Accg 100: Accouting in Socitey Lecture Notes

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social- awareness of people’s health from organisations, we must make sure we can have access to resources without comprising our quality of life→ through education and encouraging participation in the process

economic performance – profitably, return on assets, market and share price without looking at other aspects of sustainability

Limitations of Traditional Accounting

- identify information and use this amongst internal and external users to satisfy their needs and help them to make wise and ethical decisions

- focus on economic performance (e.g. profit and wages)

- remain silent on social and environmental issues (pollution? Child labour?

- How is success calculated? – profitable business or social responsible business

What do we try to do now?

- Explore the unmarked and unreported voices in social and environmental issues and the attributing consequences

Environmental Accounting

- Organisations economic influence over the environment

- Carbons emissions

- Emission Trading Scheme (ETS) are designed to control emissions by allowing participants to trade excess emissions permits

- Carbon tax where a levy is paid based on the amount of emissions of greenhouse gases (GHGs)

- Companies are charged for polluting more when they buy more carbon permits, and others are rewarded for polluting less

- Water accounting

- Australian Water Accounting Standards – provide guidance and explanatory material to assist in preparing, presenting and assuring general purpose water accounting reports

Social Accounting

- Acts as a mechanism to offer greater corporate accountability and transparency – the essence of social accounting is about what we do, and how we can listen to what others must say so the future performance can be more effectively targeted

- Accounting for society and covers community environment, diversity and tells you how a business can use accounting as a means of being ethical

- The concept has been around for decades – today it is of huge importance that social and environmental accounting becomes embedded in organisational culture, custom and law (gray 2001)

- Linked to both tangibles and intangibles

- It involves “The preparation and publication of an account about an organisation, social, environmental, employee, community, customer and other stakeholder interactions and activities, and , where possible, the consequences of those interaction and activities” (gray 2000, p 250)

Objectives of Social Accounting

- Challenges traditional (financial accounting) (Gray 2002)

- Challenges the absences of traditional accounting

- Gives accountability beyond the shareholders

- Ensures the corporation acknowledges the responsibility it has towards the ethical, social and environmental performance (Adams 2004)

Integrated Reporting

Frameworks help with the content

- Australia: Australian SAM sustainability index (AuSSI)

- International: The Global Reporting Initiative (GRI) – help businesses and Govs learn the impact of enviro issues

- these concepts must be integrated into their decision making to prepare reports, we need frameworks

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Benefits for business?

- Embedding sound ethical values throughout all levels of an org – through policies

- Enhancing communication with key stakeholders

- Attracting and retaining competent staff by demonstrating an organisation that is focused on values and its long-term existence

- Ability to benchmark performance both within and across industries

Do stakeholders care?

- Shareholders: sustainability can improve entity value – investment decisions

- Customers: some customers are interested in the source of products and actively seek ‘green’ or ‘fair trade’ products

- Creditor or branks: financial institutions need to consider the environmental impacts of projects they fund

- Community groups: invested in services and facilities offered in the local community, job creation, health and emissions info

- Media: voice concerns of stakeholders and set public agenda relating to corporate sustainability issues

- GOV: in some jurisdictions, govs are required to monitor mandatory reporting of sustainability or enviro issues

Role of Accountants in sustainability

- Reporting

- Cost analysis

- Audit and assurance service

CASE STUDY: The gold of Mexixo Oil Spill

Facts

- “the worst environmental disaster America has ever faced.”

- • Deepwater Horizon Rig exploded

- 11 men killed

- Resulted in the release of over 4 million barrels of oil into the ocean

- Raised questions on safety, management, unethical practices, accountability, regulation, authority, mistakes and communication.

- Who’s to blame - BP, Transocean and Halliburton

- Damage to ecosystems - whales, dolphins, fish, turtles,