Accounting Measurement of Environmental Costs under the Financial Accounting System: A Case Study; Naftal Corporation, Blida Province

Abstract

This study aims to examine environmental costs and the methods used to measure them according to the Financial Accounting System (FAS/SCF), while attempting to apply this framework to Naftal Corporation, Blida Province, and to demonstrate the effect of measuring and disclosing this category of costs on both the balance sheet and the income statement. To achieve the objectives of the study, the descriptive-analytical method was adopted alongside a case study approach applied to Naftal Corporation, drawing on its financial reports and statements for the year 2025.

The study concludes that accounting measurement of environmental performance functions as a two-directional indicator: it reveals whether institutions are aware of the environmental issues that may affect their existence, and it also serves as a benchmark for financial statement users to assess environmental events and the efforts of these institutions toward environmental management, together with the resulting financial implications. The study recommends that institutions pay serious attention to the environmental dimension by adopting the measurement and disclosure of environmental accounting information within dedicated and independent statements and reports, separate from the regular financial statements, in order to facilitate the process of environmental oversight and auditing.