It was not until recently that accounting and reporting acquired 3 new aspects to it, organisations are now being expected to be embracing Corporate Social Responsibility. This entails social and environmental reporting as well as having a well formulated code of ethics. In this essay I will be exploring the concepts, benefits, and drawbacks of Ethical, Social, and Environmental Accounting and Reporting. Definitions
Ethical accounting and reporting
Ethics can be described as the method in which individuals use to decide what is good or bad; it can also be used to describe a set of moral principles or values. (Carroll and Buchholtz, 2002). A mixture good personal judgement; moral principles and values are how majority of individuals live their daily life. Ethical accounting and reporting refers to accounting but with these principles and values applied to ensure that the work is honest and to a good standard. Nowadays, it has become almost compulsory for businesses to have their own code of ethics which each employee is expected to comply with, usually the code of ethics given by organisations coincide with or in most cases don’t oppose the individuals personal morals and principles. Social accounting and reporting, “...the process of communicating the social and environmental effects of organisations economic actions to particular interest groups and society at large.”(Gray et al, 1987). Rob Gray describes social accounting as all of the aspects of a business that aren’t directly profitable or to directly involved in production Environmental accounting and reporting “...covering all areas of accounting that may be affected by the business response to environmental issues....” (Gray and Bebbington, 2001). “Green accounting measures the effect of human activity on the earth’s ecological systems and resources and just the financial effects of such activity” (Greenham, 2010)
Explanation of Concepts –
Ethical accounting and reporting
There are two main ethical theories, ethical relativism which is dependent upon the current environment. It can be changed by different variables such as circumstance, culture, belief or emotion. The second concept is ethical absolutism wither something is right or wrong no change The positivist approach describes the a formally written and presented ethical code created by an organisation that all employees are expected to follow and work by. This approach is purposefully meant to bring about a sense of uniformity with in any organisation; uniformity significantly decreases the chance of misconduct. The positivist approach is relatively similar to Ethical Absolutism in terms of employees have no option but to follow the code of ethics which is considered correct. The Normative ethical stance is the second approach, this a where “...a philosophy is developed for the business...”(Elliot and Elliot, 2002, pp887) Possible variations of this stance that an organisations can adopt are as follows: Utilitarianism, Deontological Philosophy, Marxism and post-Marxism, Postmodernism, and Social Philosophy. The Normative stance is very much supportive of the Ethical Relativism theory in the idea that the ethical code is decided partly by how the ethics fit in with the company’s culture, or beliefs. (Elliot and Elliot, 2009, pp886-888)
Social Accounting and Reporting
The concept of social accounting is to tend to the organisations stakeholders need to be as informed about non-profit aspects of the organisations that could potentially affect their social and personal lives. Aspects such as: potential future employment opportunities or redundancies; health and safety of employees; consumers and products; suppliers; the wellbeing of the natural environment, how the organisation may be affecting it; local and international communities such as charities and pressure group.(Shanks, 1978) There are three main types of stakeholder an organisation can have: Internal stakeholders- anyone...