Ernst & Young has released a new report focusing on carbon emissions management, encouraging companies to address climate change issues in their business strategies.

The new report, “Carbon Market Readiness: Accounting, Compliance, Reporting and Tax Considerations Under State and National Carbon Emissions Programs,” concludes that while the timing and scope of climate change legislation in the U.S. is uncertain, many countries around the globe – as well as many states – have some type of regulatory program to manage carbon emissions.

The white paper includes a section on compliance, which Steve Starbuck, the firm’s newly appointed Leader of Americas Climate Change and Sustainability Services, said is the second step for CPAs who are interested in working with their clients on this issue.

The first is education.

“As accountants, auditors and business advisors, CPAs should first help clients prepare for carbon emissions management by developing a thorough understanding of the various state, regional and federal programs that proscribe greenhouse gas reporting requirements,” Starbuck said.

After compliance, the focus turns to risk identification and process improvement as it relates to an individual client’s business.

CPAs can also help companies develop processes and controls in three key areas – measure, monitor and report greenhouse gas emissions, according to Starbuck, who said this is quickly becoming a new concern for companies given the Jan. 27 Securities and Exchange Commission decision to issue interpretive guidance to require greater consistency for registrant disclosure of the effects of climate change on their businesses.

In a survey of more than 1,000 U.S. public registrants with revenues between $1 billion and $100 billion, only 29 companies disclosed an accounting policy related to emissions credits or allowances in notes to their financial statements, according to the report.

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