Equinox

Deep Linking Financial and Energy Accounting

Deep Linking Financial and Energy Accounting

We develop a conceptual framework for integrated accounting that imposes on certain non-financial disclosures the same double-entry balance constraints that apply to conventional financial statements. We identify the key ingredients required for a rigorous multidimensional accounting framework in terms of concepts, postulates and design choices, and we illustrate these ideas with a worked-out example of linking financial and energy accounts.

Reading Time: 9 min.
Integrated Energy Accounting is keeping track and reporting on an entity’s detailed energy footprint (primary inputs, transformations and waste generation) not as an addendum to financial accounting and reporting but as a deeply-linked extension that is subject to the same level of rigor. The central design is the use of multidimensional double-entry bookkeeping which tracks additional quantitative information characterizing economic objects beyond their monetary values. This choice ensures the enforcement of both classic balance sheet constraints and the applicable energy conservation laws.