ASSIGNMENT : SOCIAL ACCOUNTING

INTRODUCTION OF SOCIAL ACCOUNTING

Social accounting (also known as social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting, or sustainability accounting) is the process of communicating the social and environmental effects of organizations' economic actions to particular interest groups within society and to society at large.

Social accounting is commonly used in the context of business, or corporate social responsibility (CSR), although any organization, including NGOs, charities, and government agencies may engage in social accounting.

Definition of Social Accounting

“The measurement and reporting of information concerning the impact of entity and its activities on society “ R.Dobbins & David Fanning

Objectives of Social Accounting

Main objectives of social accounting are to help society by providing different facilities by enterprise and to record them. We can write them in following points

1. Effective utilization of natural resources
Main objectives of making social accounting is to determine whether company is properly utilize their natural resources or not .

2. Help to employees
Company can help employees by providing the facility of education to children of employees, providing transport free of cost and also providing good working environment conditions .

3. Help to society
Because companies' factories spread the pollution in natural society which is very harmful for society . So , enterprise can help to society by planting the trees , establishing new parks near factory area. and also opening new hospitals
4. Help to customers
In social accounting this the part of benefits given by company to society , if company provides goods to customers at lower rate and with high quality .
5. Help to investors
Company can help to investors by providing transparent accounting information to investors .
Because of many objectives are related to safeguarding of natural resources so this accounting is also known as Social and Environmental Accounting, Corporate Social Reporting, Corporate Social Responsibility Reporting, Non-Financial Reporting, Sustainability Accounting Benefits of Social Accounting :

It assists management in formuling appropriate policies and programs

It improves the cofidience of share holder of the firm by providing them proper information about social cost & social benefit of the society

It improves employee motivation

Through social accounting the management can get feed back in regard to its various policies aimed at welfare of the society

Purpose

Social accounting challenges conventional accounting, in particular financial accounting, for giving a narrow image of the interaction between society and organizations, and thus artificially constraining the subject of accounting.

Social accounting, a largely normative concept, seeks to broaden the scope of accounting in the sense that it should:

• concern itself with more than only economic events;
• not be exclusively expressed in financial terms;
• be accountable to a broader group of stakeholders;
• broaden its purpose beyond reporting financial success.

It points to the fact that companies influence their external environment (both positively and negatively) through their actions and should therefore account for these effects as part of their standard accounting practices. Social accounting is in this sense closely related to the economic concept of externality.

Social accounting offers an alternative account of significant economic entities. It has the "potential to expose the tension between pursuing economic profit and the pursuit of social and environmental objectives"
The purpose of social accounting can be approached from two different angles, namely for management control purposes or accountability purposes.

Accountability

Social accounting for accountability purposes is designed to support and facilitate the pursuit of society's objectives. These objectives can be manifold but can typically be described in terms of social and environmental desirability and sustainability. In order to make informed choices on these objectives, the flow of information in society in general, and in accounting in particular, needs to cater for democratic decision-making. In democratic systems, Gray argues, there must then be flows of information in which those controlling the resources provide accounts to society of their use of those resources: a system of corporate accountability.

Society is seen to profit from implementing a social and environmental approach to accounting in a number of ways, e.g.:

• Honoring stakeholders' rights of information;
• Balancing corporate power with corporate responsibility;
• Increasing transparency of corporate activity;
• Identifying social and environmental costs of economic success.

Management control

Social accounting for the purpose of management control is designed to support and facilitate the achievement of an organization's own objectives.
Because social accounting is concerned with substantial self-reporting on a systemic level, individual reports are often referred to as social audits.

Organizations are seen to benefit from implementing social accounting practices in a number of ways, e.g

• Increased information for decision-making;
• More accurate product or service costing;
• Enhanced image management and Public Relations;
• Identification of social responsibilities;
• Identification of market development opportunities;
• Maintaining legitimacy.

According to BITC the "process of reporting on responsible businesses performance to stakeholders" (i.e. social accounting) helps integrate such practices into business practices, as well as identifying future risks and opportunities.

The management control view thus focuses on the individual organization.
Critics of this approach point out that the benign nature of companies is assumed. Here, responsibility, and accountability, is largely left in the hands of the organization concerned

Conclusion

To conclude we can say that social accounting is a tool showing the commitment of firm towards the society .

Submitted by

Shefali
Roll no 200

Section c