Answer To: BUACC 2614 – Management Accounting 2 Semester 1, 2013 Group Assignment According to Martin and...
Robert answered on Dec 22 2021
Sustainability in Key Profession: Accounting
Introduction
Corporate responsibility is a term that is supplanting the term corporate social responsibility. The
„social‟ is increasingly being omitted in order to emphasize the (claimed) broader responsibilities
of business corporations, particularly their responsibilities with regard to the environment.
(Hopkins, M, 2003).
The desire to encourage, may require, corporations to assume greater responsibility for their
actions can be traced back over many decades, and reflects growing concerns regarding the
power and influence of corporations over people‟s lives and even the independence and integrity
of governments. For example, Oberman (2000) refers to academic debates over corporate social
responsibilities taking place in the 1920s.
As the power and influence of business corporations have assumed ever greater proportions, so
too have the calls increased for mechanisms to be put in place that would make corporations
more accountable as well as responsible to a wider constituency than merely their shareholders.
(Colin Fisher, 2009)
Each and every corporate exists in a unique environment and work uniquely. The sustainability
agenda or the Corporate Responsibility initiated by the organization is recognized from the
specific situation that the company works it.
The Corporate were initially perceived just as a profit making unit and were only confined to
generate profits, generate employment and pay taxes. The corporate were considered as a social
responsible organization if it was able to generate huge amount of profits and employment for
the workforce. (Friedman, M. 1970)
Corporate Social Responsibility as well as sustainability plays a major and a crucial role in the
organizations today. Australian government gives a strong focus to sustainability, they have put
forward different rules, framework and tools which fosters changes for sustainability in the
organizations. Accounting profession plays a major role in promoting corporate social
responsibility as well as sustainability across the business. The organizations are taking into
consideration different aspects of sustainability. With the increasing need and demand of the
society, customers. The corporate works on a momentum "triple bottom line" or "sustainable"
approach. These are social, environmental, and financial data which is used for evaluating the
performance of the company. The companies are expected to perform well not only in terms of
finance but also in the terms of areas which are not included in the part of the financial aspect i.e.
ethics, human rights, environmental policies, corporate governance, environmental concerns,
development of communities, issues in respect to its workplace, corporate governance, and
business ethics. The performance of the companies is evaluated in respect of financials, social
and environmental. (Carroll, A.B. 1991)
As per the Davis Model of Corporate Social Responsibility, the firm needs to have a strong focus
on five propositions which includes societal issues such as environmental pollution and minority
employment; considering the issues of community to improve the society; focus on social costs
and benefits; social cost related to the activities of the business; solving different societal issues
which will help the company to improve on its profits. (Friedman, 1970)
Sustainability Accounting and Reporting
With a strong focus on corporate social responsibility, the organizations as well as the governing
bodies have taken several aspects to account for sustainability and corporate social
responsibility. There are different social costs that the organizations need to take into
consideration for which the government has taken major steps to resolve the complexity. To
accomplish the reporting of corporate social responsibility, sustainability accounting has
emerged which addresses the costs and benefits that are associated with sustainability,
sustainability as well as environmental risk factors. With proper accounting the organizations are
able to achieve sustainability with which the organization is able to operate successfully socially
as well as environmentally. With a strong focus on sustainability on accounting, the
organizations are able to focus on different aspects of social as well as environmental factors.
Sustainability reporting can be said to be a structured way to report on the environmental, social
and economic performance of a company (Rao, Mock and Srivastava 2009). Such reporting
gives companies a means to demonstrate how non-financial factors affect financial figures and
how these factors ultimately help drive a company‟s value (Mock, Strohm and Swartz 2007)
Organizations report on their sustainability performance for a variety of reasons. These include
moral and ethical reasons, competitive advantage, being a party to setting of voluntary standards
or mandatory standards, peer and industry pressure, image management, public relations,
corporate reporting awards, social pressures, social license to operate, existing regulation and
financial benefits from investor reactions (Buhr 2007, p. 64-65). Hodge, Subramaniam and
Stewart (2009) find that provision of assurance on a sustainability report improves perceived
reliability of the environmental and social information. Simnett, Vanstraelen and Chua (2009)
conclude that companies seeking to enhance the credibility of their reports and build their
corporate reputation are more likely to have their sustainability reports assured.
Ballou, Heitger, Landes and Adams (2006) state that providing and measuring social and
environmental information will provide an opportunity for certified public accountants to
provide assurance on such information. Sustainability reporting is also known as triple-bottom-
line (TBL) reporting, corporate sustainability reporting (CSR), corporate social reporting (CSR),
corporate social responsibility (CSR), corporate responsibility reporting. Reporting on social and
environmental performance is required in some parts of the world.
With the sustainability reporting, environmental management accounting was also introduced
which helps in supporting the sustainability objectives of the organization. There are two aspects
of environmental management accounting which includes financially oriented as physically
oriented EMA (IFAC, 2005). Financially oriented EMA takes into consideration environmental
costs as well as environmental product costing. These are...