Degree Name

Master of Accountancy-Research


School of Accounting and Finance


In order to provide timely authoritative guidance to facilitate reporting under the European Union (EU) Emissions Trading Scheme (ETS), the International Accounting Standards Board (IASB) issued IFRIC 3 Emission Rights through the International Financial Reporting Interpretations Committee (IFRIC) in 2004. The IFRIC consensus concludes that ETS gives rises to an intangible asset for emission rights held, a provisional liability for emission rights purchased to offset emissions, and a government grant when emission rights are allocated for less than their fair value. The withdrawal of IFRIC 3 and the absence of authoritative accounting guidance for emission rights provide a window of opportunity to reconsider accounting for emission rights from an alternative perspective. Informed by the tenets of social ecology as an environmental ethics approach, this thesis seeks to critically examine and problematise the accounting recognition of emission rights in IFRIC 3. Critical Discourse Analysis (CDA) is used as a critical research method to examine texts from three sources: IFRIC 3 Emission Rights, draft IFRIC 3 comment letters and two IASB press releases on the withdrawal of IFRIC 3. CDA consists of three levels of analysis: (1) Text analysis: who is saying what? (2) Discourse analysis: what does the text mean? (3) Social analysis: who are the key players in the discourse construction?

Key findings of CDA show that while the proposed recognition of emission rights is consistent with the IASB Conceptual Framework1 and existing accounting standards, it fails to reflect the ecological substance of ETS, of which emission rights become an integral component. CDA highlights that a mainstream accounting framework does not comfortably address the complex nature of emission rights. Furthermore, this thesis argues that the mainstream accounting approach adopted in IFRIC 3 reinforces the status quo of a business-as-usual approach and represents a superficial approach to a complex environmental and social issue. A new accounting standard for emission rights needs to consider qualitative characteristics that reflect the ecological substance of emission rights.



Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.