Environmental issues are now in focus of corporate performance requiring not only the respecting of rules on environment but as well reflecting the cost of environmental damages during the financial reporting. The current financial accounting practices do not cover all the environmental cost caused from the companies. As result a new field of accounting emerged, environmental accounting that takes into consideration the concern on environment and natural resources, stating the values of the positive and negative public effects and externalities and incorporating them in the traditional accounting (Balance Sheet and Income Statement). The role of accounting on monitoring the environmental degradation caused from firms operating in Albania will be the focus of this study. The accounting legislation and regulation of Albanian firms will be examined stating the approach towards environmental damages. Accounting practices of three companies with negative impact on the environment will be analyzed. The study finds that the accounting practices and regulation in Albania do not have the proper structure on reporting the environmental issues.

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