in Australia, and services industries such as construction, manufacturing, housing, mining and agriculture).

i)Prevention cost

ii)Appraisal cost

iii)Internal failure