The Effects Of BP Limited On Oceanic Ecosystem: A Financial And Accounting Analysis

Aim of the Report

Discuss abot the Financial Accounting Theory and as Oceanic Ecosystem.

All firms put either direct or indirect effect on the ecosystem due to its operations and in this report; a case on British Petroleum Limited has been studied. It has been found that BP Limited is responsible for causing direct harm to the environment as it causes oil spills and this adversely effects the social, economical wealth as well as oceanic ecosystem (Freeman et al., 2014). It has been found that there are mainly three issues for which BP Limited is responsible. These are – effect of oil spill on oceanic ecosystem, short of ecosystem services for administering risks and short of regulation outline for detecting restoration cost. As a result, the purpose of this report is to make BP Limited alert regarding its operations and damages that it causes to the environment.    

Based on detailed study, BP Limited is incompetent to detect its cost regarding restoration and so it measures and calculates it in terms of worth of money. Additionally, BP limited does not put importance on the damages that it does to the social and ecological wealth through numerous oil spills (Raj & Roy, 2016). Furthermore, the firm considers this as non-marketed goods. Thus, generally, the organization should put emphasis on this and should measure its valuation. Government considers the organization responsible for paying cleanup cost as it causes oil spill and harms the environment. It has been fund that BP limited does figures out clearly what damages it have done to the ecosystem. Thus, the primary aim of this study is to make BP Limited concerned about the damages that it does to the ecosystem through causing oil spill.   

• Effect of oil spill on oceanic ecosystem
• Short of ecosystem services for administering risks
• Short of regulation outline for detecting restoration cost

This study will be performed on the basis of data collected through both primary and secondary resources. Primary research will include face-to-face interview or telephonic interview and questionnaire survey and these will be analyzed qualitatively and quantitatively respectively (Molisa, 2014). Secondary research will include gathering data from articles, journals and books.

For better data collection, survey of the inhabitants of Gulf Coast will occur as oil spills occurred there. Furthermore, for gathering accurate data, interview and survey of the staffs of the particular firm will also take place (Deegan, 2013). However, some of the employees might as well as the residents of Gulf Coast might hesitate to participate in the survey, so the researcher might face trouble during the course of data collection.  

Literature Review

Problems Determined and Consequences

Effect of oil Spill on Oceanic Ecosystem

Oil spills are considered as pollutions and it can be of two types. Firstly, due to various causes, accidentally some oil spills occur, those are called accidental spills, whereas, the second type occurs due to ignorance and carelessness of workforce, so it is termed as intentional spill. All these spills adversely impacts the oceanic ecosystem (Dyckman & Zeff, 2015). Thus, BP Limited should provide the fine and cleanup cost for the betterment of the ecosystem. Nonetheless, the firm intends to conceal the fact that its operations have affected and cause damage to the social, ecological wealth and the environment. Identification and measurement of damage caused to the ecology is very difficult and BP Limited does this in terms of time and money. Thus, it should put measureable factors such that the damage to the ecosystem can be reduced. 

It has been found that as per the moral and ethical standard of the firm BP Limited, most of the stakeholders keeps belief on the organization; thus, the firm should put forward its approaches towards the betterment of the ecosystem. In addition to this, the organization should include the environmental standards of accounting for making the firm more consistent to its stakeholders (Miller & Power, 2013). This accounting standard is important for BP Limited as it helps to build a strong involvement among the environment, ecosystem and corporate agent.       

It has been found that the petroleum firms generally crack the punishment level through political bargaining. Nonetheless, it is not regarded as an appropriate approach as the damages done by a firm is not recuperated by this. Furthermore, method-oriented outline can be implemented for appraising the related risks. Thus, this approach is considered as a compulsory method for every organization. Accidental spills occur for crash of dictatorial agency, the reason behind this is that it provides characterized account in ecosystem (Shubik, 2014). The disclosed information of a corporation is considered as a vital aspect as it guides the management to evaluate the effort point for restoration process of environmental properties. Therefore, it can be said that lack of outlines of regulation would adversely affect the firm, particularly to the detection of renovation expense. Therefore, method-oriented outline is mandatory for betterment of the operations of the firm.   

