Accounting Theory Assignment 2
MONASH UNIVERSITY
SEMSTER 1 – YEAR 2011
AFW 3040 – ACCOUNTING THEORY
BY: SARAH WONG
Assignment 2 – 1500-word Essay
Topic: How social and environmental reporting practices undertaken by companies highlight the limitations of the conceptual framework.
Introduction:
Accountancy has always been concerned with mainly the accountability of directors to shareholders and companies to creditors. As companies grow larger and become more integrated with the society, this call for a focus towards sustainability and being accountable to a wider range of stakeholders (Perks, 1993). Corporate Social Responsibility is defined as a concept whereby companies integrate social and environmental concerns in their business operations by going beyond compliance and investing into human capital, environment and the relations with stakeholders (Commission of European Communities, 2001).
The convergence of global capital markets has led both international and national accountants in both financial reporting and auditing fields to concentrate on capital market focused convergence issues which include the exclusion from explicit consideration of social, environmental and sustainable development issues.
The ability of the environment to supply raw materials and incorporate waste while maintaining biodiversity and upholding the quality of life has been increasingly intricate (Welford, 1995). Conventionally, the corporate view has been based on the GDP indicator which promotes an increase in output which will lead to an increase in income. For small companies, a simple environmental reporting framework which focuses on energy, water, waste and carbon dioxide emissions can be linked to the taxation system which rewards the efficient companies.
The substitute view on an increase in awareness relates to improving corporate image with various stakeholders (Adams, 2002). Adams emphasized on the strength of public pressure and image benefits of responding to these issues as demonstrating
SEMSTER 1 – YEAR 2011
AFW 3040 – ACCOUNTING THEORY
BY: SARAH WONG
Assignment 2 – 1500-word Essay
Topic: How social and environmental reporting practices undertaken by companies highlight the limitations of the conceptual framework.
Introduction:
Accountancy has always been concerned with mainly the accountability of directors to shareholders and companies to creditors. As companies grow larger and become more integrated with the society, this call for a focus towards sustainability and being accountable to a wider range of stakeholders (Perks, 1993). Corporate Social Responsibility is defined as a concept whereby companies integrate social and environmental concerns in their business operations by going beyond compliance and investing into human capital, environment and the relations with stakeholders (Commission of European Communities, 2001).
The convergence of global capital markets has led both international and national accountants in both financial reporting and auditing fields to concentrate on capital market focused convergence issues which include the exclusion from explicit consideration of social, environmental and sustainable development issues.
The ability of the environment to supply raw materials and incorporate waste while maintaining biodiversity and upholding the quality of life has been increasingly intricate (Welford, 1995). Conventionally, the corporate view has been based on the GDP indicator which promotes an increase in output which will lead to an increase in income. For small companies, a simple environmental reporting framework which focuses on energy, water, waste and carbon dioxide emissions can be linked to the taxation system which rewards the efficient companies.
The substitute view on an increase in awareness relates to improving corporate image with various stakeholders (Adams, 2002). Adams emphasized on the strength of public pressure and image benefits of responding to these issues as demonstrating