Here, both the secondary and primary research procedures will be integrated, so questionnaires will be provided to both staffs of BP Limited and inhabitants of Gulf. Secondary data will be gathered from the articles, journals and books (Horngren et al., 2013).  

Methodologies

For making the study easier, primary data will be collected from a fixed sample size of 50 employees and 150 inhabitants of Gulf and this will be selected on a random basis.     

“Probability sampling technique” and fixed sample size will be implemented here for making the research easier.

The employees of BP Limited stated that there are several kinds of spills (oil) and their percentage of occurrence have also been noted below.

Figure 1: Kinds of Oil Spills and Percentage of their Occurrence

(Source: Bp.com, 2017)

This above pie chart represents various kinds of spills and thus its effect on the oceanic ecosystem can be understood from the following graph:

Figure 2: Bird Mortality Rate

(Source: Crawford & Lepine, 2013)

Different kinds of oil spills have been found to affect the ecosystem negatively and this manly occurs in seas or oceans but it also affect the other parts like:

Figure 3: Key Accidental Oil Spills

(Source: Crawford & Lepine, 2013)

All these occur due to short of incorporation of proper ecosystem services within the firm. The residents of Gulf stated that the oil spills mainly affect the cessation of deepwater. However, it also affects the other aspects. These are:

Figure 4: Impact of Oil Spills

(Source: Bp.com, 2017)

It has been found that demand of oil increased, so supply of oil also increased simultaneously. However, along with these the rate of occurring oil spills increased, so the numbers of employees, workforce and contractors of BP Limited decreased. 

Figure 5: Oil’s Demand and Supply

(Source: Bp.com, 2017)

Figure 6: Raise in Demand of Workforce, Contractors and Employees

(Source: Bp.com, 2017)

The projected budget of Deepwater Horizon can be understood as per the data collected from the staffs of BP Limited.

Figure 7: Budget of Deepwater Horizon

(Source: Bp.com, 2017)

However, the short of authoritarian outline, which assists to detect restoration cost can be better understood from the following print screen.

Figure 8: Short of Dictatorial Frame

(Source: Bp.com, 2017)

Accurate information has been gathered here from both secondary and primary resources and representatives can rely on the researcher, as the collected information will not be disclosed.

Conclusion

BP Limited should be more aware about the social and ecological wealth. Thus, oil spills should be reduced that take place due to carelessness of the employees. Lastly, the fines that are paid to the government of the country by BP Limited is not enough for improving the damages it have done to the oceanic ecosystem.

BP Limited should integrate the environmental standards of accounting for running the business eco-friendly. In addition, the firm should consider accurate measures to protect the environment. 

References

Bp.com. (2017). Bp.com. [online] Available at: https://www.bp.com [Accessed 18 Jan. 2017].

Crawford, E. R., & Lepine, J. A. (2013). A configural theory of team processes: Accounting for the structure of taskwork and teamwork. Academy of Management Review, 38(1), 32-48.

Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.

Dyckman, T. R., & Zeff, S. A. (2015). Accounting Research: Past, Present, and Future. Abacus, 51(4), 511-524.

Freeman, R. J., Shoulders, C. D., Allison, G. S., Smith Jr, G. R., & Becker, C. J. (2014). Governmental and nonprofit accounting: Theory and practice. JPAEJOURNAL OF PUBLIC AFFAIRS EDUCATION VOLUME 20 NUMBER 3, 441.

Horngren, C. T., Sundem, G. L., Schatzberg, J. O., & Burgstahler, D. (2013). Introduction to management accounting. Pearson Higher Ed.

Miller, P., & Power, M. (2013). Accounting, organizing, and economizing: Connecting accounting research and organization theory. Academy of Management Annals, 7(1), 557-605.

Molisa, P. B. M. (2014). Accounting for apocalypse: Re-thinking social accounting theory and practice for our time of social crises and ecological collapse.

Raj, S. K., & Roy, S. (2016). Accounting Theory: An Ethical Perspective of Real Life Scenarios. International Journal of Business and Social Research, 6(10), 47-55.

Shubik, M. (2014, June). Accounting and its relationship to general equilibrium theory. In Proceedings on the Conference Accounting and Economics in honor of the 500th Anniversary of the Publication of Luca Pacioli’s Summa de Arithmetica, Geometria, Proportioni et Proportionalita (pp. 226-234).